20 NYCRR § 9-1.2

Definition of qualified New York manufacturer

Official textus-ny/regstax.ny.gov14 subsections

# (a)

A corporation or, in the case of a combined report, a combined group, engaged in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing during the taxable year will be a qualified New York manufacturer if the criteria in paragraph (1) or (2) of this subdivision are met.
(1) (i) The corporation or combined group derives more than 50% of its gross receipts during the taxable year from its sale of goods produced by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing (hereinafter referred to as the “principally engaged test”) and has qualified manufacturing property that has a New York adjusted basis of at least one million dollars at the end of the taxable year or has all its real and personal property in New York State for the entire taxable year.
(ii) The corporation’s sale of goods requires that title be transferred from the taxpayer to another party, except in instances of contracts covering more than one taxable year for the ultimate sale of goods. Any receipts earned pursuant to such contracts in each taxable year shall be deemed a sale of goods even though transfer of title has not yet occurred. The sale of a good shall not include:
(a) the licensing of goods;

# (b)

the sale of a warranty;

# (c)

the sale of an insurance contract; or

# (d)

the sale of advertising related to the good.
(iii) To determine whether the corporation or the combined group has satisfied the principally engaged test, the total everywhere receipts as determined under this Subchapter of the corporation or, in the case of a combined report, the combined group, shall be multiplied by a fraction. The denominator of the fraction used to compute the principally engaged test is the corporation’s or combined group’s everywhere receipts, except that any global intangible low-taxed income as defined in IRC section 951A must be excluded. The numerator of the fraction is the portion of such everywhere receipts derived from the sale, by the taxpayer or combined group, of goods produced by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing. Receipts from the foregoing activities are combined when determining the numerator of the fraction for the principally engaged test.
(iv) In the case of a combined report, intercorporate receipts are eliminated in the computation of the principally engaged test.
(2) A corporation or a combined group, in the case of a combined report, that does not satisfy the principally engaged test will be a qualified New York manufacturer if the corporation or combined group employs at least 2,500 qualified manufacturing employees on the last day of the taxable year and has qualified manufacturing property that has an adjusted basis of at least 100 million dollars at the close of the taxable year.
(b) In determining whether goods are produced by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing (hereinafter referred to as manufacturing activities), the following will not be considered manufacturing activities:

# (1)

A process that makes a good more attractive for sale without substantially altering the good.

# (2)

A process that does not effect a material change in the good.

# (3)

Market research, research and development, and design and creation of a prototype.

# (4)

The manipulation of information.

# (5)

The transmission of information.

# (6)

The performance of a service.

# (7)

Cooking, baking and other preparation of food for on-site consumption.

# (8)

The generation and distribution of electricity, the distribution of natural gas, and the production of steam, ice, or any other good associated with the generation of electricity.

# (9)

The creation of a digital product.

# (10)

Heating, cooling, regulating, cleaning, purifying, blending, and distributing activities.
(c) The determination of whether a corporation or a combined group is a qualified New York manufacturer is done on an annual basis.
(d) For purposes of computing the capital base tax, a qualified New York manufacturer includes a corporation that is defined as a qualified emerging technology company under Public Authorities Law section 3102-e(1)(c) regardless of the $10 million limitations expressed in subparagraph (1) of that paragraph (c). In the case of a combined report, all members of the combined group must be qualified emerging technology companies for the combined group to be considered a qualified New York manufacturer under this subdivision.

Source: official source document (DTF adopted rule text, December 2023 corporate reform)

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