Current through Register Vol. 6, March 22, 2024
(1) For
purposes of this sub-chapter, the property factor will be determined as
outlined in (2) and (3).
(2) All
real and tangible personal property, including outer-jurisdictional property,
whether owned or rented, which is used in the business shall be included in the
denominator of the property factor.
(3) The property factor numerator will be
established by following the requirements in (4) through (8).
(4) All real and tangible personal property
owned or rented by the taxpayer and used in Montana during the tax period shall
be included in the numerator of the property factor.
(5) Outer-jurisdictional property owned or
rented by the taxpayer and used in Montana during the tax period shall be
included in the numerator of the property factor in the ratio which the value
of such property that is attributable to its use by the taxpayer in business
activities in Montana bears to the total value of such property that is
attributable to its use in the taxpayer's business activities
everywhere.
(6) The value of
outer-jurisdictional property to be attributed to the numerator of the property
factor of Montana shall be determined by the ratio that the number of uplinks
and downlinks (sometimes referred to as "half-circuits") that were used during
the tax period to transmit from Montana and to receive in Montana any data,
voice, image, or other information bears to the total number of uplinks and
downlinks or half-circuits that the taxpayer used for transmissions everywhere.
Should information regarding such uplink and downlink or half-circuit usage not
be available or should such measurement of activity not be applicable to the
type of outer-jurisdictional property used by the taxpayer, the value of such
property to be attributed to the numerator of the property factor of Montana
shall be determined by the ratio that the amount of time (in terms of hours and
minutes of use) or such other measurement of use of outer-jurisdictional
property that was used during the tax period to transmit from Montana and to
receive in Montana any data, voice, image, or other information bears to the
total amount of time or other measurement of use that was used for
transmissions everywhere.
(7)
Outer-jurisdictional property shall be considered to have been used by the
taxpayer in its business activities within Montana when such property, wherever
located, has been employed by the taxpayer in any manner in the publishing,
selling, licensing, or other distribution of books, newspapers, magazines, or
other printed material and any data, voice, image, or other information is
transmitted to or from Montana either through an earth station or terrestrial
facility located in Montana.
(a) One example
of the use of outer-jurisdictional property is where the taxpayer either owns
its own communications satellite or leases the use of uplinks, downlinks, or
circuits or time on a communications satellite for the purpose of sending
messages to its newspaper printing facilities or employees in a state. The
state or states in which any printing facility that receives the satellite
communications is located and the state from which the communications were sent
would, under this rule, apportion the cost of the owned or rented satellite to
their respective property factors based upon the ratio of the in-state use of
the satellite to its total usage everywhere.
(i) Assume that ABC newspaper co. owns a
total of $400,000,000 of property everywhere and that, in addition, it owns and
operates a communication satellite for the purpose of sending news articles to
its printing plant in Montana, as well as for communicating with its printing
plants and facilities or news bureaus, employees and agents located in other
states and throughout the world.
(ii) Assume also that the total value of its
real and tangible personal property that was permanently located in Montana for
the entire income year was valued at $3,000,000.
(iii) Assume further that the total original
cost of the satellite is $100,000,000 for the tax period and that of the 10,000
uplinks and downlinks of satellite transmissions used by the taxpayer during
the tax period, 200 or 2% are attributable to its satellite communications
received in and sent from Montana.
(iv) Assume still further that the company's
mobile property that was used partially within Montana, consisting of 40
delivery trucks, were determined to have an original cost of $4,000,000 and
such mobile property was used in Montana for 95 days. The total value of
property to be attributed to Montana would be determined as follows:
Value of property permanently in
state: | $3,000,000 |
Value of mobile property: |
95/365 or (.260274) x $4,000,000: |
$1,041,096 |
Value of leased satellite property used in-state: |
(.02) x $100,000,000: | $2,000,000
|
Total value of property attributable to
state: | $6,041,096 |
Total property factor %: $6,041,096/($500,000,000)
: | 1.2082% |
(8) The payroll factor shall be determined in
accordance with
15-31-308, MCA, and the supporting
administrative rules.
(9) For
purposes of this subchapter, the receipts factor will be determined as follows:
(a) The denominator of the receipts factor
shall include the total gross receipts derived by the taxpayer from
transactions and activity in the regular course of its trade or business,
except receipts that may be excluded under ARM
42.26.251,
42.26.252,
42.26.253,
42.26.254,
42.26.255,
42.26.256,
42.26.257,
42.26.259,
42.26.261,
42.26.262, and
42.26.263.
(b) The numerator of the receipts factor
shall include all gross receipts of the taxpayer from sources within Montana
including, but not limited to, the following:
(i) gross receipts derived from the sale of
tangible personal property including printed materials, delivered or shipped to
a purchaser or a subscriber in Montana;
(ii) except as provided in (9) (b) (iii),
gross receipts derived from advertising and the sale, rental, or other use of
the taxpayer's customer lists or any portion thereof shall be attributed to
Montana as determined by the taxpayer's circulation factor during the tax
period. The circulation factor shall be determined for each individual
publication by the taxpayer of printed material containing advertising and
shall be equal to the ratio that the taxpayer's in-state circulation to
purchasers and subscribers of its printed material bears to its total
circulation to purchasers and subscribers everywhere. The circulation factor
for an individual publication shall be determined by reference to the rating
statistics as reflected in such sources as Audit Bureau of Circulations or
other comparable sources, provided that the source selected is consistently
used from year to year for such purpose. If none of the foregoing sources are
available, or, if available, none is in form or content sufficient for such
purposes, then the circulation factor shall be determined from the taxpayer's
books and records.
(iii) When
specific items of advertisements can be shown, upon clear and convincing
evidence, to have been distributed solely to a limited regional or local
geographic area in which Montana is located, the taxpayer may petition, or the
department may require, that a portion of such receipts be attributed to the
receipts factor numerator of Montana on the basis of a regional or local
geographic area circulation factor and not upon the basis of the circulation
factor provided by (9)(b)(ii). Such attribution shall be based upon the ratio
that the taxpayer's circulation to purchasers and subscribers located in
Montana of the printed material containing such specific items of advertising
bears to its total circulation of such printed material to purchasers and
subscribers located within such regional or local geographic area. This
alternative attribution method shall be permitted only upon the condition that
such receipts are not double-counted or otherwise included in the numerator of
any other state.
(iv) In the event
that the purchaser or subscriber is the United States government or that the
taxpayer is not taxable in a state, the gross receipts from all sources,
including the receipts from the sale of printed material, advertising, and the
sale, rental, or other use of the taxpayer's customer's lists, or any portion
thereof that would have been attributed by the circulation factor to the
numerator of the receipts factor for such state, shall be included in the
numerator of the receipts factor of Montana if the printed material or other
property is shipped from an office, store, warehouse, factory, or other place
of storage or business in Montana.
AUTH:
15-1-201,
15-31-313, MCA; IMP:
15-1-601,
15-31-301,
15-31-302,
15-31-303,
15-31-304,
15-31-305,
15-31-306,
15-31-307,
15-31-308,
15-31-309,
15-31-310,
15-31-311,
15-31-312,
MCA