New Mexico Administrative Code
Title 3 - TAXATION
Chapter 2 - GROSS RECEIPTS TAXES
Part 235 - DEDUCTION - GROSS RECEIPTS TAX - SALE OF CERTAIN SERVICES PERFORMED DIRECTLY ON PRODUCT MANUFACTURED
Section 3.2.235.12 - INSTALLING COMPUTER PROGRAMMING AS A COMPONENT PART
Current through Register Vol. 35, No. 18, September 24, 2024
A. Receipts from performing the service of installing computer programming on a computer chip or other device for a manufacturer may be deducted under Section 7-9-75 NMSA 1978 when the chips are supplied by the manufacturer and the programmed chip or device is designed to control the operation of machinery or equipment.
B. Example 1: M, a manufacturer of widgets, contracts with X to install control logic (developed by M) on computer chips which are to be incorporated into M's widgets. The chips are designed to control certain operations of the widget. X's receipts from performing this service are deductible under Section 7-9-75 NMSA 1978 regardless of whether or not the programming is designed to allow the ultimate purchaser of the widgets to alter some or all of the programming parameters.
C. Example 2: M, a manufacturer of computer chips, accepts an order from B to make and sell specialty chips. The order requires that certain software be included on the chips. M contracts with X to install the programming on the chips. M ships the chips to X, who in turn ships the chips to B after installing the programming. X may deduct its receipts from installing the programming on the chips under Section 7-9-75 NMSA 1978.
D. Example 3: S, retailer of computers and packaged programming, hires X to install packaged programming on the computers S sells. X may not deduct its receipts from installing the programming for S under Section 7-9-75 NMSA 1978 because S is not a manufacturer. Other deductions, such as that under Section 7-9-48 NMSA 1978, however, may be available.
