Until a couple of years ago, New York State, like most states, apportioned the income of corporations that do business in multiple jurisdictions using the traditional three-factor formula. Under this formula, a corporation computes a percentage by dividing the amounts of property, payroll and receipts in the state by the respective amounts of worldwide property, payroll and receipts. The corporation would then average the three percentages to compute an overall allocation percentage which is then applied to the corporation’s worldwide net business income.1
In 2007, New York State amended its apportionment rules by adopting single sales factor apportionment.2 Under this approach, a multistate business multiplies its income by a fraction that compares New York sales (also referred to as “receipts”) to total sales from all jurisdictions. The rationale for adopting single sales factor apportionment is to encourage corporations to move to New York or to expand their New York operations by not increasing their apportioned income to reflect the additional New York property and payroll.3
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