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Line instructions for Form CT-3-ATT

CT-3/4-I (2006) Page 25 of 29

Other subtractions

A qualified public utility is a taxpayer that:

— was subject to ratemaking supervision by the New York State

Line 37

Department of Public Service on December 31, 1999; and

Transition property — New York depreciation — In place of the federal

— was subject to tax under Tax Law, Article 9, section 186 for the tax year

depreciation deduction entered on line 33, enter the amount of depreciation

ending on December 31, 1999.

expense on transition property shown on your books and records for the tax

A qualified power producer is a taxpayer that:

year and determined in accordance with GAAP.

— was not subject to ratemaking supervision by the New York State

In the case of a financing arrangement where for federal purposes the

Department of Public Service on December 31, 1999; and

qualified public utility is treated as the owner of the transition property and

— was subject to tax under Tax Law, Article 9, section 186 for the tax year

allowed a depreciation deduction for federal income tax purposes but not

ending on December 31, 1999, because it was principally engaged in the

allowed a depreciation deduction for GAAP purposes, you should compute

business of supplying electricity.

the New York depreciation deduction in accordance with GAAP as if the

transition property was depreciated on your books and records.

A qualified pipeline is a taxpayer that:

— was subject to ratemaking supervision by the Federal Energy Regulatory

Line 38

Commission or the New York State Department of Public Service on

Transition property — New York loss — In place of the federal loss

December 31, 1999; and

entered on line 34, compute the New York loss on the sale or other

— was subject to tax under Tax Law, Article 9, sections 183 and 184 for

disposition of transition property by using book basis instead of federal tax

the tax year ending on December 31, 1999, because it was principally

basis.

engaged in the business of pipeline transmission.

Line 39

A public utility, power producer, or pipeline corporation that does not meet

Transition property — federal gain — Enter the amount of gain included

the above definitions is not required to make the 208.9(c-2) and (c-3)

on your federal return from the sale or other disposition of transition

adjustments.

property. See line 35 instructions to recalculate the gain for New York.

Transition property is property placed in service by a qualified public utility,

Lines 40 and 41

qualified power producer, or qualified pipeline before January 1, 2000, for

which a depreciation deduction is allowed under IRC section 167. Property

Transition property basis adjustment carryover — If transition property

is transition property only for the taxpayer that owns it on January 1, 2000,

is disposed of in a nonrecognition transaction (original disposition), such

and is not transition property in the hands of a subsequent transferee.

as a tax-free reorganization or a trade-in for replacement property, a basis

(However, see the instructions for Schedule D, lines 40 and 41, for a basis

adjustment on the transition property carries over to the transferee of the

adjustment that may inure from transition property.)

property, or to the replacement property, to reduce the gain or increase the

loss in a subsequent recognition transaction involving the property that was

Book basis of transition property is the cost of the property minus the

former transition property or the replacement property.

accumulated depreciation on the property determined on the taxpayer’s

books and records in accordance with GAAP.

Line 40

New York basis of transition property is the cost of the property minus the

Federal gain — If the former transition or replacement property is sold at

aggregate of the New York depreciation deductions allowed on the property

a gain for federal income tax purposes in a tax year ending before 2010 (or

under Tax Law Article 9-A. This aggregate is the sum of the amounts on

at any time thereafter if the property is a nuclear electric generating facility),

Schedule D, line 37, for tax years 2004, 2005, and 2006, and Schedule E,

the gain is reduced, but not below zero, by the New York basis differential.

line 63, for tax years 2000 through 2003.

The New York basis differential is the amount by which the New York

basis of the property exceeds its federal tax basis on the date of original

disposition. Enter here the New York basis differential of property that was

Schedule D, Part 1

— Adjustments for qualified

former transition property or the replacement property sold at a federal gain

public utilities and transferees

this year, but not more than the amount of differential necessary to bring the

federal gain to zero.

Complete this part if you are a qualified public utility. Use lines 33 through 43

Line 41

to compute the adjustments for ENI.

Federal loss — If the former transition or the replacement property is

Transferees: if you are not a qualified public utility but you are a transferee of

sold at a loss for federal income tax purposes, the loss is increased by

transition property from a qualified public utility, use only lines 40, 41, and 43

the amount of the book basis differential. The book basis differential is the

to compute the adjustments for ENI.

amount by which the book basis of the property exceeds its federal income

tax basis on the date of original disposition. Enter here the book basis

Other additions

differential of the former transition property or the replacement property sold

Line 33

at a federal loss this year.

Transition property — federal depreciation — Enter the amount deducted

Line 42

on your federal return for depreciation of transition property. See line 37

Regulatory assets — Enter the amounts recognized as expense on your

instructions to compute the New York depreciation deduction. Transition

books and records for the tax year that were recognized as expense for

property is defined above.

federal income tax purposes in a tax year ending on or before December 31,

Line 34

1999, if: (a) such amounts represent expenditures that, when made, were

charged to a deferred debit account or similar asset account on your books

Transition property — federal loss — If transition property is sold or

and records; (b) the recognition of expense on your books and records is

otherwise disposed of at a loss for federal income tax purposes, you must

matched by revenue stemming from a procedure or adjustment allowing

recalculate the amount of the loss for New York using book basis in place of

the recovery of such expenditures; and (c) such revenue is recognized for

federal tax basis for the property. Enter here the amount of loss deducted

federal income tax purposes in the tax year.

on your federal return and see line 38 instructions to recalculate the loss for

New York.

Schedule D, Part 2

— Adjustments for

Line 35

qualified power producers and qualified pipeline

Transition property — New York gain — If transition property is sold or

otherwise disposed of at a gain for federal income tax purposes in a tax year

corporations

ending before 2010 (or at any time thereafter if the property is a nuclear

electric generating facility), you must recalculate the amount of the gain for

Complete this part if you are a qualified power producer or a qualified

New York using New York basis in place of federal tax basis for the property.

pipeline corporation and you claim a depreciation deduction on transition

However, this recalculation can only reduce the federal gain to zero; it

property for federal income tax purposes. Use lines 44 and 45 to compute

cannot produce a New York loss. Enter here the New York gain on transition

the adjustments for ENI.

property calculated using New York basis. If recalculation of the federal gain

using New York basis yields a loss, the New York gain is zero. See line 39

instructions to subtract the federal gain.

Form Ct-3/4-I - Instructions For Forms Ct-4, Ct-3, And Ct-3-Att - General Business Corporation Franchise Tax Returns - 2006 Page 11

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