§ 40. The tax-free NY area tax elimination credit. (a) Allowance of\ncredit. A taxpayer that is a business or owner of a business in the case\nof a business taxed as a sole proprietorship, partnership or New York S\ncorporation, that is located in a tax-free NY area approved pursuant to\narticle twenty-one of the economic development law and is subject to tax\nunder article nine-A, or twenty-two of this chapter, shall be allowed a\ncredit against such tax, pursuant to the provisions referenced in\nsubdivision (e) of this section, to be computed as hereinafter provided.\n (b) Amount of credit. The amount of the credit shall be the product\nof: (1) the tax-free area allocation factor; and (2) the tax factor.\n (c) Tax-free area allocation factor. The tax-free area allocation\nfactor shall be the percentage representing the business's economic\npresence in the tax-free NY area in which the business was approved to\nlocate pursuant to article twenty-one of the economic development law.\nThis percentage shall be computed by:\n (1) ascertaining the percentage that the average value of the\nbusiness's real and tangible personal property, whether owned or rented\nto it, in the tax-free NY area in which the business was located during\nthe period covered by the taxpayer's report or return bears to the\naverage value of the business's real and tangible personal property,\nwhether owned or rented to it, within the state during such period;\nprovided that the term "value of the business's real and tangible\npersonal property" shall have the same meaning as such term has in\nparagraph (a) of subdivision two of section two hundred nine-B of this\nchapter; and\n (2) ascertaining the percentage that the total wages, salaries and\nother personal service compensation, similarly computed, during such\nperiod of employees, except general executive officers, employed at the\nbusiness's location in the tax-free NY area, bears to the total wages,\nsalaries and other personal service compensation, similarly computed,\nduring such period, of all the business's employees within the state,\nexcept general executive officers; and\n (3) adding together the percentages so determined and dividing the\nresult by two.\n For purposes of article twenty-two of this chapter, references in this\nsubdivision to property, wages, salaries and other personal service\ncompensation shall be deemed to be references to such items connected\nwith the conduct of a business.\n (d) Tax factor. (1) General. The tax factor shall be, in the case of\narticle nine-A of this chapter, the largest of the amounts of tax\ndetermined for the taxable year under paragraphs (a) through (d) of\nsubdivision one of section two hundred ten of such article after the\ndeduction of any other credits allowable under such article. The tax\nfactor shall be, in the case of article twenty-two of this chapter, the\ntax determined for the taxable year under subsections (a) through (d) of\nsection six hundred one of such article after the deduction of any other\ncredits allowable under such article.\n (2) Sole proprietors, partners and S corporation shareholders. (A)\nWhere the taxpayer is a sole proprietor of a business located in a\ntax-free NY area, the taxpayer's tax factor shall be that portion of the\namount determined in paragraph one of this subdivision that is\nattributable to the income of the business at its location in the\ntax-free NY area. Such attribution shall be made in accordance with the\nratio of the taxpayer's income from such business allocated within the\nstate, entering into New York adjusted gross income, to the taxpayer's\nNew York adjusted gross income, or in accordance with such other methods\nas the commissioner may prescribe as providing an apportionment that\nreasonably reflects the portion of the taxpayer's tax attributable to\nthe income of such business. In no event may the ratio so determined\nexceed 1.0. The income from such business allocated within the state
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