Current through Register Vol. 6, March 22, 2024
(1) Assignment of receipts. The assignment of
receipts to a state or states in the instance of a sale or exchange of
intangible property depends upon the nature of the intangible property sold.
For purposes of this rule, a sale or exchange of intangible property includes a
license of that property where the transaction is treated for tax purposes as a
sale of all substantial rights in the property and the receipts from
transaction are not contingent on the productivity, use or disposition of the
property. For the provisions that apply where the consideration for the
transfer of rights is contingent on the productivity, use or disposition of
property, see [New Rule V(1)].
(a) Contract
right or government license that authorizes business activity in specific
geographic area. In the case of a sale or exchange of intangible property where
the property sold or exchanged is a contract right, government license, or
similar intangible property that authorizes the holder to conduct a business
activity in a specific geographic area, the receipts from the sale are assigned
to a state if and to the extent that the intangible property is used or is
authorized to be used within the state. If the intangible property is used or
may be used only in this state the taxpayer shall assign the sale to Montana.
If the intangible property is used or is authorized to be used in Montana and
one or more other states, the taxpayer shall assign the receipts from the sale
to Montana to the extent that the intangible property is used in or authorized
for use in Montana, through the means of a reasonable approximation.
(b) Sale that resembles a license; receipts
are contingent on productivity, use, or disposition of the intangible property.
In the case of a sale or exchange of intangible property where the receipts
from the sale or exchange are contingent on the productivity, use, or
disposition of the property, the receipts from the sale are assigned by
applying the provisions set forth in [New Rule V], pertaining to the license or
lease of intangible property.
(c)
Sale that resembles a sale of goods or services. In the case of a sale or
exchange of intangible property where the substance of the transaction
resembles a sale of goods or services and where the receipts from the sale or
exchange do not derive from payments contingent on the productivity, use, or
disposition of the property, the receipts from the sale are assigned by
applying the provisions set forth in [New Rule V(5)], relating to licenses of
intangible property that resemble sales of goods and services). Examples of
these transactions include those that are analogous to the license transactions
cited as examples in [New Rule V(5)].
(d) Excluded receipts. Receipts from the sale
of intangible property are not included in the receipts factor in any case in
which the sale does not give rise to gross receipts within the meaning of ARM
42.26.202. In addition, in any
case in which the sale of intangible property does result in gross receipts
within the meaning of ARM 42.26.202, those receipts are excluded from the
numerator and denominator of the taxpayer's receipts factor if the receipts are
not referenced in [New Rule I]. The sale of intangible property that is
excluded from the numerator and denominator of the taxpayer's receipts factor
under this provision includes, without limitation, the sale of a partnership
interest, the sale of business "goodwill," the sale of an agreement not to
compete, or similar intangible value. Also, in any instance in which the state
to which the receipts from a sale is to be assigned can be determined or
reasonably approximated, but where the taxpayer is not taxable in such state,
the receipts that would otherwise be assigned to such state shall be excluded
from the numerator and denominator of the taxpayer's receipts factor.
AUTH:
15-1-201,
15-31-313, MCA; IMP:
15-1-601,
15-31-310,
15-31-311,
15-31-312,
MCA