Bill Text: NY S04228 | 2011-2012 | General Assembly | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Authorizes the trading of existing but unused research and development credits and existing but unused net operating loss deductions to existing corporations and partnerships in return for private assistance; enacts the "Small New York Based High-Technology Business Investment Tax Credit Act".
Spectrum: Slight Partisan Bill (Republican 4-2)
Status: (Introduced - Dead) 2012-03-06 - PRINT NUMBER 4228A [S04228 Detail]
Download: New_York-2011-S04228-Amended.html
Bill Title: Authorizes the trading of existing but unused research and development credits and existing but unused net operating loss deductions to existing corporations and partnerships in return for private assistance; enacts the "Small New York Based High-Technology Business Investment Tax Credit Act".
Spectrum: Slight Partisan Bill (Republican 4-2)
Status: (Introduced - Dead) 2012-03-06 - PRINT NUMBER 4228A [S04228 Detail]
Download: New_York-2011-S04228-Amended.html
S T A T E O F N E W Y O R K ________________________________________________________________________ 4228--A 2011-2012 Regular Sessions I N S E N A T E March 24, 2011 ___________ Introduced by Sens. ALESI, DILAN, GOLDEN, LIBOUS, McDONALD, OPPENHEIMER -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations -- recommit- ted to the Committee on Investigations and Government Operations in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said commit- tee AN ACT to amend the tax law, in relation to providing for direct private assistance to emerging technology companies through the trading of their existing but unused research and development credits and their existing but unused net operating loss deductions to existing corpo- rations and partnerships in return for private assistance THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "Small New York Based High-Technology Business Investment Tax Credit 3 Act". 4 S 2. The tax law is amended by adding a new section 212 to read as 5 follows: 6 S 212. CORPORATION BUSINESS TAX BENEFIT CERTIFICATE TRANSFER PROGRAM. 7 1. (A) THE DEPARTMENT SHALL ESTABLISH A CORPORATION BUSINESS TAX BENEFIT 8 CERTIFICATE TRANSFER PROGRAM TO ALLOW NEW OR EXPANDING EMERGING TECHNOL- 9 OGY AND BIOTECHNOLOGY COMPANIES IN THIS STATE HAVING UNUSED AMOUNTS OF 10 RESEARCH AND DEVELOPMENT TAX CREDITS OTHERWISE ALLOWABLE PURSUANT TO 11 SUBPARAGRAPH (I) OF PARAGRAPH (B) OF SUBDIVISION TWELVE OF SECTION TWO 12 HUNDRED TEN OF THIS ARTICLE, WHICH CANNOT BE APPLIED FOR THE CREDIT'S 13 TAX YEAR, AND UNUSED NET OPERATING LOSS CARRYOVERS PURSUANT TO PARAGRAPH 14 (F) OF SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE TO 15 SURRENDER THOSE TAX BENEFITS FOR USE BY OTHER CORPORATIONS ESTABLISHED 16 UNDER THE BUSINESS CORPORATION LAW AND SUBJECT TO THE PROVISIONS OF THIS 17 ARTICLE IN EXCHANGE FOR PRIVATE FINANCIAL ASSISTANCE TO BE PROVIDED EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD06165-02-2 S. 4228--A 2 1 THOSE TAXPAYERS OR EXPANDING EMERGING TECHNOLOGY AND BIOTECHNOLOGY 2 COMPANIES. SUCH TAXPAYERS SHALL BE PROVIDED WITH A CORPORATION BUSINESS 3 TAX BENEFIT CERTIFICATE TO BE DEVELOPED BY THE COMMISSIONER. 4 (B) THE COMMISSIONER, IN COOPERATION WITH THE COMMISSIONER OF ECONOMIC 5 DEVELOPMENT, SHALL REVIEW AND APPROVE APPLICATIONS BY NEW OR EXPANDING 6 EMERGING TECHNOLOGY AND BIOTECHNOLOGY COMPANIES IN THIS STATE HAVING 7 UNUSED BUT OTHERWISE ALLOWABLE CARRYOVERS OF RESEARCH AND DEVELOPMENT 8 TAX CREDITS AND OTHERWISE ALLOWABLE NET OPERATING LOSS CARRYOVERS PURSU- 9 ANT TO SUBPARAGRAPH (I) OF PARAGRAPH (B) OF SUBDIVISION TWELVE OF 10 SECTION TWO HUNDRED TEN OF THIS ARTICLE AND PARAGRAPH (F) OF SUBDIVISION 11 NINE OF SECTION TWO HUNDRED EIGHT, RESPECTIVELY, TO SURRENDER THOSE TAX 12 BENEFITS IN EXCHANGE FOR PRIVATE FINANCIAL ASSISTANCE TO BE MADE TO A 13 CORPORATION FILING PURSUANT TO THIS ARTICLE, WHICH HAS OBTAINED A CORPO- 14 RATION BUSINESS TAX BENEFIT CERTIFICATE IN AN AMOUNT EQUAL TO AT LEAST 15 SEVENTY-FIVE PERCENT OF THE AMOUNT OF THE SURRENDERED TAX BENEFITS. 16 (C) THE COMMISSIONER SHALL CALCULATE THE VALUE OF THE NET OPERATING 17 LOSS CARRYOVER FOR PURPOSES OF THE BENEFIT CERTIFICATE EQUAL TO THE 18 AMOUNT OF THE CARRYOVER TIMES THE APPLICABLE BUSINESS ALLOCATION 19 PERCENTAGE AND TAX RATE OF THE EMERGING TECHNOLOGY OR BIOTECHNOLOGY 20 COMPANY. 21 (D) THE COMMISSIONER, IN COOPERATION WITH THE COMMISSIONER OF ECONOMIC 22 DEVELOPMENT, SHALL REVIEW AND APPROVE APPLICATIONS BY TAXPAYERS PURSUANT 23 TO THE PROVISIONS OF THIS ARTICLE TO ACQUIRE SURRENDERED TAX BENEFITS 24 APPROVED PURSUANT TO PARAGRAPH (B) OF THIS SUBDIVISION, WHICH SHALL BE 25 ISSUED IN THE FORM OF CORPORATION BUSINESS TAX BENEFIT TRANSFER CERTIF- 26 ICATES, IN EXCHANGE FOR PRIVATE FINANCIAL ASSISTANCE TO BE MADE BY THE 27 TAXPAYER IN AN AMOUNT EQUAL TO AT LEAST SEVENTY-FIVE PERCENT OF THE 28 AMOUNT OF THE SURRENDERED TAX BENEFIT OF AN EMERGING TECHNOLOGY OR 29 BIOTECHNOLOGY COMPANY IN THE STATE. THE PRIVATE FINANCIAL ASSISTANCE 30 SHALL ASSIST IN FUNDING EXPENSES INCURRED IN CONNECTION WITH THE OPERA- 31 TION OF A NEW OR EXPANDING EMERGING TECHNOLOGY OR BIOTECHNOLOGY COMPANY 32 IN THE STATE, INCLUDING BUT NOT LIMITED TO THE EXPENSES OF FIXED ASSETS, 33 SUCH AS THE CONSTRUCTION AND ACQUISITION AND DEVELOPMENT OF REAL ESTATE, 34 MATERIALS, START-UP, TENANT FIT-OUT, WORKING CAPITAL, SALARIES, 35 RESEARCH, AND DEVELOPMENT EXPENDITURES. 36 (E) THE COMMISSIONER SHALL COORDINATE THE APPLICATIONS, IN CONJUNCTION 37 WITH THE DEPARTMENT OF ECONOMIC DEVELOPMENT, FOR SURRENDER AND ACQUISI- 38 TION OF UNUSED BUT OTHERWISE ALLOWABLE TAX BENEFITS PURSUANT TO THIS 39 SECTION IN A MANNER THAT CAN BEST STIMULATE AND ENCOURAGE THE EXTENSION 40 OF PRIVATE FINANCIAL ASSISTANCE TO NEW AND EXPANDING EMERGING TECHNOLOGY 41 AND BIOTECHNOLOGY COMPANIES IN THIS STATE INTO A WRITTEN AGREEMENT WITH 42 SUCH COMPANY CONCERNING THE TERMS AND CONDITIONS OF THE PRIVATE FINAN- 43 CIAL ASSISTANCE MADE IN EXCHANGE FOR THE CERTIFICATE. THE WRITTEN AGREE- 44 MENT MAY CONTAIN TERMS CONCERNING THE MAINTENANCE BY THE NEW OR EXPAND- 45 ING EMERGING TECHNOLOGY OR BIOTECHNOLOGY COMPANY OF A HEADQUARTERS OR A 46 BASE OF OPERATION IN THIS STATE. 47 2. (A) A TAXPAYER THAT HAS ACQUIRED A CORPORATION BUSINESS TAX BENEFIT 48 CERTIFICATE PURSUANT TO THE PROVISIONS OF PARAGRAPH (B) OF THIS SUBDIVI- 49 SION THAT INCLUDES THE RIGHT TO A NET OPERATING LOSS CARRYOVER DEDUCTION 50 SHALL ATTACH THAT CERTIFICATE TO ANY RETURN THE TAXPAYER IS REQUIRED TO 51 FILE AND SHALL OTHERWISE APPLY THE NET OPERATING LOSS CARRYOVER 52 DEDUCTION AS EVIDENCED BY THE CERTIFICATE ACCORDING TO THE PROVISIONS OF 53 PARAGRAPH (B) OF SUBDIVISION ONE OF THIS SECTION AND ANY RULES OR REGU- 54 LATIONS THE COMMISSIONER MAY ADOPT TO CARRY OUT THE PROVISIONS OF THIS 55 SECTION. S. 4228--A 3 1 (B) A NEW OR EXPANDING EMERGING TECHNOLOGY OR BIOTECHNOLOGY COMPANY 2 THAT HAS SURRENDERED AN UNUSED NET OPERATING LOSS CARRYOVER PURSUANT TO 3 THE PROVISIONS OF PARAGRAPH (F) OF SUBDIVISION NINE OF SECTION TWO 4 HUNDRED EIGHT OF THIS ARTICLE SHALL NOT BE ALLOWED A NET OPERATING LOSS 5 CARRYOVER DEDUCTION BASED UPON THE RIGHT TO SUCH A DEDUCTION, AS 6 EVIDENCED BY SUCH CORPORATION BUSINESS TAX BENEFIT CERTIFICATE, AND 7 SHALL ATTACH A COPY OF THE CERTIFICATE TO ANY RETURN THE TAXPAYER IS 8 REQUIRED TO FILE. 9 3. (A) A TAXPAYER THAT HAS ACQUIRED A CORPORATION BUSINESS TAX BENEFIT 10 CERTIFICATE PURSUANT TO SUBDIVISION ONE OF THIS SECTION THAT INCLUDES 11 THE RIGHT TO A RESEARCH AND DEVELOPMENT TAX CREDIT CARRYOVER PURSUANT TO 12 SUBPARAGRAPH (I) OF PARAGRAPH (B) OF SUBDIVISION TWELVE OF SECTION TWO 13 HUNDRED TEN OF THIS ARTICLE SHALL ATTACH THAT CERTIFICATE TO ANY RETURN 14 THE TAXPAYER IS REQUIRED TO FILE AND SHALL OTHERWISE APPLY THE CREDIT 15 CARRYOVER, AS EVIDENCED BY THE CERTIFICATE, ACCORDING TO THE PROVISIONS 16 OF PARAGRAPH (B) OF SUBDIVISION ONE OF THIS SECTION AND ANY RULES OR 17 REGULATIONS THE COMMISSIONER MAY ADOPT TO CARRY OUT THE PROVISIONS OF 18 THIS SECTION. 19 (B) A NEW OR EXPANDING TECHNOLOGY OR BIOTECHNOLOGY COMPANY THAT HAS 20 SURRENDERED AN UNUSED RESEARCH AND DEVELOPMENT TAX CREDIT CARRYOVER 21 SHALL NOT BE ALLOWED A RESEARCH AND DEVELOPMENT TAX CREDIT CARRYOVER 22 BASED UPON THE RIGHT TO SUCH A CREDIT CARRYOVER, AS EVIDENCED BY THE 23 CORPORATION BUSINESS TAX BENEFIT CERTIFICATE, AND SHALL ATTACH A COPY OF 24 THE CERTIFICATE TO ANY RETURN THE TAXPAYER IS REQUIRED TO FILE. 25 4. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS HAVE THE 26 FOLLOWING MEANINGS: 27 (A) "ADVANCED COMPUTING" MEANS A TECHNOLOGY USED IN THE DESIGNING AND 28 DEVELOPING OF COMPUTING HARDWARE AND SOFTWARE, INCLUDING INNOVATIONS IN 29 DESIGNING THE FULL SPECTRUM OF HARDWARE FROM HAND-HELD CALCULATORS TO 30 SUPER COMPUTERS, AND PERIPHERAL EQUIPMENT. 31 (B) "ADVANCED MATERIALS" MEANS MATERIALS WITH ENGINEERED PROPERTIES 32 CREATED THROUGH THE DEVELOPMENT OF SPECIALIZED PROCESSING AND SYNTHESIS 33 TECHNOLOGY, INCLUDING CERAMICS, HIGH VALUE-ADDED METALS, ELECTRONIC 34 MATERIALS, COMPOSITES, POLYMERS, AND BIOMATERIALS. 35 (C) "BIOTECHNOLOGY" MEANS THE CONTINUALLY EXPANDING BODY OF FUNDAMEN- 36 TAL KNOWLEDGE ABOUT THE FUNCTION OF BIOLOGICAL SYSTEMS FROM THE MACRO 37 LEVEL TO THE MOLECULAR AND SUBATOMIC LEVELS, AS WELL AS NOVEL PRODUCTS, 38 SERVICES, TECHNOLOGIES, AND SUB-TECHNOLOGIES DEVELOPED AS A RESULT OF 39 INSIGHTS GAINED FROM RESEARCH ADVANCES WHICH ADD TO THAT BODY OF FUNDA- 40 MENTAL KNOWLEDGE. 41 (D) "CONTROL", WITH RESPECT TO A CORPORATION, MEANS OWNERSHIP, DIRECT- 42 LY OR INDIRECTLY, OF STOCK POSSESSING EIGHTY PERCENT OR MORE OF THE 43 TOTAL COMBINED VOTING POWER OF ALL CLASSES OF THE STOCK OF THE CORPO- 44 RATION ENTITLED TO VOTE; AND "CONTROL", WITH RESPECT TO A TRUST, MEANS 45 OWNERSHIP, DIRECTLY OR INDIRECTLY, OF EIGHTY PERCENT OR MORE OF THE 46 BENEFICIAL INTEREST IN THE PRINCIPAL OR INCOME OF THE TRUST. THE OWNER- 47 SHIP OF STOCK IN A CORPORATION, OF A CAPITAL OR PROFITS INTEREST IN A 48 PARTNERSHIP OR ASSOCIATION, OR OF A BENEFICIAL INTEREST IN A TRUST SHALL 49 BE DETERMINED IN ACCORDANCE WITH THE RULES FOR CONSTRUCTIVE OWNERSHIP OF 50 STOCK PROVIDED IN SUBSECTION (C) OF SECTION 267 OF THE FEDERAL INTERNAL 51 REVENUE CODE OF 1986, 26 U.S.C. S267, OTHER THAN PARAGRAPH (3) OF 52 SUBSECTION (C) OF SUCH SECTION. 53 (E) "CONTROLLED GROUP" MEANS ONE OR MORE CHAINS OF CORPORATIONS 54 CONNECTED THROUGH STOCK OWNERSHIP WITH A COMMON PARENT CORPORATION IF 55 STOCK POSSESSING AT LEAST EIGHTY PERCENT OF THE VOTING POWER OF ALL 56 CLASSES OF STOCK OF EACH OF THE CORPORATIONS IS OWNED DIRECTLY OR INDI- S. 4228--A 4 1 RECTLY BY ONE OR MORE OF THE CORPORATIONS AND THE COMMON PARENT OWNS 2 DIRECTLY STOCK POSSESSING AT LEAST EIGHTY PERCENT OF THE VOTING POWER OF 3 ALL CLASSES OF STOCK OF AT LEAST ONE OF THE OTHER CORPORATIONS. 4 (F) "ELECTRONIC DEVICE TECHNOLOGY" MEANS A TECHNOLOGY INVOLVING MICRO- 5 ELECTRONICS, SEMICONDUCTORS, ELECTRONIC EQUIPMENT, AND INSTRUMENTATION, 6 RADIO FREQUENCY, MICROWAVE, AND MILLIMETER ELECTRONICS, AND OPTICAL AND 7 OPTIC-ELECTRICAL DEVICES, OR DATA AND DIGITAL COMMUNICATIONS AND IMAGING 8 DEVICES. 9 (G) "ENVIRONMENTAL TECHNOLOGY" MEANS ASSESSMENT AND PREVENTION OF 10 THREATS OR DAMAGE TO HUMAN HEALTH OR THE ENVIRONMENT, ENVIRONMENTAL 11 CLEANUP, OR THE DEVELOPMENT OF ALTERNATIVE ENERGY SOURCES. 12 (H) "MEDICAL DEVICE TECHNOLOGY" MEANS A TECHNOLOGY INVOLVING ANY 13 MEDICAL EQUIPMENT OR PRODUCT (OTHER THAN A PHARMACEUTICAL PRODUCT) THAT 14 HAS THERAPEUTIC VALUE, DIAGNOSTIC VALUE, OR BOTH, AND IS REGULATED BY 15 THE FEDERAL FOOD AND DRUG ADMINISTRATION. 16 (I) "PARTNERSHIP" MEANS A SYNDICATE, GROUP, POOL, JOINT VENTURE, OR 17 OTHER UNINCORPORATED ORGANIZATION THROUGH OR BY MEANS OF WHICH ANY BUSI- 18 NESS, FINANCIAL OPERATION, OR VENTURE IS CARRIED ON, AND WHICH IS NOT A 19 TRUST OR ESTATE, A CORPORATION, OR A SOLE PROPRIETORSHIP. 20 (J) "PILOT SCALE MANUFACTURING" MEANS DESIGN, CONSTRUCTION, AND TEST- 21 ING OF PREPRODUCTION PROTOTYPES AND MODELS IN THE FIELDS OF ADVANCED 22 COMPUTING, ADVANCED MATERIALS, BIOTECHNOLOGY, ELECTRONIC DEVICE TECHNOL- 23 OGY, ENVIRONMENTAL TECHNOLOGY, AND MEDICAL DEVICE TECHNOLOGY, OTHER THAN 24 FOR COMMERCIAL SALE, EXCLUDING SALES OF PROTOTYPES OR SALES FOR MARKET 25 TESTING, IF TOTAL GROSS RECEIPTS FROM SUCH SALES OF THE PRODUCT, 26 SERVICE, OR PROCESS DO NOT EXCEED ONE MILLION DOLLARS. 27 (K) "QUALIFIED INVESTMENT" MEANS THE NON-REFUNDABLE INVESTMENT AT RISK 28 IN A SMALL NEW YORK-BASED HIGH TECHNOLOGY BUSINESS BY A TAXPAYER THAT IS 29 NOT A RELATED PERSON OF THE SMALL NEW YORK BASED HIGH-TECHNOLOGY BUSI- 30 NESS, THE TRANSFER OF WHICH IS IN CONNECTION WITH A TRANSACTION IN 31 EXCHANGE FOR STOCK, INTEREST IN PARTNERSHIPS OR JOINT VENTURES, LICENSES 32 (EXCLUSIVE OR NON-EXCLUSIVE), RIGHT TO USE TECHNOLOGY, MARKETING RIGHTS, 33 WARRANTS, OPTIONS, OR ANY ITEM SIMILAR TO THOSE INCLUDED IN THIS PARA- 34 GRAPH, INCLUDING BUT NOT LIMITED TO OPTIONS OR RIGHTS TO ACQUIRE ANY OF 35 THE ITEMS INCLUDED IN THIS PARAGRAPH. 36 (L) "QUALIFIED RESEARCH EXPENSES" MEANS QUALIFIED RESEARCH EXPENSES, 37 AS DEFINED IN SECTION 41 OF THE FEDERAL INTERNAL REVENUE CODE OF 1986, 38 26 U.S.C. S 41, AS IN EFFECT ON JUNE THIRTIETH, NINETEEN HUNDRED NINE- 39 TY-TWO, IN THE FIELDS OF ENVIRONMENTAL TECHNOLOGY OR MEDICAL DEVICE 40 TECHNOLOGY. 41 (M) "RELATED PERSON" MEANS: 42 (1) A CORPORATION, PARTNERSHIP, ASSOCIATION, OR TRUST BY THE TAXPAYER; 43 (2) AN INDIVIDUAL, CORPORATION, PARTNERSHIP, ASSOCIATION, OR TRUST 44 THAT IS IN THE CONTROL OF THE TAXPAYER; 45 (3) A CORPORATION, PARTNERSHIP, ASSOCIATION, OR TRUST CONTROLLED BY AN 46 INDIVIDUAL, CORPORATION, PARTNERSHIP, ASSOCIATION, OR TRUST THAT IS IN 47 THE CONTROL OF THE TAXPAYER; OR 48 (4) A MEMBER OF THE SAME CONTROLLED GROUP AS A TAXPAYER. 49 (N) "SMALL NEW YORK BASED HIGH-TECHNOLOGY BUSINESS" MEANS A CORPO- 50 RATION DOING BUSINESS EMPLOYING OR OWNING CAPITAL OR PROPERTY, OR MAIN- 51 TAINING AN OFFICE, IN THIS STATE THAT HAS QUALIFIED RESEARCH EXPENSES 52 PAID OR INCURRED FOR RESEARCH EXPENSES CONDUCTED IN THIS STATE OR 53 CONDUCTS PILOT SCALE MANUFACTURING IN THIS STATE, AND HAS FEWER THAN TWO 54 HUNDRED TWENTY-FIVE EMPLOYEES, OF WHOM SEVENTY-FIVE PERCENT ARE NEW 55 YORK-BASED EMPLOYEES FILLING A POSITION OR JOB IN THIS STATE. S. 4228--A 5 1 (O) "TAX YEAR" MEANS THE FISCAL OR CALENDAR ACCOUNTING YEAR OF A 2 TAXPAYER. 3 S 3. The tax law is amended by adding a new section 606-a to read as 4 follows: 5 S 606-A. NONCORPORATION TAX BENEFIT CERTIFICATE TRANSFER PROGRAM. (A) 6 (1) THE DEPARTMENT SHALL ESTABLISH A CORPORATION BUSINESS TAX BENEFIT 7 CERTIFICATE TRANSFER PROGRAM TO ALLOW NEW OR EXPANDING EMERGING TECHNOL- 8 OGY AND BIOTECHNOLOGY COMPANIES IN THIS STATE HAVING UNUSED AMOUNTS OF 9 RESEARCH AND DEVELOPMENT TAX CREDITS OTHERWISE ALLOWABLE PURSUANT TO 10 SUBPARAGRAPH (A) OF PARAGRAPH TWO OF SUBSECTION (A) OF SECTION SIX 11 HUNDRED SIX OF THIS ARTICLE, WHICH CANNOT BE APPLIED FOR THE CREDIT'S 12 TAX YEAR, AND UNUSED NET OPERATING LOSS CARRYOVER PURSUANT TO SUBSECTION 13 (B) OF SECTION SIX HUNDRED SEVENTEEN AND SUBSECTION (B) OF SECTION SIX 14 HUNDRED THIRTY-THREE OF THIS ARTICLE TO SURRENDER SUCH TAX BENEFITS FOR 15 USE BY OTHER ENTITIES SUBJECT TO THE PROVISIONS OF THIS ARTICLE IN 16 EXCHANGE FOR PRIVATE FINANCIAL ASSISTANCE TO BE PROVIDED SUCH TAXPAYERS 17 OR EXPANDING EMERGING TECHNOLOGY AND BIOTECHNOLOGY COMPANIES. SUCH 18 TAXPAYERS SHALL BE PROVIDED WITH A NONCORPORATION BUSINESS TAX BENEFIT 19 CERTIFICATE TO BE DEVELOPED BY THE COMMISSIONER. 20 (2) THE COMMISSIONER, IN COOPERATION WITH THE COMMISSIONER OF THE 21 DEPARTMENT OF ECONOMIC DEVELOPMENT, SHALL REVIEW AND APPROVE APPLICA- 22 TIONS BY NEW OR EXPANDING TECHNOLOGY AND BIOTECHNOLOGY COMPANIES IN THIS 23 STATE HAVING UNUSED BUT OTHERWISE ALLOWABLE CARRYOVER OF RESEARCH AND 24 DEVELOPMENT TAX CREDITS AND OTHERWISE ALLOWABLE NET OPERATING LOSS 25 CARRYOVERS PURSUANT TO EITHER SUBPARAGRAPH (A) OF PARAGRAPH TWO OF 26 SUBSECTION (A) OF SECTION SIX HUNDRED SIX OR SUBSECTION (B) OF SECTION 27 SIX HUNDRED SEVENTEEN OR SUBSECTION (B) OF SECTION SIX HUNDRED 28 THIRTY-THREE OF THIS ARTICLE, RESPECTIVELY, TO SURRENDER THOSE TAX BENE- 29 FITS IN EXCHANGE FOR PRIVATE FINANCIAL ASSISTANCE TO BE MADE TO A 30 TAXPAYER FILING PURSUANT TO THIS ARTICLE WHO HAS OBTAINED A NONCORPO- 31 RATION BUSINESS TAX BENEFIT CERTIFICATE IN AN AMOUNT EQUAL TO AT LEAST 32 SEVENTY-FIVE PERCENT OF THE AMOUNT OF THE SURRENDERED TAX BENEFITS. 33 (3) THE COMMISSIONER SHALL CALCULATE THE VALUE OF THE NET OPERATING 34 LOSS CARRYOVER FOR PURPOSES OF THE BENEFIT CERTIFICATE EQUAL TO THE 35 AMOUNT OF THE CARRYOVER TIMES THE APPLICABLE BUSINESS ALLOCATION 36 PERCENTAGE AND TAX RATE OF THE EMERGING TECHNOLOGY OR BIOTECHNOLOGY 37 COMPANY. 38 (4) THE COMMISSIONER, IN COOPERATION WITH THE COMMISSIONER OF THE 39 DEPARTMENT OF ECONOMIC DEVELOPMENT, SHALL REVIEW AND APPROVE APPLICA- 40 TIONS BY TAXPAYERS SUBJECT TO THE PROVISIONS OF THIS ARTICLE TO ACQUIRE 41 SURRENDERED TAX BENEFITS APPROVED PURSUANT TO PARAGRAPH TWO OF THIS 42 SUBSECTION, WHICH SHALL BE ISSUED IN THE FORM OF NONCORPORATION BUSINESS 43 TAX BENEFIT TRANSFER CERTIFICATES, IN EXCHANGE FOR PRIVATE FINANCIAL 44 ASSISTANCE TO BE MADE BY THE TAXPAYER IN AN AMOUNT EQUAL TO AT LEAST 45 SEVENTY-FIVE PERCENT OF THE AMOUNT OF THE SURRENDERED TAX BENEFIT OF AN 46 EMERGING TECHNOLOGY OR BIOTECHNOLOGY COMPANY IN THE STATE. THE PRIVATE 47 FINANCIAL ASSISTANCE SHALL ASSIST IN FUNDING EXPENSES INCURRED IN 48 CONNECTION WITH THE OPERATION OF A NEW OR EXPANDING EMERGING TECHNOLOGY 49 OR BIOTECHNOLOGY COMPANY IN THE STATE, INCLUDING BUT NOT LIMITED TO THE 50 EXPENSES OF FIXED ASSETS, SUCH AS THE CONSTRUCTION AND ACQUISITION AND 51 DEVELOPMENT OF REAL ESTATE, MATERIALS, START-UP, TENANT FIT-OUT, WORKING 52 CAPITAL, SALARIES, RESEARCH, AND DEVELOPMENT EXPENDITURES. 53 (5) THE COMMISSIONER SHALL COORDINATE THE APPLICATIONS, IN CONJUNCTION 54 WITH THE DEPARTMENT OF ECONOMIC DEVELOPMENT, FOR SURRENDER AND ACQUISI- 55 TION OF UNUSED BUT OTHERWISE ALLOWABLE TAX BENEFITS PURSUANT TO THIS 56 SECTION IN A MANNER THAT CAN BEST STIMULATE AND ENCOURAGE THE EXTENSION S. 4228--A 6 1 OF PRIVATE FINANCIAL ASSISTANCE TO NEW AND EXPANDING EMERGING TECHNOLOGY 2 AND BIOTECHNOLOGY COMPANIES IN THIS STATE INTO A WRITTEN AGREEMENT WITH 3 SUCH COMPANY CONCERNING THE TERMS AND CONDITIONS OF THE PRIVATE FINAN- 4 CIAL ASSISTANCE MADE IN EXCHANGE FOR THE CERTIFICATE. THE WRITTEN AGREE- 5 MENT MAY CONTAIN TERMS CONCERNING THE MAINTENANCE BY THE NEW OR EXPAND- 6 ING EMERGING TECHNOLOGY OR BIOTECHNOLOGY COMPANY OF A HEADQUARTERS OR A 7 BASE OF OPERATION IN THIS STATE. 8 (B)(1) A TAXPAYER THAT HAS ACQUIRED A NONCORPORATION BUSINESS TAX 9 BENEFIT CERTIFICATE PURSUANT TO THE PROVISIONS OF PARAGRAPH TWO OF 10 SUBSECTION (A) OF THIS SECTION THAT INCLUDES THE RIGHT TO A NET OPERAT- 11 ING LOSS CARRYOVER DEDUCTION SHALL ATTACH THAT CERTIFICATE TO ANY RETURN 12 THE TAXPAYER IS REQUIRED TO FILE AND SHALL OTHERWISE APPLY THE NET OPER- 13 ATING LOSS CARRYOVER DEDUCTION, AS EVIDENCED BY THE CERTIFICATE, ACCORD- 14 ING TO THE PROVISIONS OF PARAGRAPH TWO OF SUBSECTION (A) OF THIS SECTION 15 AND ANY RULES OR REGULATIONS THE COMMISSIONER MAY ADOPT TO CARRY OUT THE 16 PROVISIONS OF THIS SECTION. 17 (2) A NEW OR EXPANDING EMERGING TECHNOLOGY OR BIOTECHNOLOGY COMPANY 18 THAT HAS SURRENDERED AN UNUSED NET OPERATING LOSS CARRYOVER PURSUANT TO 19 THE PROVISIONS OF SUBSECTION (B) OF SECTION SIX HUNDRED SEVENTEEN AND 20 SUBSECTION (B) OF SECTION SIX HUNDRED THIRTY-THREE OF THIS ARTICLE SHALL 21 NOT BE ALLOWED A NET OPERATING LOSS CARRYOVER DEDUCTION BASED UPON THE 22 RIGHT TO SUCH A DEDUCTION, AS EVIDENCED BY SUCH NONCORPORATION BUSINESS 23 TAX BENEFIT CERTIFICATE, AND SHALL ATTACH A COPY OF THE CERTIFICATE TO 24 ANY RETURN THE TAXPAYER IS REQUIRED TO FILE. 25 (C) (1) A TAXPAYER THAT HAS ACQUIRED A NONCORPORATION BUSINESS TAX 26 BENEFIT CERTIFICATE PURSUANT TO SUBSECTION (A) OF THIS SECTION THAT 27 INCLUDES THE RIGHT TO A RESEARCH AND DEVELOPMENT TAX CREDIT CARRYOVER 28 SHALL ATTACH THAT CERTIFICATE TO ANY RETURN THE TAXPAYER IS REQUIRED TO 29 FILE AND SHALL OTHERWISE APPLY THE CREDIT CARRYOVER, AS EVIDENCED BY THE 30 CERTIFICATE, ACCORDING TO THE PROVISIONS OF PARAGRAPH TWO OF SUBSECTION 31 (A) OF THIS SECTION AND ANY RULES OR REGULATIONS THE COMMISSIONER MAY 32 ADOPT TO CARRY OUT THE PROVISIONS OF THIS SECTION. 33 (2) A NEW OR EXPANDING EMERGING TECHNOLOGY OR BIOTECHNOLOGY COMPANY 34 THAT HAS SURRENDERED AN UNUSED RESEARCH AND DEVELOPMENT TAX CREDIT 35 CARRYOVER SHALL NOT BE ALLOWED A RESEARCH AND DEVELOPMENT TAX CREDIT 36 CARRYOVER BASED UPON THE RIGHT TO SUCH A CREDIT CARRYOVER, AS EVIDENCED 37 BY THE NONCORPORATION BUSINESS TAX BENEFIT CERTIFICATE, AND SHALL ATTACH 38 A COPY OF THE CERTIFICATE TO ANY RETURN THE TAXPAYER IS REQUIRED TO 39 FILE. 40 (D) FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE 41 THE FOLLOWING MEANINGS: 42 (1) "ADVANCED COMPUTING" MEANS A TECHNOLOGY USED IN DESIGNING AND 43 DEVELOPING COMPUTING HARDWARE AND SOFTWARE, INCLUDING INNOVATIONS IN 44 DESIGNING THE FULL SPECTRUM OF HARDWARE FROM HAND-HELD CALCULATORS TO 45 SUPER COMPUTERS, AND PERIPHERAL EQUIPMENT. 46 (2) "ADVANCED MATERIALS" MEANS MATERIALS WITH ENGINEERED PROPERTIES 47 CREATED THROUGH THE DEVELOPMENT OF SPECIALIZED PROCESSING AND SYNTHESIS 48 TECHNOLOGY, INCLUDING CERAMICS, HIGH VALUE-ADDED METALS, ELECTRONIC 49 MATERIALS, COMPOSITES, POLYMERS, AND BIOMATERIALS. 50 (3) "BIOTECHNOLOGY" MEANS THE CONTINUALLY EXPANDING BODY OF FUNDAMEN- 51 TAL KNOWLEDGE ABOUT THE FUNCTION OF BIOLOGICAL SYSTEMS FROM THE MACRO 52 LEVEL TO THE MOLECULAR AND SUBATOMIC LEVELS, AS WELL AS NOVEL PRODUCTS, 53 SERVICES, TECHNOLOGIES, AND SUB-TECHNOLOGIES DEVELOPED AS A RESULT OF 54 INSIGHTS GAINED FROM RESEARCH ADVANCES WHICH ADD TO THAT BODY OF FUNDA- 55 MENTAL KNOWLEDGE. S. 4228--A 7 1 (4) "CONTROL", WITH RESPECT TO A CORPORATION, MEANS OWNERSHIP, DIRECT- 2 LY OR INDIRECTLY, OF STOCK POSSESSING EIGHTY PERCENT OR MORE OF THE 3 TOTAL COMBINED VOTING POWER OF ALL CLASSES OF THE STOCK OF THE CORPO- 4 RATION ENTITLED TO VOTE; AND "CONTROL", WITH RESPECT TO A TRUST, MEANS 5 OWNERSHIP, DIRECTLY OR INDIRECTLY, OF EIGHTY PERCENT OR MORE OF THE 6 BENEFICIAL INTEREST IN THE PRINCIPAL OR INCOME OF THE TRUST. THE OWNER- 7 SHIP OF STOCK IN A CORPORATION, OF A CAPITAL OR PROFITS INTEREST IN A 8 PARTNERSHIP OR ASSOCIATION, OR OF A BENEFICIAL INTEREST IN A TRUST SHALL 9 BE DETERMINED IN ACCORDANCE WITH THE RULES FOR CONSTRUCTIVE OWNERSHIP OF 10 STOCK PROVIDED IN SUBSECTION (C) OF SECTION 267 OF THE FEDERAL INTERNAL 11 REVENUE CODE OF 1986, 26 U.S.C. S 267, OTHER THAN PARAGRAPH (3) OF 12 SUBSECTION (C) OF SUCH SECTION. 13 (5) "CONTROLLED GROUP" MEANS ONE OR MORE CHAINS OF CORPORATIONS 14 CONNECTED THROUGH STOCK OWNERSHIP WITH A COMMON PARENT CORPORATION IF 15 STOCK IS POSSESSING AT LEAST EIGHTY PERCENT OF THE VOTING POWER OF ALL 16 CLASSES OF STOCK OF EACH OF THE CORPORATIONS IS OWNED DIRECTLY OR INDI- 17 RECTLY BY ONE OR MORE OF THE CORPORATIONS AND THE COMMON PARENT OWNS 18 DIRECTLY STOCK POSSESSING AT LEAST EIGHTY PERCENT OF THE VOTING POWER OF 19 ALL CLASSES OF STOCK OF AT LEAST ONE OF THE OTHER CORPORATIONS. 20 (6) "ELECTRONIC DEVICE TECHNOLOGY" MEANS A TECHNOLOGY INVOLVING MICRO- 21 ELECTRONICS, SEMICONDUCTORS, ELECTRONIC EQUIPMENT, AND INSTRUMENTATION, 22 RADIO FREQUENCY, MICROWAVE, AND MILLIMETER ELECTRONICS, AND OPTICAL AND 23 OPTIC-ELECTRICAL DEVICES, OR DATA AND DIGITAL COMMUNICATIONS AND IMAGING 24 DEVICES. 25 (7) "ENVIRONMENTAL TECHNOLOGY" MEANS ASSESSMENT AND PREVENTION OF 26 THREATS OR DAMAGE TO HUMAN HEALTH OR THE ENVIRONMENT, ENVIRONMENTAL 27 CLEANUP, OR THE DEVELOPMENT OF ALTERNATIVE ENERGY SOURCES. 28 (8) "MEDICAL DEVICE TECHNOLOGY" MEANS A TECHNOLOGY INVOLVING ANY 29 MEDICAL EQUIPMENT OR PRODUCT (OTHER THAN A PHARMACEUTICAL PRODUCT) THAT 30 HAS THERAPEUTIC VALUE, DIAGNOSTIC VALUE, OR BOTH, AND IS REGULATED BY 31 THE FEDERAL FOOD AND DRUG ADMINISTRATION. 32 (9) "PARTNERSHIP" MEANS A SYNDICATE, GROUP, POOL, JOINT VENTURE OR 33 OTHER UNINCORPORATED ORGANIZATION THROUGH OR BY MEANS OF WHICH ANY BUSI- 34 NESS, FINANCIAL OPERATION, OR VENTURE IS CARRIED ON, AND WHICH IS NOT A 35 TRUST OR ESTATE, A CORPORATION, OR A SOLE PROPRIETORSHIP. 36 (10) "PILOT SCALE MANUFACTURING" MEANS DESIGN, CONSTRUCTION, AND TEST- 37 ING OF PREPRODUCTION PROTOTYPES AND MODELS IN THE FIELDS OF ADVANCED 38 COMPUTING, ADVANCED MATERIALS, BIOTECHNOLOGY, ELECTRONIC DEVICE TECHNOL- 39 OGY, ENVIRONMENTAL TECHNOLOGY, AND MEDICAL DEVICE TECHNOLOGY, OTHER THAN 40 FOR COMMERCIAL SALE, EXCLUDING SALES OF PROTOTYPES OR SALES FOR MARKET 41 TESTING, IF TOTAL GROSS RECEIPTS FROM SUCH SALES OF THE PRODUCT, 42 SERVICE, OR PROCESS DO NOT EXCEED ONE MILLION DOLLARS. 43 (11) "QUALIFIED INVESTMENT" MEANS THE NON-REFUNDABLE INVESTMENT AT 44 RISK IN A SMALL NEW YORK-BASED HIGH TECHNOLOGY BUSINESS BY A TAXPAYER 45 THAT IS NOT A RELATED PERSON OF THE SMALL NEW YORK BASED HIGH-TECHNOLOGY 46 BUSINESS, THE TRANSFER OF WHICH IS IN CONNECTION WITH A TRANSACTION IN 47 EXCHANGE FOR STOCK, INTEREST IN PARTNERSHIPS OR JOINT VENTURES, LICENSES 48 (EXCLUSIVE OR NON-EXCLUSIVE), RIGHTS TO USE TECHNOLOGY, MARKETING 49 RIGHTS, WARRANTS, OPTIONS, OR RIGHTS TO ACQUIRE ANY OF THE ITEMS SIMILAR 50 TO THOSE INCLUDED IN THIS PARAGRAPH, INCLUDING BUT NOT LIMITED TO 51 OPTIONS OR RIGHTS TO ACQUIRE ANY OF THE ITEMS INCLUDED IN THIS PARA- 52 GRAPH. 53 (12) "QUALIFIED RESEARCH EXPENSES" MEANS QUALIFIED RESEARCH EXPENSES, 54 AS DEFINED IN SECTION 41 OF THE FEDERAL INTERNAL REVENUE CODE OF 1986, 55 26 U.S.C. S 41, AS IN EFFECT ON JUNE THIRTIETH, NINETEEN HUNDRED NINE- S. 4228--A 8 1 TY-TWO, IN THE FIELDS OF ENVIRONMENTAL TECHNOLOGY OR MEDICAL DEVICE 2 TECHNOLOGY. 3 (13) "RELATED PERSON" MEANS: 4 (A) A CORPORATION, PARTNERSHIP, ASSOCIATION, OR TRUST BY THE TAXPAYER; 5 (B) AN INDIVIDUAL, CORPORATION, PARTNERSHIP, ASSOCIATION, OR TRUST 6 THAT IS IN THE CONTROL OF THE TAXPAYER; 7 (C) A CORPORATION, PARTNERSHIP, ASSOCIATION, OR TRUST CONTROLLED BY AN 8 INDIVIDUAL, CORPORATION, PARTNERSHIP, ASSOCIATION, OR TRUST THAT IS IN 9 THE CONTROL OF THE TAXPAYER; OR 10 (D) A MEMBER OF THE SAME CONTROLLED GROUP AS THE TAXPAYER. 11 (14) "SMALL NEW YORK BASED HIGH-TECHNOLOGY BUSINESS" MEANS A CORPO- 12 RATION DOING BUSINESS EMPLOYING OR OWNING CAPITAL OR PROPERTY, OR MAIN- 13 TAINING AN OFFICE, IN THIS STATE THAT HAS QUALIFIED RESEARCH EXPENSES 14 PAID OR INCURRED FOR RESEARCH CONDUCTED IN THIS STATE OR CONDUCTS PILOT 15 SCALE MANUFACTURING IN THIS STATE, AND HAS FEWER THAN TWO HUNDRED TWEN- 16 TY-FIVE EMPLOYEES, OF WHOM SEVENTY-FIVE PERCENT ARE NEW YORK-BASED 17 EMPLOYEES FILLING A POSITION OR JOB IN THIS STATE. 18 (15) "TAX YEAR" MEANS THE FISCAL OR CALENDAR ACCOUNTING YEAR OF A 19 TAXPAYER. 20 S 4. This act shall take effect immediately and shall apply to taxable 21 years which commence on or after January 1, 2012.