Instructions For Form It-252 - Investment Tax Credit For The Financial Services Industry - New York State Department Of Taxation And Finance - 2002
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4New York State Department of Taxation and Finance
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IT-252-
Instructions for Form IT-252
Investment Tax Credit for the Financial Services Industry
commodities (IRC section 475(e)(2)), or in providing lending, loan
New for 2002
arrangement, or loan origination services to customers in
Investment tax credit relief for property destroyed as a direct result of
connection with the purchase or sale of securities
the terrorist attack of September 11, 2001 — The Tax Law has been
(IRC section 475(c)(2)); or
amended to provide taxpayers with an election by which they choose either
– of providing investment advisory services for a regulated
to defer the required recapture for all qualifying property destroyed as a
investment company (IRC section 851).
direct result of the terrorist attacks of September 11, 2001, or not to make
the basis reduction required by the Internal Revenue Code (IRC) for
Though the property must be located in New York State, it is not necessary
property that replaces the destroyed property. The election is made when
for the users of the property to be located in New York State. For example,
the return for the recapture event tax year (the year in which the destruction
a computer system that is placed in service in New York State would qualify
or cessation of qualified use occurred) is filed, by including or not including
for the credit even if the brokers accessing the system are located outside
the recapture on that return. For more information, see TSB-M-02(7)I.
the state.
If you chose to defer the amount to be recaptured on last year’s return, see
Generally, property that a taxpayer purchases and leases to others does
Early disposition of property and addback of credit on early dispositions as
not qualify for the investment tax credit. However, if such property is leased
a direct result of the terrorist attacks of September 11, 2001, on page 2.
to an affiliated broker or dealer that is an affiliate of the taxpayer that
principally uses the property in the qualifying activities listed above, the
If you chose not to defer the amount to be recaptured on last year’s return
property qualifies for the credit, provided it otherwise meets the criteria for
and are now claiming the investment tax credit for any replacement
qualified property. Any contract or agreement to lease or rent, or for a
property, see Investment credit base for replacement property that is similar
license to use the property, is considered a lease. In addition, property
or related in service or use to property destroyed as a direct result of the
qualifies if it meets the criteria and is purchased by the taxpayer but is
terrorist attacks of September 11, 2001, on page 2.
principally used by a broker or dealer that is an affiliate of the taxpayer in
the qualifying activities listed above.
General instructions
Individuals and estates and trusts may claim the investment tax credit for
Definitions
the financial services industry against the tax imposed under Article 22 for
the tax year during which qualified property is placed in service. The
Affiliate means:
property must be placed in service on or after October 1, 1998, and before
1) a partnership 80% or more of whose interest in the partnership’s capital
October 1, 2008.
or profits is owned or controlled, directly or indirectly, by the taxpayer;
In order to claim the credit, all or a substantial portion of the employees
2) a corporation 80% or more of whose voting stock is owned or controlled,
performing the administrative and support functions resulting from or
directly or indirectly, by the taxpayer;
related to the qualifying uses of such property must be located in New York
3) a corporation who owns or controls, directly or indirectly, 80% or more of
State (see Part I).
the voting stock of the taxpayer; and
Who must file
4) a corporation 80% or more of whose voting stock is owned or controlled,
directly or indirectly, by the entity that owns or controls, directly or
File Form IT-252 if you are an individual, a beneficiary or fiduciary of an
indirectly, 80% or more of the voting stock of the taxpayer.
estate or trust, a member of a partnership, or a shareholder of an
S corporation, and:
Cost is the basis of property as defined in IRC section 1012.
–
You are claiming the investment credit (including the employment
Life or useful life (of property) means the depreciable life as provided by
incentive credit); or
section 167 or 168 of the IRC.
–
You had an early disposition of property for which the investment tax
credit was allowed in a prior year.
Nonqualified nonrecourse financing is any amount for which a taxpayer is
protected against loss, and generally, any amount borrowed from a person
An estate or trust that divides among itself and its beneficiaries the credit or
who has an interest (other than as a creditor) in the activity in which the
addback of credit on early dispositions must attach Form IT-252 to
property is used, or from someone related to a person (other than a
Form IT-205, showing each beneficiary’s share of the credit or addback of
creditor) who has an interest in the activity. Nonrecourse financing is
credit on early dispositions.
nonqualified if it is not qualified commercial financing as defined in
A partnership must file Form IT-252 with Form IT-204 showing the
section 49(a)(1) of the IRC.
partnership’s total investment in qualified property or total early dispositions
of qualified property.
Other basis means the adjusted basis for determining gain or loss used as
the basis for depreciation under IRC section 167(g).
An S corporation does not file Form IT-252. It must file Form CT-44. If you
are a shareholder in an S corporation that has made the election under
Principally used means more than 50%. A building or an addition to a
section 660 of the Tax Law, obtain your share of the corporation’s credit or
building is principally used in qualifying activities if more than 50% of its
addback of credit on early dispositions of qualified property from the
usable business floor space is used in qualifying activities. Floor space
corporation.
used for bathrooms, cafeterias, and lounges is not usable business floor
space. Equipment is principally used in qualifying activities when it is used
Qualified property
in such activities more than 50% of its operating time. Operating time may
Qualified property for the investment tax credit is tangible property,
be determined based on actual time, cost allocations to individual business
including buildings and structural components of buildings, that:
units, or any other reasonable method that accurately reflects operating
(a) was acquired, constructed, reconstructed, or erected by the taxpayer
time.
on or after October 1,1998, and before October 1, 2008;
Purchase or sale of stocks, bonds, or other securities or commodities
(b) is depreciable pursuant to section 167 of the IRC;
includes, but is not limited to, the issuance, entering into, assumption,
(c) has a useful life of four years or more;
offset, assignment, termination, or transfer of stocks, bonds, commodities,
or other securities.
(d) was acquired by the taxpayer by purchase according to section 179(d)
of the IRC;
(e) is located in New York State; and
When allowed
(f) is principally used in the ordinary course of the taxpayer’s business in
The credit is allowed only for the tax year in which qualified property is
one of the following capacities:
placed in service. However, if all of the credit cannot be used in the year the
property is placed in service, you may carry over the unused amount to the
– as a broker or dealer in connection with the purchase or sale of
following ten years (see Carryover of unused investment credit on page 2).
stocks, bonds, other securities (IRC section 475(c)(2)), or of
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