NOTE: The italicized portions of the above Section remain parts of the existing tax law, but laundering, manufacturing and mining corporations are no longer exempt from state taxation. While they are not taxable under the above section, they must pay an annual franchise tax on net income under Article 9-a of the Tax Law (see Part II of this book). They are, however, exempt from the local personal tax to which they were formerly subject. The statute covering the annual franchise tax on capital stock under Section 182 of the Tax Law and the method of appraisement under Section 193 are given below: Franchise tax on corporations. For the privilege of exercising its corporate franchises in this state every corporation, joint stock company or association, and for the purpose of doing business in this state, every foreign corporation, joint stock company or association shall pay to the state treasurer annually, in advance, an annual tax to be computed upon the basis of the amount of its capital stock, employed during the preceding year within this state, and upon each dollar of such amount. The measure of the amount of capital stock employed in this state shall be such a portion of the issued capital stock as the gross assets employed in any business within this state bear to the gross assets wherever employed in business. For purposes of taxation, the capital of a corporation invested in the stock of another corporation shall be deemed to be assets located where the physical property represented by such stock is located. If the dividends upon the capital stock amount to six, or more than six per centum upon the par value of the capital stock, during any year ending with the thirty-first day of October, the tax shall be at the rate of one-quarter of a mill for each one per centum of dividends made or declared upon the par value of the capital stock during said year. If such dividend or dividends amount to less than six per centum on the par value of the capital stock, and 1. The assets do not exceed the liabilities, exclusive of capital stock, or 2. The average price at which such stock sold during said year, did not equal or exceed its par value, or 3. If no dividend was declared, Then each dollar of the amount of capital stock employed in this state, determined as herein before provided, shall be taxed at the rate of three-fourths of one mill. If such dividend or dividends amount to less than six per centum on the par value of the capital stock, and 1. The assets exceed the liabilities, exclusive of capital stock, by an amount equal to or greater than the par value of the capital stock, or 2. The average price at which such stock sold during said year is equal to or greater than the par value, Then the amount of capital stock, determined as hereinbefore provided to be employed in this state, shall be taxed at the rate of one and one-half mills on each dollar of the valuation of the capital stock employed in this state, but such valuation shall not be less than 1. The par value of such stock. 2. The difference between the assets and liabilities, exclusive of capital stock. 3. The average price at which such stock sold during said year. If such corporation, joint-stock company or association shall have more than one kind of capital stock, and upon one of such kinds of stock a dividend or dividends amounting to six, or more than six percentum upon the par value thereon has been made or declared, and upon the other no dividend has been made or declared, or the dividend or dividends made or declared thereon amount to less than six percentum upon the par value thereof, then the tax shall be at the rate of one-quarter of a mill for each one percentum of dividends made or declared upon the capital stock upon the par value of which the dividend or dividends made or declared amount to six or more than six percentum, and in addition thereto a tax shall be charged upon the capital stock, 1. Upon which no dividend was made or declared, or 2. Upon which the dividend or dividends made or declared did not amount to six per centum upon the par value, At the rate as herein before provided for the taxation of capital stock upon which no dividend was made or declared, or upon which the dividend or dividends made or declared did not amount to six percentum on the par value. All corporations not taxable under the preceding paragraphs of this section shall be taxed in an amount not less than would be produced by an assessment of one and one-half mills on each one dollar of the actual value of its capital stock, determined to be employed in this state as hereinbefore provided, or one and one-half mills upon each dollar of such capital stock at the average price at which said stock sold during the said year. (Sec. 182, former sec. 182, Tax Law, as amended by ch. 558, L. 1901, ch. 474, L. 1906, ch. 734, L. 1907, and ch. 333, L. 1916.)* Source: Ch. 542, L. 1880, as amended by ch. 361, L. 1881. Recent Amendments.-The amendment of 1916 struck out the words "doing business" before the words "exercising its corporate franchise" and made it clear that the tax was to apply to domestic corporations "exercising their corporate franchises in the state" and foreign corporations "doing business in this state." This was in line with the case of People ex rel. Lehigh & N. Y. R. Co. v. Sohmer, 217 N. Y. 443, reversing 169 App. Div. 430 (1916). *NOTE: For amount of franchise tax payable by corporations incorporated under Chap. 351 L. 1912, providing for shares of capital stock without nominal or par value, see end of this chapter. Value of stock to be appraised. If the dividend or dividends amount to less than six per centum on the par value of the capital stock, or no dividend is declared the president, treasurer or secretary of the company liable to pay a tax under the provisions of section one hundred and eighty-two of this chapter, shall, under oath, between the first and fifteenth days of November in each year, estimate and appraise the capital stock of such company at its actual value. And shall forward the same to the tax commission with the report provided for in the last section. If the tax commission is not satisfied with the valuation so made and returned it is authorized and empowered to make a valuation thereof, and settle an account upon the valuation so made by it, and the taxes, penalties and interest to be paid the state. (Sec. 193, former sec. 190, Tax Law, as amended by ch. 474, L. 1906, ch. 734, L. 1907, and ch. 317, L. 1915.) Source: Ch. 540, L. 1880, as amended by ch. 361, L. 1881. "Business" corporations no longer taxed under section 182. -The principal application of section 182 to business corporations has now been greatly limited by Article 9-a, which takes away from section 182 mercantile, and business corporations generally, except the realty and holding corporations exempted from the franchise tax on income under section 210. Manufacturing,laundering and mining corporations exempted under section 183, are now taxed on net income under Article 9-a. Method of assessment under section 182:-Section 182 of the Tax Law must be taken in connection with section 193 (for mer section 190) which it supplements. People ex rel. N. Y. & E. R. Ferry Co. v. Roberts, 168 N. Y. 14 (1901). By Chapter 474, Laws of 1896 and Chapter 734, Laws of 1907, the provisions governing the annual franchise tax (Sections 182, 193 Tax Law) were materially amended in the following particulars: 1. The franchise tax was declared to be payable in advance. 2. A rule was provided in the statute itself, by which the amount of capital stock employed within and without the state could be easily determined. 3. A method was provided in the statute for determining the amount of capital stock employed within the state represented by stock in other corporations, owned by the company taxed. 4. Corporations paying less than 6 per cent. dividends, or paying no dividends, were re-classified in two divisions, so that a different rate applied to them as they fell into one or the other classification. The arrangement under section 182 is confusing and does not lend itself easily to any accurate grouping or classification of corporations. The evident intent of the statute was to group corporations into classes according to the amount of dividend paid, and vary the rate on that basis. In the case of corporations paying dividends of less than six per cent., there is also a variation of the rate, depending upon the market price of the stock or the value of the net assets. The following general classification seems to be called for by the statute: (1) Corporations paying dividends of six per cent. or more, which are taxed at the rate of one-quarter of a mill for each per cent. of dividend declared on the par value of the capital stock, without reference to the market price of the stock or the value of the assets. There is no change here from the law prior to the amendment of 1906. (2) Corporations paying no dividend, which are taxed at the rate of three-quarters of a mill on the appraised value of the capital stock. There is no minimum valuation here, and under the appraisement provided by section 193 (formerly 190), the tax may be nominal. (3) Corporations paying dividends of less than six per cent., which are subdivided into two classes: (a) Corporations paying dividends of less than six per cent., whose assets exceed the liabilities by an amount equal to or greater than the capital stock, or in which the average price of the stock sold during the year was par or over, and not included in the classification provided for in subdivision (b) infra, of corporations paying at the three-quarter mill rate. In either case, the capital stock is taxed at the rate of one and one-half mills on the appraised value, but such appraised value shall not be less than the par value of the stock or less than the difference between the assets and lia- less than the average price at which the stock sold The minimum valuation here is the par value of the stock. (b) The second subdivision of corporations paying dividends of less than six per cent., is that class of corporations in which the average price of the stock sold during the year was less than par, or whose assets do not exceed the liabilities exclusive of capital stock. In either case, the tax to be paid is three-quarters of a mill on the appraised value of the capital stock. There is no minimum valuation in this class, and under the appraisement provided for by section 193 (formerly section 190) the tax may be nominal. It may have been intended by the framers of the amendment of 1906 to take into account a minimum valuation of par for this class of corporations, but the statute did not clearly express it, and after the amendment of section 193 (formerly section 190), it was decided by a divided court of four to three in People ex rel. N. Y. Mail & Transportation Co. v. Gaus, 198 N. Y. 250, that the valuation referred to in this part of section 182 by |