Alabama Administrative Code
Title 810 - ALABAMA DEPARTMENT OF REVENUE
Chapter 810-27-1-4 - MULTISTATE TAX COMPACT
Section 810-27-1-4-.12 - Property Factor: Averaging Property Values

As a general rule, the average value of property owned by the taxpayer shall be determined by averaging the values at the beginning and ending of the tax period. However, the Commissioner may require or allow averaging by monthly values if that method of averaging is required to properly reflect the average value of the taxpayer's property for the tax period.

Averaging by monthly values will generally be applied if substantial fluctuations in the values of the property exist during the tax period or if property is acquired after the beginning of the tax period or disposed of before the end of the tax period.

EXAMPLE: The monthly value of the taxpayer's property was as follows:

January $2,000 July $15,000

February 2,000 August 17,000

March 3,000 September 23,000

April 3,500 October 25,000

May 4,500 November 13,000

June 10,000 December 2,000

$25,000 $95,000

Total 120,000

The average value of the taxpayer's property includable in the property factor for the income year is determined as follows:

$120,000/12 (division) = $10,000

Averaging with respect to rented property is achieved automatically by the method of determining the net annual rental rate of such property as set forth in Reg. 810-27-1-4-.11(b).

Author: Peter M. Petrillo, Jr.

Statutory Authority: Code of Ala. 1975, §§ 40-2A-7(a)(5), 40-18-57.