This is an important reminder that non-securities dealer corporations subject to New York State and City corporate tax have until September 30, 2015 to identify stock as investment capital in order for the stock to qualify as investment capital and the income to qualify as exempt investment income.

Under recent New York State and City corporate tax reform legislation — effective for tax years beginning on or after January 1, 2015 — the definition of investment capital was narrowed, but for the first time investment income was made entirely exempt from corporate tax. This past Spring, further legislation was enacted imposing a new five-part test for stock to qualify as investment capital. One of the new criteria for qualification is that the stock must be “clearly identified” in the taxpayer’s records as being held for investment.