(a)
In General. Business
income is apportioned to Alabama in accordance with the calculation provided in
§
40-27-1,
Code of Ala.
1975, and Rule
810-27-1-.09. The apportionment
percentage is then applied to business income to determine the amount
apportioned to Alabama.
1. For tax periods
beginning on or after January 1, 2021, the property factor and the payroll
factor are no longer considered in calculating a taxpayer's Alabama
apportionment factor.
2. The
industry specific definitions and guidance provided in this rule for property
and payroll are applicable for tax periods beginning on or after January 1,
2021, when:
(i) A taxpayer petitions and is
granted approval from the department to employ an alternative apportionment
method in accordance with 40-27-1, Code of Ala.
1975.
(ii) Measuring
against nexus thresholds pursuant to §
40-18-31.2, Code of
Ala. 1975.
(b)
The Property Factor. For
tax years prior to January 1, 2021, or if the taxpayer is granted approval from
the Commissioner to employ an alternative apportionment method that includes
the use of the property factor. The property factor shall be determined in
accordance with Rule
810-27-1-.10 through
810-27-1-.12, inclusive, except
as modified in this rule.
1.
Property
Valuation. Owned property shall be valued at its original cost and
property rented from others shall be valued at eight (8) times the net annual
rental rate in accordance with Section
40-27-1, Code of Ala.
1975, and Rule
810-27-1-.11.
2.
General Definitions. The
following definitions are applicable to the numerator and denominator of the
property factor, as well as other apportionment factor descriptions:
(i) "Average value" of property means the
amount determined by averaging the values at the beginning and end of the
income tax year, but the Commissioner may require the averaging of monthly
values during the income year or such averaging as is necessary to reflect
properly the average value of the trucking company's property. (See Rule
810-27-1-.12.)
(ii) "Mobile property" means all motor
vehicles, including trailers, engaged directly in the movement of tangible
personal property.
(iii) A "mobile
property mile" is the movement of a unit of mobile property a distance of one
mile whether loaded or unloaded.
(iv) "Original cost" is deemed to be the
basis of the property for federal income tax purposes (prior to any federal
income tax adjustments, except for subsequent capital additions, improvements
thereto, or partial dispositions); or, if the property has no such basis, the
valuation of such property for Interstate Commerce Commission purposes. If the
original cost of property is unascertainable under the foregoing valuation
standards, the property is included in the property factor at its fair market
value as of the date of acquisition by the taxpayer. (Alabama Rule
810-27-1-.11)
(v) "Property used during the course of the
income year" includes property which is available for use in the taxpayer's
trade or business during the income year.
(vi) The "value" of owned real and tangible
personal property means its original cost. (See Rule
810-27-1-.11)
(vii) The "value" of rented real and tangible
personal property means the product of eight times the net annual rental rate.
(See Alabama Rule
810-27-1-.11)
3.
The Denominator and
Numerator of the Property Factor. The denominator of the property
factor shall be the average value of all of the taxpayer's real and tangible
personal property owned or rented and used during the income year. The
numerator of the property factor shall be the average value of the taxpayer's
real and tangible personal property owned or rented and used in Alabama during
the income year. In the determination of the numerator of the property factor,
all property, except mobile property as defined in this rule, shall be included
in the numerator of the property factor in accordance with Rules
810-27-1-.10 through
810-27-1-.12, inclusive.
(i) Mobile property, as defined in this rule,
which is located solely within Alabama during the income year shall be included
in the numerator of the property factor.
(ii) Mobile property as defined in this rule,
which is located within and without Alabama during the income year shall be
included in the numerator of the property factor in the ratio which mobile
property miles in the state bear to the total mobile property miles.
(c)
The Payroll
Factor. For tax years prior to January 1, 2021, or if the taxpayer is
granted approval from the Commissioner to employ an alternative apportionment
method that includes the use of the payroll factor. The denominator of the
payroll factor is the compensation paid everywhere by the taxpayer during the
income year for the production of business Rules
810-27-1-.13 and
810-27-1-.14.) The numerator of
the payroll factor is the total compensation paid in Alabama during the income
year by the taxpayer. With respect to all personnel, except those performing
services within and without Alabama, compensation paid to such employees shall
be included in the numerator as provided in Rules
810-27-1-.13 and
810-27-1-.14.
1. With respect to personnel performing
services within and without Alabama, compensation paid to such employees shall
be included in the numerator of the payroll factor in the ratio which their
services performed in Alabama bear to their services performed everywhere based
on mobile property miles.
(d)
The Sales (Revenue)
Factor.
1. In General. All revenue
derived from transactions or activities in the regular course of the taxpayer's
trade or business which produce business income shall be included in the
denominator of the revenue factor. (See §§
40-27-1, and
40-27-1.1,
Code of
Ala. 1975, and Alabama Rule
810-27-1-.01 through .17)
(i) The numerator of the revenue factor is
the total revenue of the taxpayer in Alabama during the income year. The total
state revenue of the taxpayer, other than revenue from hauling freight, mail,
and express, shall be attributable to Alabama in accordance with §
40-27-1, Code of Ala.
1975, and Rule
810-27-1-.15 through
810-27-1-.17.
2.
Numerator of the Sales
(Revenue) Factor from Freight, Mail, and Express. The total revenue of
the taxpayer attributable to Alabama during the income year from hauling
freight, mail, and express shall be:
(i)
Intrastate: All receipts from any shipment which both originates and terminates
within Alabama.
(ii) Interstate:
That portion of the receipts from movements or shipments passing through, into,
or out of Alabama as determined by the ratio which the mobile property miles
traveled by such movements or shipments in Alabama bear to the total mobile
property miles traveled by movements or shipments from points of origin to
destination.
