Discussion:NY Investment tax credit

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Discussion Forum Index --> Basic Tax Questions --> NY Investment tax credit

Discussion Forum Index --> Tax Questions --> NY Investment tax credit

Kbairtax (talk|edits) said:

30 March 2010
Okay NY-er's. Investment tax credit. Would a screenprinting/embroidery shop qualify as being able to take the investment tax credit for equip purchased....ie: the embroidery machines and screenprinting equipment??? Seems like it fits the definition of it

For this purpose, manufacturing means the process of working raw materials into wares suitable for use or of giving new shapes, new quality, or new combinations to matter which has already gone through some artificial process by the use of machinery, tools, appliances, and other similar equipment.

Also, since there is a qualifier for lessee's.....

If you are a lessee and in fact the beneficial owner of qualifying property, you may be able to claim the investment credit (Tax Law section 606(a)(4)).

My client is leasing the equipment and her buyout at the end is $1. She is definitely the beneficial owner, so not sure what the "may be able to" qualifier is leaning towards. I cannot find 606(a)(4) definition.


UpstateCPA (talk|edits) said:

30 March 2010
See NY regs (NYCRR) 5-2.2

Dennis (talk|edits) said:

30 March 2010
§ 210.12(b) provides for a credit against tax, the investment tax credit, with respect to certain tangible personal property and other tangible property, including buildings and structural components of buildings. To qualify for the credit, the property must:
       (1)  be depreciable under section 167 of the Internal Revenue Code or be recovery property with respect to which a deduction is allowable under section 168 of the Internal Revenue Code;

(2) have a useful life of four or more years;

(3) be acquired by the taxpayer by purchase as defined in section 179 of the Internal Revenue Code; and,

(4) as relevant here, be used principally by the taxpayer in producing goods by manufacturing, processing, assembling or refining (Tax Law § 210.12[b]; 20 NYCRR 5-2.2).


Kbairtax (talk|edits) said:

31 March 2010
Upstate and Dennis...I never have any luck finding the actual code #'s in that site. What is the secret??? Isn't everything under title 20?? So what does the reference to 210.12(b) and 5-2.2 actually correlate to??

Sorry if I sound like an idiot. I have never had to look anything in NY up past the pubs.

KatieJ (talk|edits) said:

31 March 2010
Kbair, I certainly agree with you that the law on the NY Leginfo site is virtually unintelligible because the formatting is so bad. The version that is available through Findlaw.com is only slightly better; at least it's in a more readable typeface.

The reference to 210.12(b) is to Section 210 of Article 9-A of the New York Tax Law, subsection 12(b). So you would go to "TAX" on the alphabetical list of the "Laws of New York," then to Article 9-A, which is the corporation franchise tax law, and then to Section 210. Then scroll down forever and ever looking for the subsection numbers, which are in the format "1.", "2.", etc. Hard to find because subsections and sub-subsections and sub-sub-subsections are all indented the same number of spaces.

Dennis assumed that your client is a corporation. The similar credit under the Personal Income Tax law, which is Article 22, is in Section 606(a)(4), which is the reference you quoted above. The Leginfo site is no help with that; you can click on "TAX" on the first screen, then on Article 22, and then -- you get a list of the code sections, but no link to the actual text.

Try Findlaw; at least the whole text is there. Here's a shortcut to the NY Code: http://codes.lp.findlaw.com/nycode . Go to "TAX," then to Article 22, then to Part 1 - General. Under that you will find Sec. 606, where the qualifications Dennis quoted above under the Article 9-A tax are repeated for the Article 22 tax. I haven't read all the details but I presume they are the same or similar. The search function in Findlaw seems to work better than the one in Leginfo, also. You may have to set up an account as a legal professional in Findlaw to get access to all this stuff, but it's free.

NYCRR is the regulations; it stands for New York Codes, Rules and Regulations. You can access the regs through the NY Department of Revenue's web site. You can start here: http://www.dos.state.ny.us/info/nycrr.html It will link you (on the left-hand side of the screen) to a free Westlaw site with the unofficial text of the regs. Then you can click on Title 20, Dept. of Taxation and Finance; then Chapter 1: Franchise and Certain Business Taxes; then Subchapter A, Business Corporation Franchise Tax; then Part 5, Credits against Tax; then Subpart 5.2, Investment Tax Credit. That will get you a link to 5-2.2, which is actually formatted so as to be readable.

For the personal income tax equivalent regulation, you would go to Chapter II, Income Taxes and Estate Taxes; then Subchapter A, then Article 1, then Part 106, to get to 20 NYCRR Sec. 106.1.

They don't make it easy, but if you had, for example, a copy of the CCH Guidebook to New York Taxes (http://tax.cchgroup.com/Store/Products/Product+Detail.htm?cs_id=CCE-CCH-7010%28CCE%29&cs_catalog=TADS, though I'm certainly not soliciting for CCH!), you'd find citations to the statutes and regulations, and you could then access the text on Findlaw or Leginfo once you are familiar with the structures. Of course CCH and others also publish hard copies of the statutes and regulations, which are probably updated about as often as the web sites.

Now to put on my crabby old lady teacher persona: You cannot, repeat cannot, rely on editorial material or publications put out by federal or state tax agencies for interpretation of tax laws. They are not authority for anything; they are only some editor's or some administrator's idea of what the law means. Tax authorities are statutes, regulations, official rulings (not publications or form instructions, but formal rulings), and case law. Everything else is information: useful, but not authoritative. True professionals read, understand, and cite the real authorities.

Kbairtax (talk|edits) said:

31 March 2010
KatieJ...THANK YOU THANK YOU THANK YOU THANK YOU!! You took time during this super-busy part of tax season to give me so much info. I cannot thank you enough. I have printed your post and now have it in a safe place on my desk.

I know that I cannot rely on pubs....I guess I should have framed that differently... I did not think you were being crabby and I appreciate you making sure I understand my responsibilities to clients.

Again, I cannot thank you enough.

UpstateCPA (talk|edits) said:

31 March 2010
Excellent dissertation, I didn't have time to provide that much detail but glad to see it got explained. I thought I would add that another resource I find useful for researching NY taxes are the Technical Service Bureau Memoranda (TSB-M's) which you can search from this site: http://www.nystax.gov/pubs_and_bulls/understanding.htm (We have a subscription to CCH intelliconnect, which I use extensively, but I find it useful for state tax research to search the state websites also.) There is also a significant amount of NY case law and advisory opinions regarding the investment tax credit.

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