Determination of applicable methodology

# (a)

A corporation must use the aggregate method in determining its tax with respect to its interest in a partnership if the corporation has access to the information necessary to compute its tax using such method. A corporation is presumed to have access to the information if any one of the following is met:

# (1)

it is conducting a unitary business with the partnership;

# (2)

it is a general partner of the partnership or is a managing member of a limited liability company that is treated as a partnership for Federal income tax purposes;

# (3)

it has a 5% or more interest in the partnership determined in the manner provided in section 1-2.3(e)(1) of this Subchapter;

# (4)

it has reported information from the partnership in a prior taxable year using the aggregate method;

# (5)

its partnership interest constitutes more than 50% of its total assets;

# (6)

its basis in its interest in the partnership pursuant to IRC section 705 and 26 CFR 1.705-1 on the last day of the partnership year that ends within or with the corporation's taxable year is more than $5,000,000;

# (7)

any member of its affiliated group or New York combined group has the information necessary to perform such computation; or

# (8)

it is claiming a tax credit based upon the activities of the partnership or claiming a tax credit computed at the partnership level that flows through from the partnership to the corporation.

# (b)

# (1)

If a corporation does not meet any of the presumptions set forth in subdivision (a) of this section and does not and will not have access to the information necessary to compute its tax using the aggregate method within the time period allowed for filing a report, determined with regard to all available extensions of time to file, and certifies these facts to the Commissioner, the corporation must use the entity method.

# (2)

If a corporation meets one or more of the presumptions set forth in subdivision (a) of this section, but the corporation establishes to the satisfaction of the Commissioner that it, any member of its affiliated group, or any member of its New York combined group does not and will not have access to the information necessary to compute the corporation's tax using the aggregate method within the time period allowed for filing a report, determined with regard to all available extensions of time to file, and certifies these facts to the Commissioner, then the corporation must use the entity method.

# (c)

If a corporation is a partner in a partnership ("upper tier partnership") and such partnership is a partner in another partnership ("lower tier partnership") and the corporation has the necessary information to use the aggregate method with respect to the items of receipts, income, gain, loss, deduction, assets and liabilities, and activities of the upper tier partnership that are not attributable to the lower tier partnership, but does not have the necessary information to use the aggregate method with respect to such items that are attributable to the lower tier partnership, then such corporation must use the aggregate method with respect to the items of receipts, income, gain, loss, deduction, assets and liabilities, and activities of the upper tier partnership that are not attributable to the lower tier partnership and must use the entity method with respect to such items that are attributable to the lower tier partnership. If there are additional tiers of partnerships, this methodology must be employed at each tier. The corporation will be presumed to have access to the necessary information with respect to a lower tier partnership and will be subject to the provisions of paragraph (2) of subdivision (b) of this section with respect to a lower tier partnership if one or more of the presumptions set forth in subdivision (a) of this section are met at each tier. If the corporation does not meet any of the presumptions set forth in subdivision (a) of this section and does not have access to the necessary information with respect to a lower tier partnership the provisions of paragraph (1) of subdivision (b) of this section will apply.

# (d)

# (1)

For purposes of this section, the term "affiliated group" will have the same meaning as such term has in IRC section 1504, except that the term "common parent corporation" will be deemed to mean any person as defined in IRC section 7701(a)(1). Such section 1504 must be read without regard to the exclusions provided for in section 1504(b).

# (2)

For purposes of this section, a partnership interest constitutes more than 50% of a corporation's total assets if its interest in the partnership is more than 50% of the corporation's total assets. In determining its interest in the partnership and its total assets, the corporation may elect to use ending amounts, the average of the beginning and ending amounts as reported on the corporation's balance sheet included in its Federal income tax return, or average amounts determined on a more frequent basis as determined in a manner consistent with the corporation's balance sheet included in its Federal income tax return. Whichever method a corporation elects to use, it must use that method for all of its assets. If the corporation is not required to include a balance sheet in its Federal income tax return, it must use a method that it would have used if it had been required to include a balance sheet in its Federal income tax return. An alien corporation must use only amounts that are effectively connected with its United States trade or business.