New guidance on the New York State corporate tax reform legislation, set to go into effect for tax years beginning after 2014, has recently been added to the Corporate Tax Reform FAQs that appear on the Department of Taxation and Finance website. bus/ct/corp_tax_reform.htm.  The new FAQs include the following general guidance:

  • Unitary Business.  The Department will consider the “facts and circumstances” in determining whether a corporation acquired by a taxpayer is “instantly unitary.”
  • Credit Carryforwards.   Credit carryforwards from years prior to 2015 (other than the minimum tax credit) are not affected by corporate tax reform and can continue to be used in 2015 and thereafter under the same rules as before the law change.
  • Mandatory First Installment of Estimated Tax.   The mandatory first installment of estimated tax starting  in 2015 will still be based on the prior year’s tax — i.e., the tax prior to corporate tax reform.
  • Corporate Partners.   The aggregate principles applied in taxing a corporate partner deriving a distributive share of partnership income, as well as taxing gain arising from sales of the partnership interest itself,  will continue under corporate tax reform.
  • 40% Election.  A taxpayer’s 40% safe harbor election for attributing interest expense to investment income and other exempt income cannot be overridden by the Department on audit.
  • Income Not Apportionable Under the U.S. Constitution.    The Department has announced that it will not issue guidance explaining the circumstances under which income from debt obligations or other securities cannot be apportioned to the State under the U.S. Constitution.