Instructions For Form Nyc-204 -Partnership Return

Instructions for Form NYC-204 - 2010

Page 11

Discretionary use of other methods. The Com-

posit as either business or investment capital. If

business income using the formula method. How-

missioner of Finance in his or her discretion

you wish to elect to treat cash as investment cap-

ever, taxpayers who used the books and records

may permit or require the taxpayer to use an-

ital, you must include it on this line. Otherwise,

method for the two immediately preceding tax

other method to allocate its directly owned in-

you will be deemed to have elected to treat cash

years, which must have consisted of 12 months

vestment income and its distributive share of

as business capital. You may not elect to treat part

each, may make a one time election to continue

investment income of another partnership if the

of such cash as business capital and part as in-

using the books and records allocation method for

Commissioner determines that the above meth-

vestment capital. You may not revoke your elec-

each tax year beginning on and after January 1,

ods do not result in a fair and equitable alloca-

tion after it has been made.

2005 and before January 1, 2012. Taxpayers must

tion to the City of the taxpayer's income. If a

make this election on a timely filed original return

COMPOSITION OF PREPAYMENTS

partner is permitted or required to use a discre-

for the first tax year beginning in 2005. To make

SCHEDULE

tionary method, detailed schedules and expla-

this election, check the box on page 1 of this re-

Enter the payment date and the amount of all

nations should be attached.

turn. NOTE: the election cannot be made or, if

prepayments made for this tax period.

made, will be deemed to have been revoked if the

Investment capital is the average value of your

Department of Finance determines that the use of

investments in stocks, bonds, and other corpo-

SCHEDULE E

books and records did not fairly reflect the tax-

rate or government securities, less liabilities,

payer’s income from the City for either of the two

Business Allocation

both long term and short term, directly or indi-

preceding tax years. Similarly, the election will be

An allocation of business income is permitted

rectly attributable to investment capital. In-

deemed revoked as of the beginning of the tax year,

for purposes of the Unincorporated Business

vestment capital does not include governmental

if the Department of Finance determines that the

Tax if the partnership carries on business both

stocks, bonds and other securities, the interest

use of books and records does not fairly reflect the

inside and outside New York City.

and dividends from which are totally exempt

taxpayer’s income from the City for that year. A

from the UBT except such instruments that are

Allocation for Partners in Other Partnerships.

taxpayer may revoke the election for any tax year

disposed of during the taxable year, producing

If an unincorporated entity (the "partner") is a

by filing a return using another permitted alloca-

partner in another unincorporated entity (the

taxable gain or loss. Investment capital does

tion method. However, the revocation will not be

not include those stocks, bonds or other securi-

"partnership"), carrying on an unincorporated

effective if the Department determines that the

ties that are held for sale to customers in the

business wholly or partly in New York City and

other method does not fairly reflect the taxpayer’s

regular course of business. Investment capital

either the partner or the partnership allocates a

income from the City. Further, in the case of a part-

does not include interests in, or obligations of,

portion of its unincorporated business entire

nership or other unincorporated entity, the election

net income outside New York City, the partner

partnerships or other unincorporated entities.

will be deemed revoked as of the beginning of the

must allocate its distributive share of the part-

taxable year unless one or more of the persons hav-

To determine the value of your assets for in-

nership's business income, if any, as provided

ing a proportionate interest or interests of more than

vestment allocation purposes, you must include

below. The partner should not report its dis-

50 percent of the total amount of such interests in

marketable securities at fair market value.

tributive share of that partnership's business in-

the taxpayer’s unincorporated business gross in-

come or any of that partnership's allocation

come and unincorporated business deductions dur-

The fair market value of any asset is the price

factors on Schedule E.

ing that taxable year are also persons having more

(without any encumbrance, whether or not the

than 50 percent of such total proportionate inter-

taxpayer is liable) at which a willing seller, not

Unless a partner is permitted or required by the

ests in the taxpayer’s last taxable year beginning

compelled to sell, will sell and a willing pur-

Commissioner to use an alternative method, the

before January 1, 2005. For purposes of this rule,

chaser, not compelled to buy, will buy. The

partner must allocate to the City the same per-

a transfer of the above interests of a deceased part-

fair market value, on any date, of stocks, bonds

centage of its distributive share of each item of a

ner to the estate of that partner is disregarded, but

and other securities regularly dealt in on an ex-

particular partnership's business income, gain, loss

any transfer on the part of the deceased partner’s

change or in the over-the-counter market is the

and deduction as the partnership allocated to the

estate is not disregarded. Once the election has

mean between the highest and lowest selling

City for purposes of determining its own business

been revoked or is deemed revoked, the taxpayer

prices on that date.

income allocated to the City for the partnership's

may not use the books and records allocation

taxable year ending with or within the partner's

The value of all other property must be in-

method for any subsequent year. See section 11-

taxable year (whether determined on the basis of

cluded at the value shown on the taxpayer’s

508(b)(2) of the NYC Administrative Code.

the partnership's books and records or using for-

books and records in accordance with gener-

mula allocation.) The partner must report those

Eligible taxpayers who have made the election

ally accepted accounting principles (GAAP).

amounts on lines 15 and 24 of Schedule B and line

to allocate using the books and records method

3b of Schedule A. See instructions for those lines.

must check the box on page 1 and complete

ISSUER’S ALLOCATION PERCENTAGE

See §28-07(j)(2)(i)(A) of Title 19 the Rules of the

Schedule E, parts 1 and 2 and attach a detailed

To determine the portion of investment capital

City of New York.

schedule showing the source of each item of in-

to be allocated within the City, multiply the

come and expense as being attributable to in-

value of each stock or security during the period

Discretionary use of other methods. The Com-

side and outside the City.

covered by the return (column E) by the issuer’s

missioner of Finance in his or her discretion may

allocation percentage for that stock or security.

permit or require a taxpayer partner to use another

ALLOCATION BY FORMULA

method to allocate its own business income and

This percentage may be obtained from (1) tax

Unless you are electing to use the books and

its distributive share of the business income, gain,

service publications, (2) by writing to: NYC De-

records method, income from business carried

loss and deduction of another partnership if the

partment of Finance, Customer Assistance -

on both inside and outside New York City must

Commissioner determines that the methods pro-

Correspondence Unit, 59 Maiden Lane, 14th

be determined in accordance with the statutory

vided do not result in a fair and equitable alloca-

Floor, New York, NY 10038 , or (3) by calling

formula or an alternative method approved by

tion to the City of the taxpayer partner's income.

311. If calling from outside of the five NYC

the Department of Finance. Schedules E, Parts

If a partner is permitted or required to use a dis-

boroughs, please call 212-NEW-YORK (212-

1, 2 and 3 must be completed for this purpose in

cretionary method, detailed schedules and expla-

639-9675). If the issuer was not doing business

accordance with the specific instructions below.

nations should be attached.

in New York City during the preceding year, the

A partnership that derives more than 10% of its

percentage is “0”.

ALLOCATION BY SEPARATE

gross receipts for the taxable year from pub-

BOOKS AND RECORDS

lishing newspapers or periodicals or radio or

SCHEDULE D, LINE 3 - CASH

For tax years beginning on or after January 1, 2005,

television broadcasting must allocate all its in-

If you have both business and investment capi-

except as provided below, taxpayers must allocate

come using the statutory formula unless the

tal, you may elect to treat cash on hand or on de-

Instructions For Form Nyc-204 -Partnership Return - 2010 Page 12

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