I have a client who is thinking about a virtual office in NYC for his unincorporated investment business. This virtual office would allow him to use the more prestigious NYC address on his letter head and business cards. According to the terms, his phone would be answered, his mail would be forwarded and he could use the conference room twice monthly to meet clients. Does this meet the definition of having an office in NYC for tax purposes?

Having a post office box classifies as an office for tax purposes, so yes, I guess this would too, but doesn't have to be that elaborate.

Tick

The fact that his letterhead has a NYC address and the fact that he is meeting clients in the conference room would provide NYC more than enough proof that he is doing business in NYC and thus is subject to NYC taxes.

Well, I don't know about that.

There is something called the "principle place of business test", to wit:
Principal Place of Business
You can have more than one business location, including your home, for a single trade or business. To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business. To determine whether your home is your principal place of business, you must consider:

The relative importance of the activities performed at each place where you conduct business, and the amount of time spent at each place where you conduct business.

Your home office will qualify as your principal place of business if you meet the following requirements.

You use it exclusively and regularly for administrative or management activities of your trade or business.

You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.

See also:
Principal Place Of Business definition

I also direct your attention to the classic case of De Beers v. Howe:
This test of company residence is that enunciated by Lord Loreburn in De Beers Consolidated Mines v Howe (5TC198) at the beginning of this century:
`A company resides, for the purposes of Income Tax, where its real business is carried on... I regard that as the true rule; and the real business is carried on where the central management and control actually abides`.

And, while this is a British decision it has been incorporated into US tax doctrine.

The OP failed to note where exactly he/she planned to actually conduct their business.

If he/she could show a business license for New Jersey or Connecticut, then perhaps he/she could legitinately argue that there is no business establishment in NYC.

Since he/she failed to provide this info, I can only assume that he/she is merely trying to avoid paying the business taxes due for his/her business operation in the NYC area.

As a NY state resident, when I do my taxes, including a Schedule C, I am asked whether I conducted business in NYC and/or Yonkers. My assumption is that NYC will tax the proportional earnings that occurred in NYC. So, while a principal place of business is where you are principally taxed, you may also be taxed by another taxing district, if you do business within that taxing district. At least that's my understanding.

After reading the NY tax publications and various court cases and advisory memorandums I do think that the phone, business cards, conferences personally attended, etc. provides sufficient nexus so that income derived from NY residents would be liable to the variety of both state and local taxes imposed.

I would give very careful consideration to establishing that nexus.