CT-3.1: Investment and Other Exempt Income and Investment Capital (2024)
New York · NY DTF · Used for tax years 2024
New York Form CT-3.1 is filed with Form CT-3 or CT-3-A to report investment income, other exempt income, investment capital, and related interest deductions. It also includes an election to use a 40% safe harbor reduction instead of direct or indirect attribution for certain inco
Who files this form
You must complete and file Form CT-3.1 with Form CT-3 or CT-3-A if you have any entries on those forms in:
- Part 3, line 8, 10, or 12;
- Part 5, line 16, 17, 18, or 20; or
- Part 6, line 44.
What you'll need
Have the following information available for the schedules that apply:
- Your corporation's legal name and employer identification number (EIN).
- Form CT-3 or CT-3-A, including entire net income (ENI) from Part 3, line 7.
- Amounts of GILTI, exempt CFC income, exempt unitary corporation dividends, cross-article dividends, investment dividends, and net capital gains in excess of losses.
- Directly and indirectly attributable interest deductions, where required.
- Investment details, including asset descriptions or Name/CUSIP/CINS/lot numbers, shares acquired and sold, acquisition and sale dates, average fair market value (FMV), and attributable liabilities. The required details vary by schedule.
- Totals from partnerships and additional sheets, if applicable.
If Schedule F applies, you will also need prior-year return information, including the prior-year Form CT-3.1, Schedule C, line 12 amount, the prior-year safe harbor election or attributable interest deductions, and previously reported investment values and liabilities.
How to file
File Form CT-3.1 with Form CT-3 or CT-3-A.
Transfer the totals to the CT-3 or CT-3-A lines identified on the schedule. For example, Schedule D, lines 1 and 2 go to Part 3, lines 8 and 10, respectively.
The supplied form text does not give a mailing address or e-filing directions.
Common mistakes
- Completing the wrong parts after electing the safe harbor. If you make the election, do not complete Schedule B, Parts 3, 4, or 5. In Schedule C, skip Part 3 and continue with Part 4.
- Applying the safe harbor to cross-article dividends. The election excludes gross exempt cross-article dividends.
- Entering negative amounts where prohibited. Follow each line's direction to enter zero or not enter less than zero.
- Listing investments that are not directly owned in the individual entry rows. Schedules E and F say to enter only directly owned assets or investments in items A through G. They provide separate rows for partnership totals.
- Completing Schedule F after correcting the prior-year return. Do not complete Schedule F if prior-year presumed investment capital failed the holding-period presumption and you amended the prior-year return to treat the stock as not investment capital and any related income as not investment income.
Questions people ask
What is the 40% safe harbor reduction election?
It is an election to reduce gross investment income and gross other exempt income, other than gross exempt cross-article dividends, by 40% instead of using direct or indirect attribution. Mark an X in Schedule A, line 1 to make the election.
How is gross investment income limited?
Schedule C, Part 1 sets the limitation at the greater of 8% of ENI, not less than zero, or gross investment income from investments generating income not taxable by New York under the U.S. Constitution.
Is there also an entire net income limitation?
Yes. Schedule B, line 28 limits allowed other exempt income to the lesser of ENI or other exempt income, with zero entered if the result is zero or less. Schedule C, line 23 limits allowed investment income to the lesser of investment income on line 21 or the remaining ENI limitation from Schedule B, line 29.
Does the form distinguish stocks actually held from stocks presumed held more than one year?
Yes. Schedule C reports their income separately, and Schedule E has separate parts for investment capital from stocks actually held more than one year and stocks presumed held more than one year.
What is Schedule F for?
Schedule F calculates current-year addbacks of prior-year presumed investment capital and investment income for stocks that did not meet the holding-period requirement. Do not complete it if you amended the prior-year return to treat those stocks as not investment capital and any related income as not investment income.