FS Codes and Automatic Adjustments

The New York return begins with federal taxable income before net operating loss and special deductions. Federal taxable income carries automatically from the federal return. As a result, FS and state codes on the federal worksheets do not apply and are ignored in computing federal taxable income on the New York return.

FS and state codes are used only for certain "automatic adjustments" to federal income (listed below) to arrive at New York entire net income. Any other additions and subtractions are entered on the worksheets.

Automatic Adjustments: The following items from the federal return carry automatically to the New York return and do not require additional entries on New York State interview forms:

Net Operating Loss Deduction

Enter New York net operating loss carryovers on the NOL Carryover worksheet based on one of the following situations.

When NOL amounts are the same for New York state, city and federal, enter all of the amounts on one NOL Carryover worksheet, along with NYC for the city code (while leaving the FS and State codes blank).

When NOL amounts for New York state, city and federal all differ, enter one NOL Carryover worksheet with an FS Code of "F" , add a second NOL Carryover worksheet with an FS Code of "S" and a State Code of "NY" (for New York State only), and then add a third NOL Carryover worksheet with an FS Code of "S" , "FC" for the State Code, and "NYC" for the City Code (for New York City only).

When NOL amounts for New York and federal differ, but are the same for New York state and city, enter one NOL Carryover worksheet with an FS Code of "F" , and then add a second NOL Carryover worksheet with an FS code of "S", "NY" for the State Code, and "NYC" for the City Code.

The NOL is limited to the federal NOL unless you indicate NOT to do the limitation on the Options section of the New York General Information worksheet. If applicable, the New York and New York City NOL is allocated to investment income in accordance with New York State and New York City Instructions..

Estimated Tax Overrides

The amount of the estimated tax shown on Form CT-400-MN can be overridden by using the Federal Estimate Overrides Section of the Estimates and Application of Overpayment Worksheet and entering the state code of "NY" for the franchise tax return or "MTA" for the MTA Surcharge return.

Interest on U.S. Obligations

Interest on obligations of the United States (entered on the Interest worksheet) is automatically included in the federal taxable income and entire net income of the corporate franchise tax return.

Municipal Bond Interest

New York includes all municipal bond interest in New York income. If using the tax return input method, interest on state, and local obligations carries to the New York returns as an addition to federal taxable income.

Indicate the source of municipal bond interest. The interest is assumed to have originated in the state entered on federal General Information worksheet for the automatic state return if:

50% of Dividends from Non-Subsidiary Capital

50% of dividends entered on the dividends worksheet carry to the state return as a subtraction from federal income, unless "WFC", "FG", "CFC", "DISC" or "AG" is entered in the "Category" field, or "9" is entered on the federal input in the "State 1" field.

Federal Employment Credit Wage Reduction

Wages and salaries eligible for the federal employment credit, and excluded from federal wages, are deducted for New York purposes.

Depreciation

For assets placed in service on or after June 1, 2003, the special bonus depreciation allowance created by the JCWA of 2002 and enhanced for the JGTRRA of 2003 is not allowed unless those assets were placed in service in either the "Resurgence Zone" or the "Liberty Zone." Designate such property by entering the appropriate code in the JCWA/JGTRRA accelerated depreciation option field on the Depreciation and Amortization worksheet

Note: To create the addition to entire net income for section 179 depreciation taken for non-qualifying SUVs in excess of 6000 pounds, enter the "section 179/bonus" amount of zero and the "cost or other basis" reduced by the section 179 depreciation on the Depreciation a and Amortization worksheet (state amount). Use the New York/Income / Deductions worksheet/ACRS/MACRS Deduction section to override.

If detail depreciation wasnot used to enter depreciation information, you may use the Depreciation section of the Income/Deductions worksheet to enter information to complete Form CT-399.

To compute the adjustment for ACRS/MACRS assets on CT- 399, use federal a federal depreciation section to enter the state information.

Leave the "State use" field blank to indicate a New York ACRS/MACRS asset placed in service before 1982 and after 1984.

Note: To make the election to depreciate non-New York assets acquired prior to 1/1/94 under IRC section 168, check the checkbox on the Depreciation section of the Income/Deductions worksheet.

Remember, when entering state if different depreciation, based on the state code, the state depreciation will carry to the particular state return indicated. For example, if an asset has been entered on with a "State" code of "CA" to carry to the California return, then enter the property again with a "State" code of "NY" in order to carry to the New York return.

If the return being processed is a banking return (Form CT-32), the following entries in the "state use" code field carries assets to Schedule E. Enter "5" to carry the asset to Schedule E, Part I. Enter "6" to carry the asset to Schedule E, Part II.