1. (a) A taxpayer which is entitled to allocate alternative entire net income within and without New York State for only part of a taxable year allocates its alternative entire net income for only that part of the taxable year during which it is entitled to allocate. (See section 19-3.1 of this Part - General rules for allocation of alternative entire net income.) A taxpayer subject to tax for a period less than its taxable period for Federal income tax purposes computes its prorated alternative entire net income pursuant to section 18-4.4 of this Title and computes its alternative entire net income allocation percentage only for that part of the taxable year during which it is entitled to allocate.

   1. (1) The alternative entire net income allocation percentage is applied to alternative entire net income which has been prorated for the period for which the taxpayer is entitled to allocate. In the case of a taxpayer subject to tax for a period less than its taxable period for Federal income tax purposes, the alternative entire net income allocation percentage is applied to alternative entire net income which:

      1. (i) has been prorated, pursuant to section 18-4.4 of this Title, for the period during which the taxpayer is subject to tax; and
      2. (ii) has been prorated for the period during which the taxpayer is entitled to allocate.

   2. (2) Alternative entire net income (or prorated alternative entire net income) is prorated for the period the taxpayer is entitled to allocate and is computed as follows:

      1. (i) divide alternative entire net income (or prorated alternative entire net income) by the number of calendar months or major parts thereof covered by the taxpayer's New York State return; and
      2. (ii) multiply the amount determined in paragraph (1) of this subdivision by the number of calendar months or major parts thereof for which the taxpayer is entitled to allocate.
   3. (3) After alternative entire net income (or prorated alternative entire net income) has been prorated for the period for which the taxpayer is entitled to allocate, the remaining portion of alternative entire net income (or prorated alternative entire net income) will be allocated at either 100 percent or zero percent, depending on whether the taxpayer's business was conducted solely within or solely without New York State.

   (b)

2. (c) If, in the opinion of the Tax Commission, the method described in this section for prorating alternative entire net income (or prorated alternative entire net income) for the period during which the taxpayer is entitled to allocate does not properly reflect the taxpayer's alternative entire net income (or prorated alternative entire net income) for the period during which it is entitled to allocate and the remaining period, the Tax Commission may determine alternative entire net income solely on the basis of the alternative entire net income properly recorded on the taxpayer's books and records during such periods.

3. (d) The short period alternative entire net income allocation percentage is determined in the same manner as the alternative entire net income allocation percentage described in section 19-3.2 of this Part, except that:

   1. (1) the payroll factor is computed only for the period for which the taxpayer is entitled to allocate;
   2. (2) the receipts factor is computed only for the period for which the taxpayer is entitled to allocate; and

   3. (3) the deposits factor is computed only for the period for which the taxpayer is entitled to allocate.

      A taxpayer must submit complete details with its return, showing how it computed each factor of the short period alternative entire net income allocation percentage.

4. (e) The following is an example illustrating the computation of the alternative entire net income allocation percentage for a short period and the application of this percent age to alternative entire net income:

   Example:

   A banking corporation incorporated outside the United States had been doing business in the State of Florida since 1978. It began doing business and became subject to tax in New York State on May 3, 1985. On November 30, 1985 the taxpayer ceased doing business in Florida but continued its operations in New York State. For Federal income tax purposes, the taxpayer reports on a calendar-year basis and had alternative entire net income of $120,000 for the 12-month calendar year 1985. For the period the taxpayer is entitled to allocate, that is, May 3, 1985 through November 30, 1985 (seven months), the taxpayer had the following: *

   	New York State	Total
   Payroll	$ 80,000*	$ 100,000
   Receipts	875,000	1,250,000
   Deposits	900,000	1,650,000

   *

   100% of the New York State amount.

   The taxpayer's short period alternative entire net income allocation percentage is computed as follows:

   Payroll factor [($80,000 / $100,000) × 100]	80%
   Receipts factor [($875,000 / $1,250,000) × 100]	70%
   Deposits factor [($990,000 / $1,650,000) × 100]	60%
   Total	210%

   The short period alternative entire net income allocation percentage is 70% (210% ÷ 3).

   The taxpayer's alternative entire net income allocated to New York State is $59,000, computed as follows:

   $120,000 / 12 (months) = $10,000
   $10,000 × 7 (months) = $70,000
   $70,000 × 70% = $49,000
   $10,000 × 1 (month) = $10,000
   ($120,000 − $70,000) − $10,000 = $40,000
   Alternative entire net income for period
   1/1/85 – 4/30/95 is $40,000 allocated at 0%	$ 0
   Alternative entire net income for period
   5/1/85 - 1/30/85 is $70,000 allocated at 70%	49,000
   Alternative entire net income for period
   12/1/85 - 12/31/85 is $10,000 allocated at 100%	$10,000
   Total allocated alternative entire net income	$59,000

Tax Law, §§ 1453(k), 1453-A, 1454