Instructions for Form NYC-204

NEW YORK CITY DEPARTMENT OF FINANCE Instructions for Form NYC-204 Unincorporated Business Tax Return for Partnerships, including Limited Liability Companies 2020 Single member LLCs using SSN as their primary identifier must use Form NYC-202 Highlights of Recent Tax Law Changes for Partnerships (including Limited Liability Companies) ● New York City’s Business Corporation Tax, General Corporation Tax, Unincorporated Business Tax, and Banking Corporation Tax are decoupled from the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) changes to interest expense provisions under IRC section 163(j)(10) for tax years beginning in 2019 and 2020. Additionally, for tax years beginning before Jan- uary 1, 2021, the General Corporation Tax, Unincorporated Business Tax, and Banking Corporation Tax are decoupled from CARES Act changes to the net operating loss provisions under IRC section 172. The Unincorporated Business Tax is also decoupled from CARES Act changes to the limitation on excess business losses of non-corporate taxpayers under IRC section 461(l). Fi- nance Memorandum 20-6 discusses these issues in more detail. ● For details on the proper reporting of income and expenses addressed in the federal Tax Cuts and Jobs Act of 2017, such as manda- tory deemed repatriation income, foreign-derived intangible income (FDII), global intangible low-taxed income (GILTI), please refer to Finance Memorandum 18-10. For information about the IRC section 163(j) limitation on the business interest expense deduction, please refer to Finance Memorandum 18-11, updated to address New York City’s decoupling from the CARES Act as dis- cussed further above, within these instructions, and in Finance Memorandum 20-6. ● Note that according to the federal Tax Cuts and Jobs Act of 2017, net operating losses generated during or after 2018 generally may no longer be carried back. These losses may be carried forward indefinitely; however, each year’s deduction will be limited to 80% of taxable income (without regard to the deduction). ● Section 18 of part Q of Chapter 60 of the Laws of 2016 amended section 11-514 of the Administrative Code of the City of New York (“Administrative Code”) to provide that for tax years beginning on or after January 1, 2016, calendar year taxpayers which are partnerships for federal tax purposes are required to file tax reports for such year on or before March 15 of the following year, instead of April 15 of the following year, and fiscal year taxpayers must file tax reports for such fiscal year by the 15th day of the third month following the date its tax year ended. Note that the time for filing a declaration of estimated tax set forth in Ad. Code section 11-511 has not changed. ● For taxable years beginning on or after January 1, 2015, federal or state tax base changes should be reported as an Amended Re- turn. See Finance Memorandum 17-5, “Reporting Federal or State Changes”, revised and dated October 10, 2018, for more information. ● Royalty payments -- For tax years beginning on or after January 1, 2013, the Unincorporated Business Tax has been amended to change the treatment of royalty payments to related members. Under prior law, taxpayers who made royalty payments to related entities were required to add back the amount of the payments to taxable income if those payments were deducted when calculat- ing federal taxable income and if the royalty recipient, under certain conditions, could exclude the royalty income. Ad. Code section 11-506(e), as amended, eliminates the income exclusion previously allowed to certain royalty recipients and increases to four the number of exceptions to the add-back requirement. Part E of Chapter 59 of the Laws of 2013, § 9. For more information, see “Royalty Payments to Related Members,” below. ● For purposes of the New York City Unincorporated Business Tax, General Corporation Tax, Banking Corporation Tax and Busi- ness Corporation Tax, the City has “decoupled” from the Federal bonus depreciation allowed under IRC section 168(k), except with respect to the depreciation deductions allowed with respect to “qualified New York liberty zone property” and “qualified property” placed in service in the Resurgence Zone (generally the area in the borough of Manhattan south of Houston Street and north of Canal Street.) For City tax purposes, depreciation deductions for all other “qualified property” must be calculated as if the property was placed in service prior to September 11, 2001. See Form NYC-399Z and Finance Memorandum 20-1, “Application of the IRC §280F to Sports Utility Vehicles” for more information. IMPORTANT INFORMATION CONCERNING FORM NYC-200V AND PAYMENT OF TAX DUE Payments may be made on the NYC Department of Finance website at nyc.gov/eservices, or via check or money order. If pay- ing with check or money order, do not include these payments with your New York City return. Checks and money orders must be accompanied by payment voucher form NYC-200V and sent to the address on the voucher. Form NYC-200V must be post- marked by the return due date to avoid late payment penalties and interest. See form NYC-200V for more information. Instructions for Form NYC-204 - 2020 Page 2 GENERAL INFORMATION years beginning in 1995 that elected tion, and any other activity not constituting to continue to be subject to the Un- an unincorporated business subject to the PARTNERSHIP DEFINED incorporated Business Tax for Unincorporated Business Tax. For purposes of this form, “partnerships” include years after 1995 on a timely filed Property Defined. Property for this pur- syndicates, groups, pools, joint ventures, limited Unincorporated Business Tax re- pose includes real and personal property, in- liability companies (other than single-member turn for tax year beginning in 1996 cluding property qualifying as investment LLCs) and other unincorporated or incorporated continue to be subject to the Unin- capital (see instructions for Schedule D of organizations classified as partnerships for fed- corporated Business Tax. this form), and other stocks and securities, eral income tax purposes, through or by means of b) any entity subject to the tax im- notional principal contracts, derivative fi- which any business, profession, financial opera- posed by Title 11, Chapter 11 (Util- nancial instruments and other positions in tion or venture is carried on. An estate or trust is ity Tax) of the NYC Administrative property but excluding property and posi- not a partnership and must file using form NYC- Code (except that vendors of utility tions in property held by a dealer, and ex- 202EIN. services are subject to the unincor- cluding debt instruments acquired in the porated business tax on that per- ordinary course of a trade or business and WHO MUST FILE centage of their entire net income certain other property. See Admin. Code For tax years beginning in 2009 or later, any part- allocable to the City which their §11-502(c)(i)(A). nership that carries on or liquidates any trade, non-utility receipts bear to their business, profession or occupation wholly or total receipts); Notwithstanding anything to the contrary, partly within New York City and has a total gross the receipt of $25,000 or less of gross re- income from all business regardless of where car- c) any entity carrying on an insurance ceipts during the taxable year (determined ried on of more than $95,000 (prior to any de- business as a member of the New without regard to deductions) from an unin- duction for cost of goods sold or services York Insurance Exchange (autho- corporated business will not disqualify the performed) must file an Unincorporated Business rized in Section 6201 of the Insur- taxpayer for this exemption. Tax Return on Form NYC-204. ance Law); Partial Exemption for Investment Activi- Taxpayers that are required to file an Unincorpo- d) Real Estate Mortgage Investment ties: (Admin. Code §11-502(c)(4)) For tax- rated Business Tax Return but have no tax liability Conduits (REMICs). Holders of in- able years beginning after 1995, if a may be eligible to file a Form NYC-204EZ. To de- terests in a REMIC remain taxable taxpayer is an unincorporated entity (not an termine whether you may use Form NYC-204EZ, on such interests or on the income individual) and is primarily engaged in refer to that form. The Form NYC-204EZ may also from such interests. be used by a partnership that is not required to file 1. the activities described above under but wishes to disclaim any liability for tax because e) Wireless Telecommunications Service “Full Exemption for Investment Ac- Providers tivities ”or it is engaged solely in activities that are exempt from the tax. Effective for tax periods beginning 2. the ownership as an investor of inter- on and after August 1, 2002, entities ests in one or more other unincorpo- WHO IS SUBJECT TO THE TAX that receive eighty percent or more of rated entities engaged in an 1) The Unincorporated Business Tax is im- their gross receipts from charges for unincorporated business in the City. posed on any individual or unincorporated providing mobile telecommunica- entity (including a partnership, fiduciary or tions services to customers will be The taxpayer’s own activities described at corporation in liquidation) engaged in any taxed as if they were regulated utili- (1) and the activities of any other unincor- trade, business, profession, or occupation ties for purposes of the New York porated entity primarily engaged in the ac- wholly or partly carried on within New York City Utility Tax and Unincorporated tivities described at (1) and (2) in which City. the taxpayer holds an interest will not be Business Tax. Thus, such entities considered an unincorporated business car- 2) Income received from the practice of law, will be subject to only the New York ried on by the taxpayer and the income medicine, dentistry, architecture, or any City Utility Tax.

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