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Page 22 of 29 CT-3/4-I (2006)

Line instructions for Form CT-3-ATT

because it qualifies as investment capital. Compute its average value,

Column E — Determine the net average value of each item listed in

stated in column C of Section 1, as ($95,000 + $90,000 + 0 + 0) ÷ 4

column A by subtracting column D from column C. The net average value of

= $46,250. The use of the zeros represents the fact that the taxpayer

any item cannot be less than zero.

is deemed to own cash, and not a bond, on September 30 and

Column F — Enter the issuer’s allocation percentage for each investment

December 31. Compute the average value of the bond insofar as it is

listed in column A. The issuer’s allocation percentage used to compute

deemed to be cash as (0 + 0 + $98,000 + $100,000) ÷ 4 = $49,500. The

investment capital allocated to New York State is the percentage determined

use of the zeros represents the fact that the taxpayer owned no cash

on the New York State tax return filed by the issuing corporation for the

on March 31 or June 30. The figures $98,000 and $100,000 represent

preceding year. The issuer’s allocation percentage on government bonds

the fact that the taxpayer is deemed to own cash in those amounts

listed in Part 1 is 0%.

on September 30 and December 31, respectively. The taxpayer had

liabilities attributable to the bond. Treat the amount of the liabilities in

Issuer’s allocation percentages are available on the Tax Department’s Web

conformity with the above treatment of the value of the bond itself. Thus,

site and from many online and printed tax services. You may also obtain up

the liabilities, which were $10,000, $12,000, $8,000, and $6,000 on the

to three issuer’s allocation percentages by calling toll free (see Need help?

four test dates, yield an average liability of $5,500 attributable to the

on page 29).

listed bond ($10,000 + $12,000 + 0 + 0) ÷ 4 = $5,500, to be entered in

column D of Section 1, and an average liability of $3,500 (0 + 0 + $8,000

Column G — Determine the value of each investment in column A by

+ $6,000 ÷ 4 = $3,500) to be applied to determine the net average value

multiplying each item in column E by the issuer’s allocation percentage

of the taxpayer’s cash. If the taxpayer elects to treat the deemed cash

listed in column F.

as investment capital, it would include $49,500 on line 6, column C and

$3,500 on line 6, column D. If the election to treat the deemed cash as

Schedule B, Part 1, Section 2

– Corporate stock,

investment capital is not made, the $49,500, reduced by $3,500, would

constitute business capital.

stock rights, stock warrants, and stock options

4. A taxpayer purchased a debt instrument, includable in Section 1, with

a maturity date of December 15, 2006. Any such investment is deemed

Column A — List investments in the following:

cash on the same numerical date as the maturity date, less one day,

— stock issued by a corporation;

six months prior. Thus the date on which this debt instrument becomes

— options as described in item 4 of the definition of investment capital listed

cash is June 14, 2006.

on page 21;

Column C — Enter the total average fair market value of each item listed

— units in a publicly traded partnership treated as a corporation for

in column A. On any date, the fair market value of stocks, bonds, and other

purposes of Tax Law Article 9-A;

regularly traded securities is the mean between the highest and lowest

— business trust certificates;

selling prices.

— stock rights and stock warrants not in the possession of the issuer; and

The average value is generally computed quarterly if your usual accounting

— other corporate equity instruments similar to stock.

practice permits it, but you may use a monthly, weekly, or daily average. If

your usual accounting practice does not permit a quarterly or more frequent

Columns C through G — See instructions for Schedule B, Part 1,

computation of average fair market value, you may use a semiannual or

Section 1, columns C through G above.

annual computation if no distortion of average fair market value results. If the

security is not marketable, value it using GAAP. (See example 3 starting on

Line 6 — Cash election — At the election of the taxpayer, cash on hand

page 21.)

and cash on deposit may be treated as either investment capital or business

capital. However, no election to treat cash as investment capital may be

Column D — Deduct all liabilities, both long-term and short-term, directly

made when the taxpayer has no other investment capital.

or indirectly attributable to investment capital. Use the same method of

averaging used to determine the average value of assets in column C.

Cash includes shares in a money market mutual fund. A money market

Enter for each item of investment capital listed in column A the sum of the

mutual fund is a no-load, open-end investment company registered under

liabilities directly or indirectly attributable to it. Liabilities directly attributable

the Federal Investment Company Act of 1940 that attempts to maintain a

to an asset are those that were incurred to acquire that asset. (See

constant net asset value per share (that is, a money market fund). Cash also

example 3 starting on page 21.)

includes debt instruments deemed cash; see Instruments deemed cash on

page 21.

Use the worksheet below to determine the amount of liabilities indirectly

attributable to a particular asset.

Cash cannot be split between business capital and investment capital. You

must treat cash as all business capital or all investment capital.

In column D, on the line for the asset in question, include the sum of the

amount from line O of this worksheet and the amount of liabilities directly

Schedule B, Part 2

attributable to that asset.

— Computation of investment

Worksheet

income before allocation

Liabilities indirectly attributable to a particular asset

Complete this schedule if you are allocating part of your ENI by using an

A. Total liabilities

(enter amount from Form CT-3,

investment allocation percentage from Schedule B, Part 1. Investment

.................................................. A.

line 31, column C)

income is income from investment capital to the extent it is included in ENI,

Liabilities directly attributable to:

minus any deductions allowable in computing ENI that are attributable to

B. Subsidiary capital .................................................. B.

investment capital or investment income, and minus a portion of any NOLD

C. Investment capital ................................................. C.

allowable in computing ENI.

D. Business capital .................................................... D.

E. Total liabilities directly attributable

(add

Income from investment capital includes dividends (other than from a

................................................... E.

lines B, C, and D)

subsidiary or a DISC), interest, and capital gains and losses from sales or

F. Total liabilities indirectly attributable

(subtract

exchanges of investment capital that are included in the computation of ENI.

.................................................. F.

line E from line A)

Professional services corporations (Article 15 or 15-A BCL) must use an

G. Average value of investment capital

(enter

investment allocation percentage of 100% (section 210.3(b)(3)).

................. G.

amount from Form CT-3-ATT, line 7, column C)

Do not include stocks, bonds, and other securities issued by, and any

H. Average value of adjusted total assets

(enter

indebtedness from, a QSSS in the computation of investment capital, if the

............... H.

amount from Form CT-3, line 30, column C)

QSSS is included in the parent’s return (see page 3).

I. Divide line G by line H ........................................... I.

J. Multiply line F by line I ........................................... J.

Line 8 — Enter interest income received from investment capital listed in

K. Value of the particular asset ................................. K.

Schedule B, Part 1, Section 1, column A, to the extent included in ENI.

L. Enter amount from line G ...................................... L.

M. Divide line K by line L ............................................ M.

Line 9 — Enter interest income received from bank accounts (cash) if

N. Enter amount from line J ....................................... N.

included on line 6. Include interest income received from a savings account,

O. Liabilities indirectly attributable to a particular

checking account, time deposit account (other than certificate of deposit),

............................. O.

asset

(multiply line M by line N)

or similar accounts, which are usually evidenced by a passbook. Enter

0 on this line if the investment allocation percentage on line 5 is zero. In

Form Ct-3/4-I - Instructions For Forms Ct-4, Ct-3, And Ct-3-Att - General Business Corporation Franchise Tax Returns - 2006 Page 8

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