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 Laws of New York (Last Updated: November 21, 2014)
  TAX Tax
 Article 22. PERSONAL INCOME TAX
 Part III. NONRESIDENTS AND PART-YEAR RESIDENTS * 631. New York source income of a nonresident individual. * 632. Nonresident partners and electing shareholders of S corporations. * 633. New York source income of a nonresident estate or trust. * 634. Share of a nonresident beneficiary in income from New York sources. * 635. Credit to trust beneficiary receiving accumulation distribution. * 636. New York minimum taxable income of nonresidents or part-year residents. * 637. Computation of separate tax on the ordinary income portion of lump sum distributions received by nonresident or part-year resident individuals, estates and trusts. * 638. New York source income of a part-year resident. 639. Accruals upon change of residence. * NB Applicable to taxable years beginning after 1987. * PART III-NONRESIDENTS * 631. New York taxable income of a nonresident individual * 632. New York adjusted gross income of a nonresident individual. * 633. New York deduction of a nonresident individual * 634. New York standard deduction of a nonresident individual. * 635. New York itemized deduction of a nonresident individual. * 636. New York personal exemptions of a nonresident individual. * 637. Nonresident partners and electing shareholders of S corporations. * 638*. New York taxable income of a nonresident estate or trust. * 641. New York minimum taxable income of nonresidents. * 642. Computation of separate tax on the ordinary income portion of lump sum distributions received by nonresident individuals, estates and trusts. * (Repealed for taxable years beginning after 1987)

  Section 632-A. Personal service corporations and S corporations formed or availed of to avoid or evade New York State income tax  

Latest version. 
  • (a) General.  If  (1)  substantially all of the services of a personal service corporation
  or S corporation are performed for or on behalf of another  corporation,
  partnership,  or  other entity and (2) the effect of forming or availing
  of such personal service corporation or S corporation is  the  avoidance
  or  evasion  of New York income tax by reducing the income of, or in the
  case of a nonresident, reducing  the  New  York  source  income  of,  or
  securing  the  benefit  of any expense, deduction, credit, exclusion, or
  other allowance for, any employee-owner which  would  not  otherwise  be
  available,  then  the  commissioner may allocate all income, deductions,
  credits, exclusions, and other allowances between such personal  service
  corporation  or S corporation (even if such personal service corporation
  or S corporation is taxed under article nine-A of this chapter or is not
  subject to tax in this state) and  its  employee-owners,  provided  such
  allocation  is  necessary  to  prevent  avoidance or evasion of New York
  state income tax or to clearly reflect the source and the amount of  the
  income  of  the  personal service corporation or S corporation or any of
  its employee-owners.
    (b) Definitions for purposes of this section. (1) The  term  "personal
  service corporation" means a corporation whose principal activity is the
  performance  of  personal  services  and such services are substantially
  performed by the employee-owners of such corporation.
    (2) The term "S corporation" means a corporation for which an election
  under section 1362 of the internal revenue code is in  effect  for  such
  taxable year and whose principal activity is the performance of personal
  services   and   such   services  are  substantially  performed  by  the
  employee-owners of such corporation.
    (3) The term "employee-owner" means any  employee  who  owns,  on  any
  given  day  during  the  taxable  year,  more  than  ten  percent of the
  outstanding stock of the personal service corporation or S  corporation.
  For  purposes  of  the preceding sentence, the constructive ownership of
  stock rules set forth in section 318 of the internal revenue code  shall
  apply,  except that "5 percent" shall be substituted for "50 percent" in
  section 318(a)(2)(C) of the internal revenue code.
    (4) All related persons (within the meaning of  section  144(a)(3)  of
  the internal revenue code) shall be treated as one entity.