New York Laws
Part 3 - Nonresidents and Part-Year Residents
632-A - Personal Service Corporations and S Corporations Formed or Availed of to Avoid or Evade New York State Income Tax.

(b) Definitions for purposes of this section. (1) The term "personal
service corporation" means a corporation whose principal activity is the
performance of personal services and such services are substantially
performed by the employee-owners of such corporation.
(2) The term "S corporation" means a corporation for which an election
under section 1362 of the internal revenue code is in effect for such
taxable year and whose principal activity is the performance of personal
services and such services are substantially performed by the
employee-owners of such corporation.
(3) The term "employee-owner" means any employee who owns, on any
given day during the taxable year, more than ten percent of the
outstanding stock of the personal service corporation or S corporation.
For purposes of the preceding sentence, the constructive ownership of
stock rules set forth in section 318 of the internal revenue code shall
apply, except that "5 percent" shall be substituted for "50 percent" in
section 318(a)(2)(C) of the internal revenue code.
(4) All related persons (within the meaning of section 144(a)(3) of
the internal revenue code) shall be treated as one entity.