CT-3.1: Investment and Other Exempt Income and Investment Capital (2025)
New York · NY DTF · Used for tax years 2025
Form CT-3.1 is a New York corporation tax schedule filed with Form CT-3 or CT-3-A. It reports investment income, other exempt income, investment capital, and related interest deductions, and includes a 40% safe harbor reduction election.
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 that return in:
- Part 3, line 8, 10, or 12.
- Part 5, line 16, 17, 18, or 20.
- Part 6, line 44.
What you'll need
Have the following information available for the schedules that apply to you:
- 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 for exempt CFC income, exempt unitary corporation dividends, exempt cross-article dividends, investment dividends, and net capital gains in excess of losses.
- Interest deductions directly and indirectly attributable to the income or investment capital, as applicable.
- Investment details, including asset descriptions or investment identifiers, share counts, acquisition and sale dates, average fair market value (FMV), and attributable liabilities. Schedule E also has rows for totals from partnerships and additional sheets.
- If Schedule F applies, prior-year return information, including Form CT-3.1, Schedule C, line 12, and the previously reported values and income for stocks that failed the holding-period requirement.
How to file
File Form CT-3.1 with Form CT-3 or CT-3-A.
Transfer the amounts to the return as directed on the form:
- Schedule D, lines 1 and 2, to Part 3, lines 8 and 10.
- Schedule E, lines 1, 2, and 3, columns F, G, and H, to Part 5, lines 16, 17, and 18.
- If Schedule F applies, line 1, columns F, G, and H, to Part 5, line 20, and line 6 to Part 3, line 12.
The supplied form text does not provide a mailing address or e-file directions.
Common mistakes
- Completing the wrong parts after making the safe harbor election. 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 reduction to gross exempt cross-article dividends. Schedule A excludes these dividends from the election.
- Entering negative amounts where the form requires zero. Follow the “do not enter less than zero” and “if zero or less, enter 0” directions on the applicable lines.
- Listing investments that are not directly owned in items A through G. Schedules E and F restrict those items to directly owned assets or investments and provide separate rows for partnership totals.
- Completing Schedule F after correcting the prior-year return. Do not complete Schedule F if you amended the prior-year return to treat the stock that failed the holding-period presumption 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 the box on Schedule A, line 1, to make the election.
Are gross exempt cross-article dividends covered by the safe harbor election?
No. Schedule B, Part 2, separately calculates these dividends and the interest deductions directly and indirectly attributable to them.
How does entire net income limit exempt income?
Schedule B, line 28, limits other exempt income to the lesser of ENI or the other exempt income on line 27, with zero entered if the result is zero or less. Schedule C, line 23, then limits investment income to the lesser of the investment income on line 21 or the remaining ENI limitation from Schedule B, line 29.
Where do I report stocks actually held more than one year and stocks presumed held more than one year?
Schedule E reports stocks actually held more than one year in Part 2 and stocks presumed held more than one year in Part 3. Schedule C, Part 1, also lists their income separately.
What is Schedule F used for?
Schedule F calculates current-year addbacks for prior-year presumed investment capital and investment income when stocks failed the holding-period requirement. Do not complete it if you amended the prior-year return to reflect that the stock was not investment capital and any related income was not investment income.