Current through Register Vol. 6, March 22, 2024
(1) The receipts
factor is a fraction, the numerator of which is the receipts of the taxpayer in
Montana during the taxable year and the denominator of which is the receipts of
the taxpayer within and without Montana during the taxable year. The method of
calculating receipts for purposes of the denominator is the same as the method
used in determining receipts for purposes of the numerator. The receipts factor
shall include only those receipts described herein which constitute
apportionable income and are included in the computation of the apportionable
income base for the taxable year.
(2) Interest, fees, and penalties imposed in
connection with loans secured by real property.
(a) The numerator of the receipts factor
includes interest, fees, and penalties imposed in connection with loans secured
by real property if the property is located within Montana. If the property is
located both within Montana and one or more other states, the receipts
described in this subsection are included in the numerator of the receipts
factor if more than fifty percent of the fair market value of the real property
is located within Montana. If more than fifty percent of the fair market value
of the real property is not located within any one state, then the receipts
described in this subsection shall be included in the numerator of the receipts
factor if the borrower is located in Montana.
(b) The determination of whether the real
property securing a loan is located within Montana shall be made as of the time
the original agreement was made and any and all subsequent substitutions of
collateral shall be disregarded.
(3) Interest, fees, and penalties imposed in
connection with loans not secured by real property. The numerator of the
receipts factor includes interest, fees, and penalties imposed in connection
with loans not secured by real property if the borrower is located in
Montana.
(4) Net gains from the
sale of loans. The numerator of the receipts factor includes net gains from the
sale of loans. Net gains from the sale of loans includes income recorded under
the coupon stripping rules of Section 1286 of the Internal Revenue Code.
(a) The amount of net gains (but not less
than zero) from the sale of loans secured by real property included in the
numerator is determined by multiplying such net gains by a fraction the
numerator of which is the amount included in the numerator of the receipts
factor pursuant to (2) above, and the denominator of which is the total amount
of interest and fees or penalties in the nature of interest from loans secured
by real property.
(b) The amount of
net gains (but not less than zero) from the sale of loans not secured by real
property included in the numerator is determined by multiplying such net gains
by a fraction the numerator of which is the amount included in the numerator of
the receipts factor pursuant to (5) below, and the denominator of which is the
total amount of interest and fees or penalties in the nature of interest from
loans not secured by real property.
(5) Receipts from fees, interest, and
penalties charged to card holders. The numerator of the receipts factor
includes fees, interest, and penalties charged to credit, debit, or similar
card holders, including but not limited to annual fees and overdraft fees, if
the billing address of the card holder is in Montana.
(6) Net gains from the sale of credit card
receivables. The numerator of the receipts factor includes net gains (but not
less than zero) from the sale of credit card receivables multiplied by a
fraction, the numerator of which is the amount included in the numerator of the
receipts factor pursuant to (5) above, and the denominator of which is the
taxpayer's total amount of interest and fees or penalties in the nature of
interest from credit card receivables and fees charged to card
holders.
(7) Card issuer's
reimbursement fees. The numerator of the receipts factor includes:
(a) All credit card issuer's reimbursement
fees multiplied by a fraction, the numerator of which is the amount of fees,
interest, and penalties charged to credit card holders included in the
numerator of the receipts factor pursuant to (5) above, and the denominator of
which is the taxpayer's total amount of fees, interest, and penalties charged
to credit card holders.
(b) All
debit card issuer's reimbursement fees multiplied by a fraction, the numerator
of which is the amount of fees, interest, and penalties charged to debit card
holders included in the numerator of the receipts factor pursuant to (5) above,
and the denominator of which is the taxpayer's total amount of fees, interest,
and penalties charged to debit card holders.
(c) All other card issuer's reimbursement
fees multiplied by a fraction, the numerator of which is the amount of fees,
interest, and penalties charged to all other card holders included in the
numerator of the receipts factor pursuant to (5) above, and the denominator of
which is the taxpayer's total amount of fees, interest, and penalties charged
to all other card holders.
(8) Receipts from merchant discount.
(a) If the taxpayer can readily determine the
location of the merchant and if the merchant is in Montana, the numerator of
the receipts factor includes receipts from the merchant discount.
(b) If the taxpayer cannot readily determine
the location of the merchant, the numerator of the receipts factor includes
such receipts from the merchant discount multiplied by a fraction:
(i) in the case of a merchant discount
related to the use of a credit card, the numerator of which is the amount of
fees, interest, and penalties charged to credit card holders that is included
in the numerator of the receipts factor pursuant to (5) above, and the
denominator of which is the taxpayer's total amount of fees, interest, and
penalties charged to credit card holders; and
(ii) in the case of a merchant discount
related to the use of a debit card, the numerator of which is the amount of
fees, interest, and penalties charged to debit card holders that is included in
the numerator of the receipts factor pursuant to (5) above, and the denominator
of which is the taxpayer's total amount of fees, interest, and penalties
charged to debit card holders.
(c) The taxpayer's method for sourcing each
receipt from a merchant discount must be consistently applied to such receipt
in all states that have adopted sourcing methods substantially similar to (a)
and (b) above, and must be used on all subsequent return for sourcing receipts
from such merchant unless the department permits or requires application of the
alternative method.
(9)
Receipts from ATM fees. The receipts factor includes all ATM fees that are not
forwarded directly to another bank.
(a) The
numerator of the receipts factor includes fees charged to a card holder for the
use at an ATM of a card issued by the taxpayer if the card holder's billing
address is in Montana.
(b) The
numerator of the receipts factor includes fees charged to a card holder, other
than the taxpayer's card holder, for the use of such card at an ATM owned or
rented by the taxpayer, if the ATM is in Montana.
(10) Loan servicing fees.
(a) The numerator of the receipts factor
includes loan servicing fees derived from loans secured by real property
multiplied by a fraction the numerator of which is the amount included in the
numerator of the receipts factor pursuant to (2) above, and the denominator of
which is the total amount of interest and fees or penalties in the nature of
interest from loans secured by real property.
(b) The numerator of the receipts factor
includes loan servicing fees derived from loans not secured by real property
multiplied by a fraction the numerator of which is the amount included in the
numerator of the receipts factor pursuant to (3) above, and the denominator of
which is the total amount of interest and fees or penalties in the nature of
interest from loans not secured by real property.
(c) In circumstances in which the taxpayer
receives loan servicing fees for servicing either the secured or the unsecured
loans of another, the numerator of the receipts factor shall include such fees
if the borrower is located in Montana.
(11) Receipts from the financial
institution's investment assets and activity and trading assets and activity.
(a) Interest, dividends, net gains (but not
less than zero), and other income from investment assets and activities and
from trading assets and activities that are reported on the taxpayer's
financial statements, call reports, or similar reports shall be included in the
receipts factor. Investment assets and activities and trading assets and
activities include but are not limited to: investment securities; trading
account assets; federal funds; securities purchased and sold under agreements
to resell or repurchase; options; futures contracts; forward contracts;
notional principal contracts such as swaps; equities; and foreign currency
transactions. With respect to the investment and trading assets and activities
described in (i) and (ii) below, the receipts factor shall include the amounts
described.
(i) The receipts factor shall
include the amount by which interest from federal funds sold and securities
purchased under resale agreements exceeds interest expense on federal funds
purchased and securities sold under repurchase agreements.
(ii) The receipts factor shall include the
amount by which interest, dividends, gains, and other income from trading
assets and activities, including but not limited to assets and activities in
the matched book, in the arbitrage book, and foreign currency transactions,
exceed amounts paid in lieu of interest, amounts paid in lieu of dividends, and
losses from such assets and activities.
(b) The numerator of the receipts factor
includes interest, dividends, net gains (but not less than zero), and other
income from investment assets and activities and from trading assets and
activities described in (a) above, that are attributable to Montana.
(i) The amount of interest, dividends, net
gains (but not less than zero), and other income from investment assets and
activities in the investment account to be attributed to Montana and included
in the numerator is determined by multiplying all such income from such assets
and activities by a fraction, the numerator of which is the average value of
such assets which are properly assigned to a regular place of business of the
taxpayer within Montana, and the denominator of which is the average value of
all such assets.
(ii) The amount of
interest from federal funds sold and purchased and from securities purchased
under resale agreements and securities sold under repurchase agreements
attributable to Montana and included in the numerator is determined by
multiplying the amount described in (a)(i) above, from such funds and such
securities by a fraction, the numerator of which is the average value of
federal funds sold and securities purchased under agreements to resell which
are properly assigned to a regular place of business of the taxpayer within
Montana and the denominator of which is the average value of all such funds and
such securities.
(iii) The amount
of interest, dividends, gains, and other income from trading assets and
activities, including but not limited to assets and activities in the matched
book, in the arbitrage book, and foreign currency transactions (but excluding
amounts described in (i) and (ii) above, attributable to Montana and included
in the numerator is determined by multiplying the amount described in (a)(ii)
above, by a fraction, the numerator of which is the average value of such
trading assets which are properly assigned to a regular place of business of
the taxpayer within Montana and the denominator of which is the average value
of all such assets.
(iv) For
purposes of this section, average value shall be determined using the rules for
determining the average value of tangible personal property set forth in
15-31-307, MCA.
(c) In lieu of using the method
set forth in (b) above, the taxpayer may elect, or the department may require
in order to fairly represent the business activity of the taxpayer in Montana,
the use of the method set forth in this subsection.
(i) The amount of interest, dividends, net
gains (but not less than zero), and other income from investment assets and
activities in the investment account to be attributed to Montana and included
in the numerator is determined by multiplying all such income from such assets
and activities by a fraction, the numerator of which is the gross income from
such assets and activities which are properly assigned to a regular place of
business of the taxpayer within Montana and denominator of which is the gross
income from all such assets and activities.
(ii) The amount of interest from federal
funds sold and purchased and from securities purchased under resale agreements
and securities sold under repurchase agreements attributable to Montana and
included in the numerator is determined by multiplying the amount described in
(a)(i) above, from such funds and such securities by a fraction, the numerator
of which is the gross income from such funds and such securities which are
properly assigned to a regular place of business of the taxpayer within Montana
and denominator of which is the gross income from all such funds and such
securities.
(iii) The amount of
interest, dividends, gains, and other income from trading assets and
activities, including but not limited to assets and activities in the matched
book, in the arbitrage book, and foreign currency transactions (but excluding
amounts described in (c)(i) and (c)(ii) above), attributable to Montana and
included in the numerator is determined by multiplying the amount described in
(a)(ii) by a fraction, the numerator of which is the gross income from such
trading assets and activities which are properly assigned to a regular place of
business of the taxpayer within Montana and the denominator of which is the
gross income from all such assets and activities.
(d) If the taxpayer elects or is required by
the department to use the method set forth in subsection (c) above, it shall
use this method on all subsequent returns unless the taxpayer receives prior
permission from the department to use, or the department requires, a different
method.
(e) The taxpayer shall have
the burden of proving that an investment asset or activity or trading asset
activity was properly assigned to a regular place of business outside of
Montana by demonstrating that the day-to-day decisions regarding the asset or
activity occurred at a regular place of business outside Montana. Where the
day-to-day decisions regarding an investment asset or activity or trading asset
or activity occur at more than one regular place of business and one such
regular place of business is in Montana and one such regular place of business
is outside Montana, such asset or activity shall be considered to be located at
the regular place of business of the taxpayer where the investment or trading
policies or guidelines with respect to the asset or activity are established.
Unless the taxpayer demonstrates to the contrary, such policies and guidelines
shall be presumed to be established at the commercial domicile of the
taxpayer.
(12)
Attribution of certain receipts to commercial domicile. All receipts which
would be assignead under this rule to a state in which the taxpayer is not
taxable shall be included in the numerator of the receipts factor, if the
taxpayer's commercial domicile is in Montana.
AUTH:
15-1-201, 15-1-313, MCA; IMP:
15-1-601,
15-31-301,
15-31-302,
15-31-303,
15-31-304,
15-31-305,
15-31-310,
15-31-311,
15-31-312,
MCA