20 NYCRR § 9-5.4

Rules for treatment of earnings and profits

Official textus-ny/regstax.ny.gov12 subsections

# (a)

The earnings and profits of a DISC or of a former DISC are deemed to be divided into the following three categories:

# (1)

accumulated DISC income, which includes the earnings and profits of the corporation that have been deferred from taxation, as defined in 26 CFR 1.996-3(b);

# (2)

previously taxed income, which includes the earnings and profits of the DISC that have been previously taxed by reason of having been deemed distributed, as defined in 26 CFR 1.996-3(c); and

# (3)

other earnings and profits, which includes the earnings and profits of the DISC that were derived by the corporation in taxable years when it was not qualified as a DISC, as defined in 26 CFR 1.996-3(d).

# (b)

Any actual distribution to a stockholder that is made out of the earnings and profits of a DISC or a former DISC shall be treated as made in the following order:

# (1)

first, out of previously taxed income, as described in paragraph (2) of subdivision (a) of this section;

# (2)

second, out of accumulated DISC income, as described in paragraph (1) of subdivision (a) of this section; and

# (3)

third, out of other earnings and profits, as described in paragraph (3) of subdivision
(a) of this section.

# (c)

If for any taxable year a DISC, or a former DISC, incurs a deficit in earnings and profits, such deficit shall be charged in the following order:

# (1)

first, to other earnings and profits, as described in paragraph (3) of subdivision (a) of this section;

# (2)

second, to accumulated DISC income, as described in paragraph (1) of subdivision (a) of this section; and

# (3)

third, to previously taxed income, as described in paragraph (2) of subdivision (a) of this section.
Section 2. Parts 16 through 23 of Subchapter B of Chapter I of Title 20 of the Rules and Regulations of the State of New York are repealed.
Section 3. Parts 32 and 33 of Subchapter C of Chapter 1 of Title 20 of the Rules and Regulations of the State of New York are repealed and a new Part 32 is added to read as follows:

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

In this part (21 sections)

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