N.Y. Tax Law § 1504 — Allocation

§ 1504. Allocation. (a) Allocation of entire net income. The portion\nof entire net income of a taxpayer to be allocated within the state\nshall be the amount determined by multiplying such income by the income\nallocation percentage determined by:\n (1) ascertaining the percentage which the taxpayer's New York premiums\nfor the taxable year bear to the taxpayer's total premiums for the\ntaxable year, and multiplying such percentage by nine,\n (2) ascertaining the percentage which total wages, salaries, personal\nservice compensation and commissions for the taxable year of employees,\nagents and representatives of the taxpayer within New York bear to the\ntotal wages, salaries, personal service compensation and commissions for\nthe taxable year of all the taxpayer's employees, agents and\nrepresentatives, and\n (3) adding the amounts determined under paragraphs one and two and\ndividing the sum by ten.\n (b) Definition of premiums. (1) For purposes of paragraph one of\nsubdivision (a), the term "premium" includes all amounts received as\nconsideration for insurance contracts, reinsurance contracts and annuity\ncontracts and shall include premium deposits, assessments, policy fees,\nmembership fees and every other compensation for such contract. The term\n"total premiums" means total gross premiums or deposit premiums or\nassessments, less returns thereon, on all policies, annuity contracts,\ncertificates, renewals, policies subsequently cancelled, insurance and\nreinsurance executed, issued or delivered on property or risks,\nincluding premiums for reinsurance assumed, less dividends on such total\npremiums, including unused or unabsorbed portions of premium deposits\npaid or credited to policyholders but not including deferred dividends\npaid in cash to policyholders on maturing policies, nor cash surrender\nvalues, and less premiums on reinsurance ceded.\n (2) For purposes of paragraph one of subdivision (a), "New York\npremiums" shall be determined as follows:\n (A) For all premiums other than premiums described in subparagraph (B)\nor (C) of this paragraph, "New York premiums" means that portion of\ntotal premiums written, procured or received on property or risks\nlocated or resident in New York and shall also include premiums written,\nprocured or received in this state on business which cannot be\nspecifically assigned as located or resident in any other state or\nstates, other than premiums described in subdivision (b) of section\nfifteen hundred twelve. Provided however, in the case of special risk\npremiums, "New York premiums" shall include only those premiums written,\nprocured or received in this state on property or risks located or\nresident in this state.\n (B) For premiums on reinsurance, "New York premiums" shall be\ndetermined as provided in subparagraph (A) of this paragraph except that\nwhere the location or residence of the property or risk covered by the\nreinsurance cannot be ascertained, "New York premiums" shall mean the\nportion of premiums for reinsurance determined by multiplying the amount\nof premiums from reinsurance ceded by each company to the taxpayer by\nthe percentage determined under paragraph one of subdivision (a) of this\nsection for each such ceding company for the preceding taxable year.\n (C) For premiums from marine insurance, "New York premiums" means (i)\nthat portion of premiums from such marine insurance as are written,\nprocured or received on property or risks located or resident in this\nstate and, (ii) to the extent not otherwise includible in "New York\npremiums" under clause (i) hereof, the premiums for such marine\ninsurance written within this state on property or risks which cannot be\nspecifically assigned as located or resident in any other state or\ncountry, provided however, in the case of special risk premiums, "New\nYork premiums" shall include only those premiums written, procured or\nreceived in this state on property or risks located or resident in this\nstate. For purposes of this subparagraph, marine insurance means\ninsurance written, procured or received upon hulls, freights or\ndisbursements, or upon goods, wares, merchandise and all other personal\nproperty and interests therein, in the course of exportation from,\nimportation into any country, or transportation coastwise, including\ntransportation by land or water from point of origin to final\ndestination in respect to, appertaining to, or in connection with, any\nand all risks or perils of navigation, transit or transportation, and\nwhile being prepared for, and while awaiting shipment, and during any\ndelays, storage, transshipment or reshipment incident thereto, including\nwar risks and marine builder's risks.\n (3) For the purpose of paragraph one of subdivision (a), "total\npremiums" shall not include special risk premiums unless the special\nrisk premium was written, procured or received in this state on property\nor risks located or resident in this state. "Total premiums" shall be\nreported on a written basis or on a paid-for basis, consistent with the\nbasis required by the annual statement filed with the superintendent of\nfinancial services pursuant to section three hundred seven of the\ninsurance law.\n (c) Allocation of capital. (1) Business capital and investment\ncapital. The portion of the taxpayer's business and investment capital\nof a taxpayer to be allocated within the state shall be determined by\nmultiplying the amount thereof by the allocation percentage determined\nas provided in subdivision (a) of this section.\n (2) Subsidiary capital. The portion of the taxpayer's subsidiary\ncapital to be allocated within the state shall be determined by\nmultiplying the amount of subsidiary capital invested in each subsidiary\nduring the period covered by its return (or, in the case of any such\ncapital so invested during only a portion of such period, such portion\nof such capital) by the percentage, if any, of the entire capital, or\nthe issued capital stock, or the net income, as the case may be, of such\nsubsidiary required to be allocated within the state on the return or\nreturns, if any, required of such subsidiary under this chapter for the\npreceding year, and adding the sums so obtained.\n (d) If it shall appear to the tax commission that the income\nallocation percentage determined as hereinabove provided does not\nproperly reflect the activity, business or income of a taxpayer within\nthe state, the tax commission shall be authorized, in its discretion, to\nadjust it by:\n (1) excluding one or more factors therein;\n (2) including one or more other factors therein, such as expenses,\npurchases, receipts other than premiums, real property or tangible\npersonal property;\n (3) or any other similar or different method calculated to effect a\nfair and proper allocation of the income and capital reasonably\nattributable to the state. The tax commission from time to time shall\npublish all rulings of general public interest with respect to any\napplication of the provisions of this subdivision.\n