Instructions For Form Nyc-202 - Unincorporated Business Tax Return

Instructions for Form NYC-202 2006

Page 9

be properly included in his invento-

Administrative Code. See "Highlights of

LINE 26a - DIVIDENDS FROM

ry if on hand at the close of the tax-

Recent

Tax

Law

Changes

for

STOCKS HELD FOR INVESTMENT

able year, or property held by the

Unincorporated Businesses."

Enter dividends not excluded on line 18. This

taxpayer primarily for sale to cus-

includes 50% of dividends from corporations

any other subtractions required by

tomers in the ordinary course of his

for which an exclusion was allowed on line 18

Sections 11-506 and 11-507 (other than

trade or business; and

of this schedule, and 100% of dividends from

charitable contributions) of the NYC

stock not meeting the holding period require-

accounts

notes

receivable

Administrative Code. (Attach any appro-

ment set forth in Section 246(c) of the IRC.

acquired in the ordinary course of

priate schedules.)

his/her trade or business for services

Do not include on line 20 any net operating

LINE 26d - INCOME FROM CASH

rendered or from the sale of proper-

loss carryover. Any unincorporated business

Enter income from cash on Schedule B, line

ty described in a) to the extent of the

net operating loss deduction allowable in 2006

26d only if you have elected to treat cash as

difference between:

by reason of a carryover of a net operating

investment capital and have entered the

the amount of gain reported at

loss sustained by the unincorporated business

amount thereof on Schedule D, line 3.

part 1, line 3, for each proper-

in prior years should be reported in Schedule E

ty; and

and on Schedule A.

LINE 26f - DEDUCTIONS

ATTRIBUTABLE TO INVESTMENT

ii)

the amount of gain that would

SAFE HARBOR LEASES

CAPITAL

be reported on line 3 for each

This applies to agreements entered into prior

For more information, see Statement of Audit

property if the adjusted basis

to January 1, 1984. The NYC Administrative

Procedure 96-1-GCT, Noninterest Expense

of the property on the date of

Code was amended to nullify the effects of

Attribution, January 29, 1996 and Statement

sale or other disposition had

federal “Safe Harbor Leases” upon New York

of Audit Procedure 04-02-AU, GCT & UBT

been either:

City unincorporated business taxable income.

Treatment of Repurchase Agreements and

A) its fair market value on

(Refer to Sections 11-506 and 11-507 of the

Securities

Lending

and

Borrowing

January 1, 1966, plus or

NYC Administrative Code for details.)

Transactions for Financial Services Firms

minus all federal adjust-

Regularly Engaged in Such Activities,

ments to basis for the peri-

LINE 24 - CHARITABLE

September 24, 2004, available on the

od after December 31,

CONTRIBUTIONS

Department’s website at nyc.gov/finance.

1965; or

Deductions are allowed for charitable contri-

butions made by the unincorporated business,

the amount realized from

LINE 27b - INVESTMENT INCOME TO

as a tax entity separate and distinct from its

its sale or other disposi-

BE ALLOCATED

owners or proprietors, to the extent they would

tion,

Enter on line 27b the amount from line 27a

be deductible by a corporation for federal

unless the amount on line 27a is greater than

whichever is lower.

income tax purposes, but not in excess of 5%

the amount on line 23, in which case, enter the

If the gain reported is from a

of line 23. In general, contributions deductible

amount from line 23. If the amount on line

sale of property before January

by a corporation are the same as those for indi-

27a is a loss, enter zero (“0”) on line 27b of

1, 1966, and reported on the

viduals, except that:

this Schedule B and on line 7 of Schedule A.

installment method, the fair

contributions to fraternal societies, orders

market value of the property on

SCHEDULE C

and associations operating under the

the date of sale must be substi-

Business Allocation

lodge system are not deductible; and

tuted for its fair market value

An allocation of business income is permitted

contributions to a trust, chest, fund or

on January 1, 1966. The total

foundation

for purposes of the Unincorporated Business

adjustment may not exceed the

Tax if you carry on business both inside and

are deductible only if they are to be used with-

taxpayer’s net gain from the

outside New York City.

in the United States or its possessions.

sale or other disposition of all

the property.

ALLOCATION BY SEPARATE BOOKS

LINE 26 - INVESTMENT INCOME

interest on money borrowed to purchase

AND RECORDS

Investment income includes: 50% of dividends

or carry bonds or securities, the interest

For tax years beginning on or after January 1,

from stocks held for investment; interest from

on which is subject to the Unincorporated

2005, except as provided below, taxpayers

investment capital; net capital gain or loss from

Business Tax but exempt from federal

must allocate business income using the for-

sales or exchanges of securities held for invest-

income tax; ordinary and necessary

mula method. Taxpayers who used the books

ment; and income from cash if an election is

expenses paid or incurred during the tax-

and records method for the two immediately

made to treat cash as investment capital on line

able year in connection with such income

preceding tax years, which must have consist-

3 of Schedule D. Do not include any capital

or property held for the production of

ed of 12 months each, may make a one time

loss that could not be used in computing feder-

such income; and amortization of bond

election to continue using the books and

al taxable income.

premium for the taxable year on any

records allocation method for each tax year

bond, the interest from which is subject to

beginning on and after January 1, 2005 and

In computing investment income, subtract the

the Unincorporated Business Tax but

before January 1, 2012. Taxpayers must make

amount of deductions allowable in computing

exempt from federal income tax, to the

this election on a timely filed original return

entire net income which are directly or indi-

extent these items were not deducted in

for the tax year beginning in 2005. To make

rectly attributable to investment capital or

computing part 1, line 8.

this election, check the box marked “yes” on

investment income.

page 1 of this return. NOTE: the election can-

Subtract income such as royalties from

not be made or, if made, will be deemed to

related members for the use of intangibles

have been revoked if the Department of

as described in section 11-506(f) of the

Instructions For Form Nyc-202 - Unincorporated Business Tax Return - 2006 Page 9

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