1. (a) A taxpayer which is subject to tax for a period less than its taxable period for Federal income tax purposes computes its business allocation and alternative business allocation percentage only for the period it is subject to tax in New York State.

2. (b) Except for corporations principally engaged in the conduct of aviation or in the conduct of a railroad or trucking business, the business income and business capital for the short period are allocated by a business allocation percentage and the alternative business income for the short period is allocated by an alternative business allocation percentage, both determined by a three-factor formula consisting of:

   1. (1) tangible property (see Subpart 4-3 of this Part) for the period for which it is subject to tax in New York State; however, the taxpayer may compute its tangible property values by placing them on an annual basis and by prorating these values for the period for which it is subject to tax in New York State;
   2. (2) receipts (see Subpart 4-4 of this Part) for the period for which it is subject to tax in New York State; and

   3. (3) payroll (see Subpart 4-5 of this Part) for the period for which it is subject to tax in New York State.

      See section 4-2.2(b) of this Part for method of computing the business allocation percentage. See section 210(3-a)(a) of the Tax Law for method of computing the alternative business allocation percentage.

3. (c) The business income, business capital and alternative business income of a corporation principally engaged in the conduct of aviation for the short period are allocated by a business allocation percentage determined pursuant to section 210(3)(a)(7)(A) of the Tax Law.
4. (d) The business income, business capital and alternative business income of a corporation principally engaged in the conduct of a railroad or trucking business for the short period are allocated by a business allocation percentage determined pursuant to section 210(3)(a)(8) of the Tax Law.

5. (e) The short period business allocation percentage and the short period alternative business allocation percentage must be applied to business income and business capital and alternative business income, respectively, which have been prorated to represent business income and business capital and alternative business income for the period for which the taxpayer is subject to tax in New York State. Prorated business income, prorated business capital and prorated alternative business income are computed as follows:

   1. (1) divide business income, business capital or alternative business income before allocation by the number of months covered by the taxpayer's Federal return; and

   2. (2) multiply the figure determined in paragraph (1) of this subdivision by the number of months for which the taxpayer is subject to tax in New York State.

      Example:

      A corporation incorporated in the State of Delaware in 1990 became subject to tax in New York State on July 2, 1997. The taxpayer reports on a fiscal year ending November 30th. The short period business allocation percentage, computed as described in subdivision (b) of this section, is 20 percent. It had business income of $24,000 for the 12-month period covered by the Federal return. The taxpayer's allocated business income is $2,000, computed as follows:

      $24,000 ÷ 12 (months) = $2,000

      $2,000 × 5 (months) = $10,000

      $10,000 × 20% = $2,000

6. (f) A taxpayer must submit complete details with its report showing how it computed each factor of the business allocation percentage and alternative business allocation percentage for the period it is subject to tax in New York State, if for less than a full year. If, in the opinion of the commissioner, the prorated business income or the prorated alternative business income for the period for which the taxpayer is subject to tax in New York State does not properly reflect the business income or alternative business income for such period, the commissioner may determine business income or alternative business income solely on the basis of the taxpayer's business income or alternative business income during such period.

Tax Law, § 210(8)