Tax tips for avoiding common filing errors for general business corporations
Follow the tips below to prevent mistakes on your Form CT-3 or Form CT-3-A that may result in bills for additional tax, penalty, and interest.
For more information see, General business corporation tax forms (current year).
General tips
Mark only the applicable checkboxes that apply to your circumstances and leave the rest of the checkboxes blank.
Tips for reporting NYS modifications on Form CT-225, CT-225-A, and CT-225-A/B
- Enter the appropriate C corporation modification codes for your form type when reporting NYS additions and subtractions. Federal S corporations that are New York C corporations must use valid New York C corporation codes for Form CT-3/CT-3-A rather than CT-3-S filer codes.
- Every addition and subtraction modification must be separately listed. Do not use one code to report multiple modifications.
- Do not use a minus sign when reporting a subtraction or negative number.
Tips for foreign corporations and corporate partners
Public Law (PL) 86-272 foreign corporations are exempt from the corporate franchise tax
Foreign corporations that are not part of a combined group that are disclaiming tax liability in NYS based on PL 86-272 are not required to file Form CT-3 or pay tax on any base under the corporate franchise tax, including the fixed dollar minimum tax or file any other form.
- However, if you choose to file Form CT-3 and claim PL 86-272 protection, you must mark the box on Line C on the first part of Form CT-3 and complete the entire form, but report $0 on the tax due after credits line (Part 2, line 4).
- Every nontaxpayer member of a NYS combined group, including members eligible for the PL 86-272 exemption, must file Form CT-3-A/BC and include all its receipts and activities on Form CT-3-A/BC and on the combined group’s Form CT-3-A.
Foreign corporate limited partners making the separate accounting election have specific reporting procedures
If you are a foreign corporate limited partner eligible to make the separate accounting election, you must use specific reporting procedures when preparing your tax return. If you have made the election for more than one partnership, you must check the box on Part 1, Section C, line 7. See Foreign corporate limited partners - separate accounting election.
Foreign corporations or corporate partners with economic nexus
If you are a foreign corporation or a corporate partner only subject to tax in New York because you are deriving receipts from activity in New York and have no employees in New York, wages paid to employees in New York, or business establishments in New York, mark the box in Part 1, Section B, line 6.
Tips for reporting losses (Form CT-3.3 and Form CT-3.4)
Losses incurred in tax years beginning prior to January 1, 2015 that were eligible for carryover as of the last day of your 2014 tax year are converted into a Prior Net Operating Loss Conversion (PNOLC) subtraction that is computed on Form CT-3.3.
- The PNOLC is applied against apportioned business income on line 16 of Part 3 of Form CT-3 or CT-3-A. Do not use a minus sign to report it.
- Do not report the value of these losses on line 18 of Part 3 of these forms.
Apportioned net operating losses (NOLs) incurred in tax years beginning on or after January 1, 2015 are allowed as a net operating loss deduction (NOLD).
- The NOLD is computed on Form CT-3.4 and is applied against apportioned business income on line 18 of Part 3 of Form CT-3 or CT-3-A as a positive value.
- Do not report the value of these losses on line 16 of Part 3 of these forms.
If your apportioned business income reported on line 15 of Part 3 of Form CT-3 or CT-3-A is zero or less, do not report a PNOLC or NOLD subtraction on line 16 or 18, respectively, of Part 3.
Tips for reporting investment income, other exempt income, and investment capital (Form CT-3.1)
- If you make the 40% safe harbor election in Schedule A, line 1, do not report actual interest deductions in Schedule B, Parts 3 and 4 of the CT-3.1.
- If you report investment income in Schedule C, you must complete the appropriate part of Schedule E.
- If an amount is reported on Schedule C, line 3, you must complete Schedule E, Part 1.
- If an amount is reported on Schedule C, lines 6 or 7, you must complete Schedule E, Part 2.
- If an amount is reported on Schedule C, line 11, you must complete Schedule E, Part 3.
Tips for the business apportionment factor (BAF) schedule (Form CT-3 and Form CT-3-A, Part 6*)
*line references refer to the 2019 forms
General Tips
- You must enter values on the lines for your specific receipt types on lines 1 through 54, even if 100% of your receipts are in NY. Line 55 is the total of lines 1 through 54, do not only enter totals on line 55.
- If you do not have any receipts required to be included in the denominator of the BAF, you must mark the box at the beginning of Part 6, otherwise the BAF schedule in Part 6 will generally be recomputed by the Department using a BAF of 100%.
- Do not enter negative values.
- For CT-3 filers, the New York receipts total reported on line 55, column A must match the New York receipts reported on Part 2, 1c.
Tips for specific receipts
- Do NOT mark line 8, the fixed percentage method election for qualified financial instruments, unless you have assets that are marked to market under IRC sections 475 or 1256. Line 8 typically only applies to financial businesses.
- Interest on bank accounts is sourced to the bank’s commercial domicile and is reported on line 29, Interest from other financial instruments.
- Lines 31 through 37 should only be completed by registered securities or commodities brokers or dealers.
- Commissions and management/advisory fees earned by non-brokers or dealers generally are reported on line 53, receipts from other services/activities not specified.
- Line 38 through 42 are reserved for corporations that issue or process credit cards.
- Credit card receipts from the sale of tangible personal property are reported on Line 1, Sales of tangible personal property, NOT on lines 38 through 42.
- Credit card receipts from sales of services not required to be reported on another line, e.g. restaurants, are reported on Line 53, Receipts from other services/activities not specified.
- Line 54, discretionary adjustments, is only used if you have received a letter from the Department authorizing you to use this line. If you report receipts on this line pursuant to an authorized discretionary adjustment, you must attach a copy of the Department’s approval to the return.
Tips for combined groups (Form CT-3-A)
- The commonly owned group (COG) election is not necessarily the same as the designated agent’s federal affiliated group or federal consolidated income tax return because a return with a COG election in place must include all related corporations that meet the capital stock requirement.
- When circumstances dictate, it must include corporations from multiple federal filings.
- A COG made by a lower-tier entity will bind both upper and lower tier related corporations.
- Combined groups must identify if the COG election is in effect in each year by checking either box 5a or 5b of Part 1, Section C each year.
- The box on line 5a should be checked in the first year the election is made and each year thereafter the election is effect.
- Form CT-3-A/BC must be filed by every member of the combined group (other than the designated agent).
- The number of Form CT-3-A/BCs’ filed by the group should be one less than the total reported in box C on the first page of the CT-3-A.
Tips for MTA surcharge taxpayers (Form CT-3-M)
- CT-3 Filers: The amount on line 1 should equal the amount from Form CT-3, Part 2, Line 2.
- CT-3-A Filers: The amount on line 1 should equal the amount reported on Form CT-3-A, Part 2, Line 2 plus the portion of the fixed dollar minimum tax reported on line 4b that is attributable to each member of the combined group that is subject to the MTA Surcharge.
