New York Innovation Hot Spot Deduction

Innovation Hot Spot Deduction
Form CT-223 Innovation Hot Spot Deduction Tax Year 2023
Department of Taxation and Finance	

Innovation Hot Spot Deduction

Tax Law – Article 1, Section 38 and Article 9-A, Section 208.9(a)(18)	
	 Legal name of corporation	

CT-223

Employer identification number (EIN)

Attach this form to Form CT-225 or CT-225-A.
Complete the information below if you are a qualified entity located both inside and outside a hot spot, you are a corporate
partner of a qualified entity, or both. If you are a qualified entity located entirely within a hot spot, do not complete this
form unless you are a qualified entity that is a New York S corporation. See the instructions on page 2 before completing.
A

Innovation hot spot name

546001230094

B

Code

C

Business
participation
number

D

EIN of qualified entity
located in the hot spot

E

F

Mark an X if Tax year
this entity is
being
subject to
claimed
(enter 1, 2, 3,
the MTA
4, or 5)
surcharge

G

Income or gain
attributable to the hot spot

Page 2 of 2  CT-223 (2023)

General information

Instructions

Qualified entities in innovation hot spots are eligible for the tax
benefits listed below for five tax years, beginning with the year
the entity became a tenant in or part of an innovation hot spot:
•	 Qualified entities taxable under Article 9-A located completely
within the hot spot are liable only for the fixed dollar minimum
tax.
•	 Qualified entities located inside and outside the hot spot,
and corporate partners of qualified entities, are allowed a
deduction for the amount of income or gain attributable to
operations in the hot spot.
•	 Individuals who are sole proprietors of a qualified entity, or
are partners in a partnership, members of a limited liability
company (LLC), or shareholders of a New York S corporation,
that is a qualified entity, are allowed a deduction for the
amount of income or gain attributable to operations at the hot
spot.
•	 Qualified entities are also eligible for a credit or refund of sales
and use tax imposed on the retail sale of tangible personal
property or services.
Taxpayers claiming the above tax benefits are not eligible for
any other New York State exemptions, deductions, credits, or
refunds to the extent the exemption, deduction, credit, or refund
is attributable to the business operations in the innovation
hot spot. Claiming any such benefit represents an irrevocable
election.
Qualified entity means a business enterprise that is:
•	 in the formative stages of development, and
•	 located in New York State, and
•	 certified by a New York State innovation hot spot as being
approved to locate in, or be part of, a virtual incubation
program operated by that innovation hot spot, and
•	 either A or B below:
A.	 any corporation, except a corporation which:
	
•	 over 50% of the number of shares of stock entitling
the holders thereof to vote for the election of directors
or trustees is owned or controlled, either directly or
indirectly, by a taxpayer subject to tax under Tax Law
Article 9, sections 183 or 184; Article 9-A; or Article 33;
or
	
•	 is substantially similar in operation and in ownership
to a business entity (or entities) taxable or previously
taxable under Tax Law Article 9, sections 183 or 184,
or former sections 185 or 186; Article 9-A; former
Article 32; Article 33; former Article 23; or would have
been subject to tax under Article 23 (as it was in effect
on January 1, 1980); or the income (or losses) of which
is (or was) includable under Article 22.
B.	 a sole proprietorship, partnership, limited partnership,
LLC, or New York S corporation that is not substantially
similar in operation and in ownership to a business entity
(or entities) taxable, or previously taxable, under Tax Law
Article 9, sections 183 or 184, or former sections 185
or 186; Article 9-A; former Article 32; Article 33; former
Article 23; or would have been subject to tax under
Article 23 (as it was in effect on January 1, 1980); or the
income (or losses) of which is (or was) includable under
Article 22.
For more information about the New York Innovation Hot Spot
Program, visit www.esd.ny.gov.
546002230094

Who must file

Complete this form if you are a corporation that is a qualified
entity located inside and outside a hot spot, or you are a corporate
partner of a qualified entity, or both. If you are a qualified entity
located entirely within a hotspot, do not complete this form unless
you are a qualified entity that is a New York S corporation. Include
information for all of the entities from which you are receiving
income or gain attributable to an innovation hot spot.
Corporate partners: If receiving a share of income or gain from
more than one partnership, complete one form for all partnerships.
Combined filers: Complete one form for all of the members of the
combined group.

Column instructions

Column A – Enter the innovation hot spot name as shown on your
letter from the hot spot.
Column B – Enter the hot spot identification code as shown on
your letter from the hot spot.
Column C – Enter the business participation number as shown on
your letter from the hot spot.
Column D – If the corporation is a qualified entity, enter the
corporation’s employer identification number (EIN). If you received
income or gain attributable to a hot spot from another entity, enter
the EIN of the qualified entity certified in the hot spot.
Column E – If the qualified entity does business, employs capital,
owns or leases property, maintains an office, or derives receipts
from activity, in the Metropolitan Commuter Transportation District
(MCTD), mark an X in the box. The MCTD includes the counties of
New York, Bronx, Kings, Queens, Richmond, Dutchess, Nassau,
Orange, Putnam, Rockland, Suffolk, and Westchester.
Column F – Make only one entry (1, 2, 3, 4, or 5) to indicate which
tax year you are claiming this deduction.
Column G – Enter the amount of income or gain attributable to the
hot spot that was included in your federal taxable income.
CT-3 and CT-3-S filers: Enter the amounts(s) from this column on
the applicable lines of Form CT-225, New York State Modifications.
For details, see Form CT-225-I, Instructions for Form CT-225.
CT-3-A filers: Enter the amounts(s) from this column on the
applicable lines of Form CT-225-A, New York State Modifications
(for filers of combined franchise tax returns), and CT-225-A/B,
Group Member’s Detail Spreadsheet. For details, see
Form CT-225-A-I, Instructions for Forms CT-225-A and CT-225-A/B.
In addition to any record keeping requirement imposed by Empire
State Development, a qualified entity that is located inside and
outside a New York innovation hot spot must keep books and
records to disclose, to the satisfaction of the Tax Department, the
amount of items of income, gain, loss, and deduction attributable to
operations at (or as part of) the innovation hot spot.

Need help? and Privacy notification

See Form CT-1, Supplement to Corporation Tax Instructions.