July 2003

New York Conforms Ordering of Corporate Tax Credits

By Mark H. Levin, CPA, H.J. Behrman & Company, LLP

In a move designed to bring conformity to the credit provisions of the Tax Law, the New York State Legislature, in the Fiscal Year 2002/2003 Budget Act, changed the ordering of corporate tax credits for taxpayers taxable under Article 9 (Corporation Tax), Article 9-A (Franchise Tax on Business Corporations), Article 32 (Franchise Tax on Banking Corporations), and Article 33 (Franchise Tax on Insurance Corporations).

The new rules direct that any credits or credit carryovers are to be used in the following order:

This order maximizes the use of the credits and credit carryovers, allowing the use of noncarryover credits first, and minimizes the loss of credit carryovers due to expiration.

This provision was effective for tax years beginning on or after January 1, 2000, except for the provision regarding the Empire Zone (EZ) wage credit and the EZ capital credit under Article 33, which is effective for tax years beginning on or after January 1, 2002.

Corporations that have filed returns using credits for tax years beginning on or after January 1, 2000, should review the ordering of credits taken on those returns and, if necessary, revise the schedule of credit carryovers to reflect this new legislation.

Mark H. Levin, CPA
H.J. Behrman & Company LLP

Contributing Editors:
Henry Goldwasser, CPA
Weiser LLP

Neil H. Tipograph
Imowitz Koenig & Co., LLP

Warren Weinstock, CPA
Marks Paneth & Shron, LLP

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