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General information

CT-3/4-I (2006) Page 5 of 29

Do not mark an X in the Final return box if you are only changing the type

Overview of corporation franchise tax

of return that you file (for example, from Form CT-3 to CT-3-S, or from

Form CT-3 to CT-32).

Tax bases

Do not mark an X in the Final return box in the case of a merger or

Corporations subject to tax under Tax Law Article 9-A must compute four

consolidation.

distinct taxes and pay the tax that results in the largest amount owed. The

four taxes include a tax on ENI, a tax on business and investment capital, a

Note: A foreign corporation, authorized to do business in New York State

tax on MTI, and a fixed dollar minimum tax. In addition, if a corporation has

but disclaiming tax liability, that wishes to continue to be authorized must file

any subsidiaries, it must pay a tax on its subsidiary capital. If you have any

Form CT-245.

subsidiaries, you cannot file Form CT-4, but instead must file Form CT-3 or

Call 1 800 327-9688 (Dissolution Unit) if you have questions concerning

CT-3-A. For more information, see Which form to file on page 2.

dissolution or surrendering authority to do business in New York State.

Fixed dollar minimum tax

New York S corporation termination year

The fixed dollar minimum tax is determined by the corporation’s gross

When a New York S corporation terminates its federal or New York

payroll, total receipts, and average value of gross assets.

S election on a day other than the first day of a tax year, the tax year is

To avoid an erroneous assessment or a delay in your refund, you must enter

divided into two tax periods (an S short year and a C short year). The

an amount on Form CT-3, lines 74a, 74b, and 74c, or Form CT-4, lines 31,

corporation must file Form CT-3-S for the New York S short year and

32, and 33. If you do not have assets, payroll, or receipts, enter 0 on the

Form CT-3 or CT-4 for the New York C short year.

appropriate lines. Failure to make an entry on each line may result in an

When an IRC section 338(h)(10) election is made for a target corporation

assessment of tax or reduction of your refund or credit.

that is a New York S corporation, the target corporation must file two

short-period (less than 12 months) reports. The gain/loss on the deemed

A domestic corporation that is no longer doing business, employing capital,

asset sale is not included on the old target’s report for the first short period.

or owning or leasing property in New York State is exempt from the fixed

When filing the second short-period report, the federal taxable income (FTI)

dollar minimum tax for years following its final tax year and is no longer

of the new target is the starting point for computing ENI.

required to file a franchise tax return provided it meets the requirements

listed in TSB-M-06(5)C.

The total tax for the S short year and the C short year may not be less

than the fixed dollar minimum tax determined as if the corporation

Short periods — fixed dollar minimum tax and

were a C corporation for the entire tax year. For more information,

maintenance fee

see Form CT-3-S-I, Instructions for Forms CT-3-S and CT-3-S-ATT,

and TSB-M-90(11)C, 1990 Legislation — Franchise Tax on New York

Compute the gross payroll and total receipts for short periods (tax periods

S Corporations.

of less than 12 months) by dividing the amount of each by the number of

months in the short period and multiplying the result by 12.

The due date of the New York S corporation short year return (Form CT-3-S)

is the same as the New York C corporation short year, even though they are

The fixed dollar minimum tax and maintenance fee may be reduced for short

treated as separate short tax years.

periods:

Period

Reduction

Reporting period

Not more than six months .................................................................... 50%

More than six months but not more than nine months ........................ 25%

All filers must complete the beginning and ending tax period boxes in the

More than nine months ........................................................................ None

upper right corner on the front of the form.

If you are an authorized foreign corporation, you are subject to the

Your tax year for New York State must be the same as your federal tax year.

maintenance fee for the entire period in which you are authorized, whether

Use this return for both calendar and fiscal years beginning in 2006, and for

or not you are doing business in New York State (see Foreign corporations

short periods beginning in 2007 and ending before December 31, 2007.

authorized to do business but disclaiming tax liability on page 2).

Tax rates schedule

Tax base

Tax rates

Table 1 — ENI base for general business taxpayers

.075

Table 2 — ENI base for qualified small business taxpayers

ENI base of $290,000 or less:

.065

ENI base of more than $290,000 but not more than $390,000:

• $18,850

• plus 7.5% of the amount over $290,000

• plus 7.25% of the amount over $350,000

Table 3 — Capital base

.00178

Table 4 — Qualified cooperative housing corporation capital base*

.0004

Table 5 — MTI base

.025

Table 6 — Fixed dollar minimum tax

For a corporation with a gross payroll of:

$6,250,000 or more:

$1,500

More than $1,000,000 but less than $6,250,000:

$ 425

More than $500,000 but not more than $1,000,000:

$ 325

More than $250,000 but not more than $500,000:

$ 225**

$250,000 or less:

$ 100**

However, if the corporation’s gross payroll, total receipts, and

average value of gross assets are each $1,000 or less:

$ 800

Table 7 — Subsidiary capital base

.0009

*See Cooperative housing corporations on page 6.

Foreign authorized corporations: If the total of your tax (including tax imposed under Article 9) and MTA surcharge is

less than $300, you must increase your payment accordingly to satisfy the $300 maintenance fee requirement.

Form Ct-3/4-I - Instructions For Forms Ct-4, Ct-3, And Ct-3-Att - General Business Corporation Franchise Tax Returns - 2006 Page 5

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