NEW YORK CITY DEPARTMENT OF FINANCE Instructions for …

1 Instructions for form NYC-204. NEW york city DEPARTMENT OF FINANCE . TM. 2016. DEPARTMENT of FINANCE Unincorporated Business Tax Return for Partnerships, including Limited Liability Companies Single member LLCs using SSN as their primary identifier must use form NYC-202. Hi g h l i g h t s of Recent Tax Law Changes for Partnerships (including Limited Liability Companies). Section 18 of part Q of Chapter 60 of the Laws of 2016 amended section 11-514 of the Administrative Code of the city of New york ( Administrative Code ) to provide that for tax years beginning on or after January 1, 2016, calendar year l taxpayers which are partnerships for federal tax purposes are required to file tax reports for such year on or before March 15 of the following year, instead of April 15 of the following year, and fiscal year taxpayers must file tax reports for such fiscal year by the 15th day of the third month following the date its tax year ended instead of the 15th day of the fourth month following the close of its fiscal year.

2 Note that the time for filing a declaration of estimated tax set forth in Ad. Code section 11-511 has not changed. The biotechnology tax credit providing a tax credit to certain emerging technology companies for certain costs and expenses in- curred was extended through 2018. See section 11-503(o) of the Administrative Code, as amended by Local Law 111 of 2015. l Royalty payments -- For tax years beginning on or after January 1, 2013, the Unincorporated Business Tax has been amended to change the treatment of royalty payments to related members. Under prior law, taxpayers who made royalty l payments to related entities were required to add back the amount of the payments to taxable income if those payments were deducted when calculating federal taxable income and if the royalty recipient, under certain conditions, could ex- clude the royalty income.

3 Ad. Code section 11-506(e), as amended, eliminates the income exclusion previously allowed to certain royalty recipients and increases to four the number of exceptions to the add-back requirement. Part E of Chap- ter 59 of the Laws of 2013, 9. For more information, see Royalty Payments to Related Members, below. Tax year 2011 was the last taxable year in which eligible taxpayers who made the one-time election to continue using books and records allocation for tax year 2005 were permitted to use that method of allocation. For tax years beginning l on or after January 1, 2012, all taxpayers must allocate unincorporated business taxable income using formula allocation. See sections 11-508(b) and (c) of the Administrative Code. form NYC 115 has been discontinued. For taxable years beginning on or after January 1, 2015, changes resulting from an Internal Revenue Service audit and /or a New york State change should be reported as an Amended Return.

4 The box l indicating either a Federal or New york State change should be checked and the date of the Final Determination of the adjustment should be included. Chapter 201 of the Laws of 2009 provides for a 10 year phase-in of single factor allocation beginning in 2009. For tax- able years beginning in 2015, for taxpayers using the three factor formula, the business allocation percentage will be l composed of of the New york city property percentage, of the New york city wages percentage and 87% of the New york city gross income percentage. Starting with taxable years beginning in 2011, the election to double-weight the gross income percentage for manufactur- ers is no longer available. Note: The phase-in of single factor allocation is now more advantageous than double-weighting.

5 L For purposes of the New york city Unincorporated Business Tax, General Corporation Tax and Banking Corporation Tax, the city has decoupled from the Federal bonus depreciation allowed under the Economic Stimulus Act of 2008 and other l Federal legislation, except with respect to the depreciation deductions allowed with respect to qualified New york liberty zone property and qualified property placed in service in the Resurgence Zone (generally the area in the borough of Man- hattan south of Houston Street and north of Canal Street.) For city tax purposes, depreciation deductions for all other qual- ified property must be calculated as if the property was placed in service prior to September 11, 2001. See form NYC-399Z. and FINANCE Memorandum 16-1, Application of IRC Section 280F to Sports Utility Vehicles for more information.

6 IMPORTANT INFORMATION CONCERNING form NYC-200V AND PAYMENT OF TAX DUE. Payments may be made on the NYC DEPARTMENT of FINANCE website at , or via check or money order. If paying with check or money order, do not include these payments with your New york city return. Checks and money orders must be accompanied by payment voucher form NYC-200V and sent to the address on the voucher. form NYC- 200V must be postmarked by the return due date to avoid late payment penalties and interest. See form NYC-200V for more information. Instructions for form NYC-204 - 2016 Page 2. GENERAL INFORMATION porated Business Tax for tax acquisition, holding or disposition, other years beginning in 1995 that than in the ordinary course of business, of PARTNERSHIP DEFINED elected to continue to be subject interests in unincorporated entities also el- For purposes of this form , partnerships in- to the Unincorporated Business igible for this exemption, and any other clude syndicates, groups, pools, joint ventures, Tax for years after 1995 on a activity not constituting an unincorpo- limited liability companies (other than single- timely filed Unincorporated Busi- rated business subject to the Unincorpo- member LLCs) and other unincorporated or in- ness Tax return for tax year be- rated Business Tax.

7 Corporated organizations classified as ginning in 1996 continue to be subject to the Unincorporated Property Defined. Property for this pur- partnerships for federal income tax purposes, Business Tax. pose includes real and personal property, through or by means of which any business, including property qualifying as invest- profession, financial operation or venture is b) any entity subject to the tax im- ment capital (see Instructions for Sched- carried on. An estate or trust is not a partner- posed by Title 11, Chapter 11 ule D of this form ), and other stocks and ship and must file using form NYC-202 EIN. (Utility Tax) of the NYC Admin- securities, notional principal contracts, istrative Code (except that ven- derivative financial instruments and other WHO MUST FILE. dors of utility services are subject positions in property but excluding prop- For tax years beginning in 2009 or later, any to the unincorporated business tax erty and positions in property held by a partnership that carries on or liquidates any on that percentage of their entire dealer, and excluding debt instruments ac- trade, business, profession or occupation wholly net income allocable to the city quired in the ordinary course of a trade or or partly within New york city and has a total which their non-utility receipts business and certain other property.

8 See gross income from all business regardless of bear to their total receipts); Admin. Code 11-502(c)(i)(A). where carried on of more than $95,000 (prior to any deduction for cost of goods sold or serv- c) any entity carrying on an insurance Notwithstanding anything to the contrary, ices performed) must file an Unincorporated business as a member of the New the receipt of $25,000 or less of gross re- Business Tax Return on form NYC-204. york Insurance Exchange (autho- ceipts during the taxable year (determined rized in Section 6201 of the Insur- without regard to deductions) from an un- Taxpayers that are required to file an Unincorpo- ance Law); incorporated business will not disqualify rated Business Tax Return but have no tax liabil- the taxpayer for this exemption. ity may be eligible to file a form NYC-204EZ.

9 D) Real Estate Mortgage Investment To determine whether you may use form NYC- Conduits (REMICs). Holders of Partial Exemption for Investment Activi- 204EZ refer to that form . The form NYC-204EZ interests in a REMIC remain tax- ties: (Admin Code 11-502(c)(4)) For tax- may also be used by a partnership that is not re- able on such interests or on the in- able years beginning after 1995, if a quired to file but wishes to disclaim any liability come from such interests. taxpayer is an unincorporated entity (not an for tax because it is engaged solely in activities individual) and is primarily engaged in that are exempt from the tax. e) Wireless Telecommunications Serv- ice Providers 1. the activities described above under WHO IS SUBJECT TO THE TAX Full Exemption for Investment Ac- Effective for tax periods beginning tivities or 1) The Unincorporated Business Tax is im- on and after August 1, 2002, enti- posed on any individual or unincorporated ties that receive eighty percent or 2.

10 The ownership as an investor of in- entity (including a partnership, fiduciary more of their gross receipts from terests in one or more other unincor- or corporation in liquidation) engaged in charges for providing mobile porated entities engaged in an any trade, business, profession, or occu- telecommunications services to unincorporated business in the city . pation wholly or partly carried on within customers will be taxed as if they New york city . were regulated utilities for purposes The taxpayer's own activities described of the New york city Utility Tax at (1) and the activities of any other un- 2) Income received from the practice of law, and Unincorporated Business Tax. incorporated entity primarily engaged in medicine, dentistry, architecture, or any Thus, such entities will be subject the activities described at (1) and (2) in other profession is subject to the unincor- to only the New york city Utility which the taxpayer holds an interest will porated business tax.