shall not be entitled to any deductions unless his return discloses his total gross income from sources both within and without the State to the extent required by the form of return.

section 367; article 481.)

(Tax Law,

ART. 432. Business expenses.- Articles 111 to 125, inclusive, under the title of "Deductions Allowed: Business Expenses" in the resident section, apply equally to a nonresident to the extent that the business expenses are connected with a business, trade, profession or occupation carried on within the State of New York, but not otherwise. (See articles 415, 457 and 481.)

ART. 433. Taxes.- Income taxes and taxes and assessments for benefits of a kind tending to increase the value of the property assessed, paid or accrued within the taxable year, are not deductible. Estate and inheritance taxes are not deductible. All other taxes paid or accrued by a nonresident are deductible to the extent that they are connected with sources of income derived from property owned or a business, trade, profession or occupation carried on within the State. (See articles 415, 457 and 481.)

ART. 434. Interest.- A nonresident is entitled to deduct from gross income the proportion of the total interest paid or accrued in connection with taxable income from sources within the State of New York, which the amount of his gross income, as defined in the Tax Law, section 359, and as provided by these regulations, from all sources within the State, bears to his total gross income from all sources within and without the State. His total gross income is his gross income, as defined by the Tax Law, section 359, and these regulations, plus his income exempt from taxation, including all of his income from sources without the State. (See Tax Law, section 367, and article 481.)

ART. 435. Losses.- A nonresident taxpayer may deduct from gross income on account of losses sustained during the taxable year and not compensated by insurance or otherwise, as follows: (a) If incurred in a trade or business carried on within the State.

(b) If incurred in any transaction within the State entered into for profit though not connected with a trade or business, but only if and to the extent that, they are connected with property located within the State of such a character that the

income flowing from, or by virtue of the transaction, if a profit had been realized, would have been included in the gross income of a nonresident.

(c) If arising from fire, storm, shipwreck or other casualty or from theft, but only if and to the extent that, they are connected with property located within the State of such a character, that the income flowing from it, or by virtue of it, if any, would be included in the gross income of a nonresident. article 481.)

nonresident.

(See

APPORTIONMENT OF INCOME FROM SOURCES WITHIN AND WITHOUT THE STATE OF NEW YORK

ART. 451. Earnings of salesmen.—The gross income from commissions and salaries earned by nonresident salesmen, drummers, agents or others, through whose services receipts or remuneration inure directly to the employer, for services performed or sales made within and without the State of New York, includes that proportion of the commissions and salaries received which the volume of business transacted by such employee within the State of New York bears to the total volume of business transacted by him within and without the State. (See article 266.) Allowable deductions must be apportioned on the same basis.

ART. 452. Salaries and wages of nonresident employees and officers. If the nature of the employment of the nonresident is such that receipts or remuneration for services rendered do not inure directly to the employer, as in the case of corporate officers, clerical employees, laborers or other like classes of employees, gross income includes that proportion of the total amount received for services which the time employed within the State bears to the total time employed both within and without the State of New York. (See article 266.) Allowable deductions must be apportioned on the same basis.

ART. 453. Wages of nonresident seamen.-Resident seamen, like all other residents of the State of New York, are taxable on their entire net income as defined by the law and these regulations from whatever sources derived. Nonresident seamen, however, are taxable only on income derived from sources within the State of New York. The wage of a nonresident seaman

earned on a vessel operating exclusively within the State of New York is regarded as income received from sources within the State of New York, and as such, is taxable income. The wage earned by a nonresident seaman on a ship which is operated exclusively between ports of the State of New York and foreign ports, or ports of other states is not to be regarded as from sources within the State of New York, even though at times the ship touches at a port within the State of New York and remains there a reasonable time for the transaction of its business. The presence within the State of a seaman aboard a ship which enters a port for the purpose of foreign or interstate trade is merely transitory and the wages earned during that period by a nonresident seaman are not taxable. Seamen employed on vessels operating between the States of New Jersey and New York within the port of New York, are regarded as earning income from sources partly within and partly without the State of New York. Onehalf of the compensation earned aboard such a vessel by a nonresident is held to be taxable income. Withholding at the source applies with respect to all compensation of nonresident seamen, which in accordance with this article, constitutes taxable income.

ART. 454. Income from vessels. The tax does not apply to charter money or freight or passage payments, received by a nonresident owner or lessee in regard to a vessel which is operated exclusively between ports of the State of New York and foreign ports, or ports of other states, if the person receiving the income maintains no regular agency in the State of New York and is not carrying on business in the State of New York. (See article 415.)

ART. 455. Business carried on wholly within the State.— The entire net income of a nonresident from a business, trade, profession or occupation, carried on within the State (as "business carried on" is defined in article 415), and not carried on else where, as so defined, is income from a source within the State of New York and taxable as such.

This is so, even though the nonresident or his representatives travel without the State for the purposes of the trade or business,

that is for the purpose of buying, selling, financing or performing any duties in connection with the business, and even though sales may be made to, or services performed for, or on behalf of, persons or corporations located without the State.

ART. 456. Business carried on wholly without the State.- No part of the net income of a nonresident from a business, trade, profession, or occupation, carried on without the State of New York, (as "business carried on" is defined in article 415,) and not carried on as so defined within this State, is taxable.

This is so, even though the nonresident or his representatives may enter the State for the purpose of buying, selling, financing, or performing any other duty in connection with the business; and even though sales may be made to, or services performed for, or on behalf of, persons or corporations located within the State.

ART. 457. Apportionment of business income from business carried on both within and without the State. If a nonresident, or a partnership with a nonresident member, carries on business, (as business carried on " is defined in article 415,) both within and without the State, the net business income therefrom must be apportioned so as to allocate to the State of New York a proportion of such income on a fair and equitable basis, in accordance with approved methods of accounting.

If the books of the taxpayer are so kept as regularly to disclose the proportion of his business income, which is earned from sources within the State, the return of the taxpayer shall disclose both the total income, and the part apportioned to the State of New York, and the basis upon which such apportionment is made. If such basis is approved by the Comptroller, the return will be accepted.

If the books of the taxpayer do not disclose the proportion of his net income from sources within the State of New York, his return, or if the basis of apportionment used by him shall not be approved by the Comptroller, his amended return shall disclose his net income from business both within and without the State, and the tax will be calculated and collected upon the portion of his total net income from business which the aggregate of the NEW YORK STATE FACTORS bears to the aggregate of the TOTAL FACTORS as herein defined.

The "NEW YORK STATE FACTORS" include the following:

(1) The average of the value of his real property and tangible personal property within the State, (a) at the beginning of the taxable year and (b) at the end of the taxable year, but only of property connected with the business.

(2) The total wages, salaries, and other personal service compensation paid during the taxable year to employees in connection with the business carried on (as defined in article 415) within the State.

(3) The gross sales or charges for services performed, by or through an agency (of the kind enumerated in article 415) located within the State. The sales or charges to be allocated to New York shall include all sales negotiated or consummated by salesmen, or services performed by other representatives, attached to or sent from offices, or other agencies, situated within the State of New York.

The "TOTAL FACTORS" include the following:

(1) The average of the value of all his real property and tangible personal property (a) at the beginning of the taxable year, and (b) at the end of the taxable year, both within and without the State, but only of property connected with the business.

(2) The total wages, salaries, and other personal service compensation paid by him during the taxable year, to employees connected with the business, whether within or without the State.

(3) The gross sales, or charges for services performed, whether within or without the State.

"Business Income" as used in this article excludes profits (or losses) from the sale, exchange or other disposition of real property, and income from rents and royalties, income from these sources being taxable only if the property from which the income was derived was located within the State of New York, and in such case the entire net income from these sources is taxable. (See articles 417 and 418.)

ART. 470. Alternative basis of apportionment. The provisions of articles 451 to 470 dealing with the apportionment of income of nonresidents earned from sources both within and without the