(a) In the case of a corporation which reports for purposes of article 9-A on a combined basis with one or more related corporations, either in the taxable year in which a net operating loss is sustained or in the taxable year in which a deduction is claimed on account of such loss, the deduction is subject to the same limitations which apply for purposes of the Federal income tax as if such corporation had filed for such taxable year a consolidated Federal income tax return with the same related corporations. If a corporation files a combined report for purposes of article 9-A, regardless of whether it filed a separate return or consolidated return for Federal income tax purposes, the net operating loss and any carry back or carry forward for purposes of article 9-A will be computed as if the corporation had filed a consolidated return for the same corporations for Federal income tax purposes.

(b) In general, any carry back or carry forward from a year in which a combined report (for purposes of article 9-A) was filed must be based upon the combined net operating loss of the group of corporations filing such report. The portion of the combined loss attributable to any member of the group which files a separate report for a preceding or succeeding taxable year will be an amount bearing the same relation to the combined loss as the net operating loss of such corporation bears to the total net operating losses of all members of the group having such losses, to the extent that they are taken into account in computing the combined net operating loss.

In taxable year 1970, X Corp. filed a separate New York State franchise tax report showing entire net income of $20,000 and also filed a separate Federal income tax return showing Federal taxable income of the same amount. In 1973, it filed a separate Federal return showing a net operating loss of $10,000 but joined with W Corp., Y Corp. and Z Corp. in filing a combined New York State franchise tax report showing the following:

For franchise tax purposes, the deduction allowable to X Corp. against its 1970 income must be based upon the combined net operating loss shown above. The portion of the combined loss attributable to X Corp. is one-third of the combined loss or $5,000. This is because the net operating loss of X Corp. was one-third of the total net operating losses of all members of the combined group having such losses (X Corp. $10,000 and Y Corp. $20,000).