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New York State Department of Taxation and Finance

CT-244-I

Instructions for Form CT-244

(8/99)

Acquisition, Merger and Consolidation Information Report

General information

the largest proportion of the total voting power in the surviving

corporation, and the target corporations are all other constituent

Tax Law Articles 9-A and 22 limit tax benefits associated with certain

corporations that have been absorbed by the acquiring corporation. For

business restructuring. Form CT-244 must be filed by both the target

purposes of this definition, a corporate merger does not include an

and acquirer in the year of acquisition, merger or consolidation. In

excluded transaction.

addition, the acquiring corporation may be required to file Form CT-244

after the year of acquisition, merger or consolidation. See the

A corporate consolidation is a procedure through which two or more

instructions for lines 17 through 28 and lines 31 through 36. For

corporations become a single corporation that is a new corporation. In a

additional information, see TSB-M-89(17)C. For help, call our Business

corporate consolidation, acquiring person means the constituent

Tax Information Center at 1 800 972-1233.

corporation whose stockholders, after the consolidation, own the largest

proportion of the total voting power in the new corporation, and target

Unless the restructuring transaction is specifically excluded, the

corporation means all other constituent corporations. For purposes of

following tax consequences result:

this definition, a corporate consolidation does not include an excluded

— in any acquisition, merger or consolidation, the tax benefits of the

transaction.

target corporation’s unused investment tax credit, unused

employment incentive credit, and unused research and

Line instructions

development tax credit are lost;

Part I — General information

— in a highly leveraged transaction, up to 5% of the total interest

expense of the acquiring corporation or affiliated group, may be

This section identifies the parties to an acquisition, merger or

required as an add-back in the computation of New York taxable

consolidation and determines whether tax consequences result for

income. In addition, the target must recapture a portion of the

participants in the transaction.

investment tax credit and research and development credit taken by

Lines 4, 5, and 6 — Excluded transactions - If you answered Yes at

it in tax years prior to the acquisition year. Also, the acquiring

line 4, 5, or 6, do not complete the rest of this form. If you answered

corporation loses the benefit of the target corporation’s unused net

No at lines 4, 5 and 6, complete Parts II and III.

operating loss available to be carried forward, and;

Part II — Target corporation’s tax credit history

— in any acquisition, whether or not highly leveraged, if a sufficient

portion of the target’s stock and/or assets is sold or otherwise

Lines 7 through 9 — This section is to be completed by the target

disposed of within 18 months following the acquisition date,

(or the acquirer on behalf of the target). Any acquisition, merger or

subsidiary capital treatment of the target by the acquirer is denied.

consolidation results in the loss of any unused investment tax credit,

An excluded transaction is:

unused employment incentive credit, and unused research and

— an acquisition which occurs solely by reason of a redemption of

development credit of the target corporation.

stock under section 303 of the Internal Revenue Code (IRC); or

Part III — Acquirer information

— an acquisition where a corporation and the corporation acquiring it

are members of a previously existing affiliated group as defined in

In any case in which the acquiring person, but not the target, is a

section 1504 of the IRC, except that the term common parent

member of an affiliated group, the group as a whole is treated as the

corporation is deemed to mean any person, as defined in

acquiring person.

section 7701(a)(1) of the IRC, and except that references to at least

An affiliated group is a group as defined in section 1504 of the IRC

eighty percent should be read as more than fifty percent; or

except that:

— an acquisition by a person, as defined in section 7701(a)(1) of the

— references to at least eighty percent should be read as more than

IRC, that is controlled by a majority of the employees of the target

fifty percent .

corporation or that is a trust for the exclusive benefit of those

employees or their beneficiaries. Control, in this context, refers to

— section 1504 should be read without regard to the exclusion of

(1) ownership of more than 50% of the total voting power in a

foreign corporations provided for in section 1504(b)(3) (provided

corporation, or (2) total employees’ interest (within the meaning of

that the debt, equity and assets of these foreign corporations are

section 704(b) of the IRC) of more than 50% of a partnership; or

included only to the extent that they are effectively connected with

the conduct of a trade or business within the United States).

— a merger or consolidation in which all the constituent corporations

are members of an affiliated group as defined in section 1504 of the

— section 1504 should be read without regard to the exclusion

IRC, except that the term common parent corporation is any

provided for in section 1504(b)(4).

person, as defined in section 7701(a)(1) of the IRC, and except that

Line 12 — Base your answer on the target’s total capital, before

references to at least eighty percent in section 1504 should be read

allocation, as shown on its New York State tax return for the acquisition

as more than fifty percent .

year. Use a quarterly or more frequent average, and exclude ending

values; i.e., the last quarter value is “0.”

Department of State notification

Note: If you answered N o on lines 10 and either 11 or 12, complete

The Business Corporation Law requires that the Department of State

Part V only. If you answered Yes on lines 10 and either 11 or 12, you

be notified of all mergers or consolidations. The Department of State

must complete Parts IV, V and VI.

will notify the Tax Department of all completed mergers or

consolidations. Please refer to Publication 110, Information and

Part IV — Ratio computation

Instructions for Termination of Business Corporation , for specific

information and instructions.

Complete Part IV to determine if the transaction is a highly leveraged

transaction.

Definition of terms

Compute the combined acquirer and target corporations’ debt-to-equity

A corporate acquisition is the purchase and/or other acquisition

ratio and the debt-to-assets ratio for both the prior and current years,

(including redemption) on an acquisition date, by a person (the

and compute the percent of change between the current and prior year

acquiring person) , as the term person is defined in section 7701(a)(1) of

ratios.

the IRC, of stock of a corporation (the target corporation ), so that

immediately prior to the acquisition the person owned 50% or less, and

The debt-to-equity ratio and the debt-to-asset ratio of an affiliated group

immediately thereafter owned more than 50% of the total voting power

are determined for the entire group. The prior year’s ratio should

in the target corporation. For purposes of this definition, a corporate

include the target as well.

acquisition does not include an excluded transaction.

In a highly leveraged corporate acquisition the taxpayer is the target

A corporate merger is a procedure through which two or more

corporation and;

constituent corporations become a single corporation that is one of the

constituent corporations. In a corporate merger, the acquiring person is

the constituent corporation whose stockholders, after the merger, own

Instructions For Form Ct-244 - Acquisition, Merger And Consolidation Information Report

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