A C corporation filing federal Form 1120 must file Form NYC-2, Business Corporation Tax Return with the City of New York if the corporation does business, employs capital, owns or leases property, or maintains an office in the city. A corporate partner in a partnership is subject to the same requirement. Some corporations don't have a filing requirement with the city, however. See the Form NYC-2 instructions for a list of corporations that aren't required to file Form NYC-2.
A corporation that ceases to do business in New York City must file Form NYC-2 by the 15th day after the date of the cessation. Otherwise, the filing deadline for a calendar-year entity is the same as for the federal and state forms. For a fiscal-year entity the filing deadline is the 15th day of the fourth month following the end of the fiscal year.
A corporation can request an automatic 6-month extension by timely filing Form NYC-EXT and by paying the amount properly estimated as its tax. See the Form NYC-EXT instructions for more information about properly estimating the tax.
A business is located in New York City if its ZIP code begins with 100 through 104, 111 through 114, and 116, as well as the two ZIPs 11004 and 11005. Certain Queens addresses in ZIP codes 11001, 11040, and 11096 also fall within the city, so if you're uncertain if a business's address is within New York City, consult the Geographic Online Address Translator (GOAT) here, an address lookup tool provided by the Department of City Planning.
Tax Calculation
Tax is imposed at the highest rate as calculated by three different methods:
- Entire net income base - Tax is calculated using the adjusted federal net income before any NOL on Schedule B.
- Total capital base - This method utilizes Schedules C, D, and E to calculate the tax on the business and investment capital allocated to the city.
- Fixed dollar minimum tax - Schedule F utilizes the single-factor or three-factor calculation of business allocated to NYC to compute minimum NYC tax.
Structure of the form
Form NYC-2 is divided into a number of schedules:
- Schedule A - Everything ultimately flows to Schedule A where the overpayment or balance due is calculated.
- Schedule B - This is where the tax on the business income base is calculated.
- Schedule C - This is where the tax on the capital base is calculated.
- Schedule D - This is the computation of investment capital for the year. The entries on Schedule D flow from Form NYC-2.1, and the bottom line of Schedule D flows to Schedule C.
- Schedule E - This schedule is a list of the places of business both within and without NYC. Any rent entered here flows to Schedule A. In TaxSlayer Pro, completing Schedule E is done under the Schedule F menu.
- Schedule F - Schedule F is used to calculate the "business allocation percentage", i.e., the ratio of the corporation's activity within NYC to everywhere, as well as the NYC receipts for the purpose of calculating the fixed dollar minimum tax in Schedule A. The percentage is calculated either using the sales receipts or using a three-factor formula comprising real estate, inventory, and tangible personal property. Not every business can use either formula as desired; see the form instructions to determine which formula to use. The business allocation percentage is used to determine how much income to allocate to NYC on Schedule B.
- Schedule G - This schedule consists of a number of Yes/No questions about the business, and a Yes answer may result in additional information being needed on another form.
- Schedule H - The tax rate is computed on this form using the business income as calculated in Schedule B.
Completing the form
Before Form NYC-2 can be completed, New York Form CT-3 must be begun and ideally be completed as some of the information in that form carries to Form NYC-2.
When you're ready to work on Form NYC-2, from the NY CT-3 Main Menu select:
- Additional Forms
- NYC Corporation Return (NYC-2) - Enter the amount of gross receipts in the city.
- Heading information - Go through the menus and submenus to ensure all questions have been answered, as certain answers may affect the tax calculation.
Be sure to complete each of the three tax calculations. A business working both within and without New York City must compute its business allocation percentage, i.e., the percentage of business carried on within the city. The allocation can be done using the single factor of the corporation's receipts in the city, or by using a three-factor combination of receipts, wages, and property owned in the city. This allocation is determined on Schedule F.
Schedules E and F
To complete Schedules E and F, from the NYC-2 Main Menu select:
- Net Income Tax
- Business Income
- Allocated Business Income
Note that calculating the receipts factor in Schedule F is done on Form NYC-2.5 whether using the single-factor or three-factor calculation. Form NYC-2.5 is subdivided into multiple sections, and you will categorize the corporation's receipts into the appropriate section(s) according to the New York City Administrative Code §11-654.2. Consult the Form NYC-2.5 instructions for details about each section to help you determine how to categorize the corporation's income.
Note: This article is intended to assist in completing the New York City Business Corporation Tax Return in TaxSlayer Pro. It is not intended as tax advice. The form instructions are available at the NYC Department of Finance website linked below.
Additional Information: