Instructions For Form Nyc-202 - Unincorporated Business Tax Return

Instructions for Form NYC-202 2006

Page 5

statutory formula, enter on line 2 of this sched-

tax purposes, generally 20 years for losses

Taxpayers filing a short period return

ule the percentage shown in the explanation

from years beginning after 8/5/97.

should fill in the dates at the top of page 1 of

rounded to the nearest one hundredth of a per-

the return and prorate the exemption as

If a “carryback” results in an overpayment of a

centage point. If a direct allocation method is

described above.

prior year's tax, a claim for refund on Form

used, disregard lines 2 through 6 and enter on

NYC-113 accompanied by a copy of the

line 10 the amount directly allocated to New

LINE 16 - TAXABLE INCOME

Unincorporated Business Tax Return for the

York City contained in the explanation. Check

Enter here the amount of line 14 less line 15.

taxable year for which the refund is claimed,

the appropriate box on line 2. (Refer to the

(If loss, refer to the instructions for Schedule

should be filed within the limitation period pre-

instructions for Schedule C, Alternative

A, line 10.)

scribed by law. A detailed computation of the

Allocation Method.)

net operating loss deduction for that year must

LINE 17 - TAX

accompany the refund claim.

LINES 3 AND 6 - INCOME, GAIN

Enter on line 17 the amount obtained by multi-

OR LOSS FROM NYC REAL PROPERTY

plying the amount entered on line 16 by 4%.

LINE 11 - NEW YORK CITY NET

The business allocation percentage is not

OPERATING LOSS DEDUCTION

applied to income from rentals of New York

LINE 18 - SALES AND USE TAX

The business allocation percentage is not

City real property or gains or losses from the

ADDBACK

applied to a New York City net operating loss

sale of New York City real property. Enter

This item relates to the unincorporated busi-

deduction that was subject to allocation in the

here the modified gain (or loss) from the sale

ness tax credit for sales and compensating use

year in which the loss was incurred. If there

or exchange and net income from rental of real

tax paid on certain machinery, equipment and

was an unincorporated business net operating

property located in New York City included on

services (NYC Administrative Code Sections

loss in a prior year any part of which may be

line 1 of Schedule A. This is the gain (or loss)

11-503(d) and 11-503(k)). If the taxpayer

carried over to 2006, the amount claimed for

and net rental income included on line 8 of

received a refund or credit in 2006 of such

2006 should be entered on line 11 after com-

Schedule B as adjusted for the portion of the

sales or compensating use tax for which it

pleting Schedule E. (Refer to instructions for

New York City modifications (Schedule B,

claimed an unincorporated business tax credit

Schedule E.)

part 2) applicable to such items. If New York

in a prior tax period, the amount of such refund

City modifications are not applicable, enter on

or credit must be added back on line 18. A cor-

LINE 13 - ALLOWANCE FOR TAXPAY-

lines 3 and 6 the full amount of gain (or loss)

responding adjustment is to be made on line 14

ER’S SERVICES

and net rental income included on line 8 of

on Schedule B, part 2. (Refer to instructions

A deduction may be claimed for reasonable

Schedule B. (Refer to “Who is Subject to the

for line 14 of Schedule B, part 2.)

compensation for taxpayer’s personal services.

Tax”, paragraph 6.)

The allowable deduction is:

LINE 20 - BUSINESS TAX CREDIT

1) 20% of line 12 or

LINE 9 - ALLOCATED INVESTMENT

If the amount entered on line 19 is $3,200

INCOME

or over, no credit is allowable; enter “0”

2) $5,000,

If the investment allocation percentage is zero,

on line 20.

whichever is lower. If line 12 is a loss, enter

interest on bank accounts must be multiplied

“0” on line 13.

If the amount entered on line 19 is $1,800

by the business allocation percentage.

or less, your credit is the entire amount of

LINE 15 - EXEMPTION

tax on line 19. No tax will be due.

LINE 10 - CURRENT YEAR’S

An unincorporated business exemption of

UNINCORPORATED BUSINESS NET

If the amount of tax entered on line 19

$5,000 is allowed against net income reported

OPERATING LOSS

exceeds $1,800 but is less than $3,200, a

on line 14. If more than one business was car-

If line 10 shows a net loss from business, this

credit is allowed in the amount deter-

ried on by a taxpayer, only one exemption of

loss is the 2006 unincorporated business net

mined by multiplying the tax on line 19

$5,000 is allowed against the combined net

operating loss.

by a fraction, the numerator of which is

income derived from all business activities.

$3,200 minus the amount of the tax on

Only the first $10,000 of each year’s loss may

The exemption of $5,000 must be prorated on

line 19 and the denominator of which is

be carried back. The carryback period for City

a $13.70 daily basis if the business was carried

$1,400. Use the following formula:

purposes generally corresponds to the federal

on for a period of less than a full taxable year

carryback period available for individuals.

of 12 months, unless the business was carried

FORMULA

Whichever carryback period, if any, the tax-

on and the return is filed for a number of whole

payer elects for federal purposes, the same car-

Unincorporated

months. In that case, the proration is to be on a

tax on line 19 x ($3,200 - tax on line 19)

Business Tax

ryback period must be used for City purposes.

$416.67 per month basis.

$1,400

Credit

If the taxpayer elects to carry back the first

EXAMPLE

$10,000 of the loss, any excess net operating

loss may be carried forward as if the taxpayer

EXAMPLE

#1 If the sole proprietorship carried on busi-

had elected to relinquish the entire carryback

ness for a full 9 months, the exemption

If the tax on line 19 is $2,800, the business

period for all but the first $10,000 of the loss.

amount to be entered on line 15 is

tax credit is calculated as follows:

If the taxpayer elects to forego the federal car-

$3,750.03 (9 months X $416.67 per full

($3,200 - 2,800) = $800

ryback period, no amount of the net operating

1) $2,800 x

month).

$1,400

loss may be carried back for City purposes and

#2 If the sole proprietorship carried on busi-

the entire net operating loss may be carried

ness for 263 days, the exemption amount

2) Enter $800 on line 20.

forward for City purposes.

to be entered on line 15 is $3,603.10 (263

3) Enter $2,000 ($2,800 - 800) on line 21

Losses that are not permitted to be carried

days X $13.70 per day).

(Unincorporated Business Tax)

back may be carried forward and used to off-

set income for the period permitted for Federal

Instructions For Form Nyc-202 - Unincorporated Business Tax Return - 2006 Page 5

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