CT-3.2: Subtraction Modification for Qualified Banks (2024)
New York · NY DTF · Used for tax years 2024
Form CT-3.2 calculates the New York subtraction modification for qualified banks and is filed with Form CT-3 or CT-3-A. It includes calculations for captive real estate investment trusts (REITs), qualified residential loan portfolios, and community banks and small thrifts.
Who files this form
You must file Form CT-3.2 with Form CT-3 or CT-3-A if you have an entry on Part 3, line 6 of either return.
The form calculates subtraction modifications for a captive real estate investment trust (REIT), qualified residential loan portfolios, and community banks and small thrifts. Use only one modification in Schedule A.
What you'll need
Have your Form CT-3 or CT-3-A and the information needed for the schedules you complete:
- Your corporation’s legal name and employer identification number (EIN).
- For Schedule B: the identity and EIN of the captive REIT maintained as of April 1, 2014, and also maintained for federal income tax purposes on the last day of the tax year, plus its allowed dividends paid deductions.
- For Schedule C: qualified residential loan portfolio assets, total assets, entire net income before this modification, and the specified federal deductions and loan recovery amounts. Combined filers also need the asset information requested for group members.
- For Schedules D and E: the qualifying entity’s EIN, gross interest income and expense, average loan values and total assets, and gross interest income from qualifying loans.
How to file
File Form CT-3.2 with Form CT-3 or CT-3-A.
Complete Schedule B even if the captive REIT modification does not apply. In that case, enter 0 on line 3 and continue with the rest of the form.
Enter the applicable modification on Schedule A, line 1. Use the amount from line 3. If line 3 is zero, use the amount from line 14 or line 16, as applicable. Do not enter less than zero.
Form CT-3-A filers calculating net interest income from qualifying loans must complete Schedule E separately for each combined entity. Total the Schedule E, line 11 amounts on Schedule D, line 15, and enter the number of attached Schedules E.
Common mistakes
- Leaving out Form CT-3.2: You must include it if Form CT-3 or CT-3-A, Part 3, line 6 has an entry.
- Skipping Schedule B: All filers must complete it. If it does not apply, enter 0 on line 3.
- Using more than one modification: Schedule A says to use only one.
- Entering a negative modification: Schedule A, line 1 cannot be less than zero. If Schedule C, line 14 is zero or less, enter 0.
- Carrying a negative loan-interest result forward: If Schedule E, line 7 is less than zero, enter 0 on both lines 7 and 11.
Questions people ask
How is the captive REIT modification calculated?
Multiply the allowed dividends paid deductions on Schedule B, line 2 by 160% (1.6). Enter the result on line 3 and Schedule A, line 1.
How is the qualified residential loan portfolio modification calculated?
Schedule C multiplies the applicable entire net income amount on line 10 or 11 by 32% (0.32). It then subtracts line 13 from that result. If the result is zero or less, enter 0 on line 14.
How is the community bank and small thrift modification calculated?
Multiply total net interest income from qualifying loans on Schedule D, line 15 by 50% (0.5). Enter the result on line 16 and, if applicable, Schedule A, line 1.
Do combined filers calculate Schedule E separately for each entity?
Yes. Form CT-3-A filers calculate Schedule E separately for each combined entity, then total the line 11 amounts and enter that total on Schedule D, line 15.