Current through Register Vol. 35, No. 18, September 24, 2024
A.
Section
7-4-2 NMSA 1978
defines the term "sales" to mean all gross receipts of the taxpayer not
allocated under Sections
7-4-5
through
7-4-9
NMSA 1978. Thus for the purposes of the sales factor of the apportionment
formula for each trade or business of the taxpayer, the term "sales" means all
gross receipts derived by the taxpayer from transactions and activity in the
regular course of such trade or business. The following are rules for
determining "sales" in various situations.
(1) In the case of a taxpayer engaged in
manufacturing and selling or purchasing and reselling goods or products,
"sales" includes all gross receipts from the sales of such goods or products
(or other property of a kind which would properly be included in the inventory
of the taxpayer if on hand at the close of the tax period) held by the taxpayer
primarily for sale to customers in the ordinary course of its trade or
business. Gross receipts for this purpose means gross sales, less returns and
allowances and includes all interest income, service charges, carrying charges
or time-price differential charges incidental to such sales. Federal and state
excise taxes (including sales taxes and gross receipts taxes) shall be included
as part of such receipts if such taxes are passed on to the buyer or included
as part of the selling price of the product.
(2) In the case of cost plus fixed fee
contracts, such as the operation of a government-owned plant for a fee, "sales"
includes the entire reimbursed cost, plus the fee.
(3) In the case of a taxpayer engaged in
providing services, such as the operation of an advertising agency, or the
performance of equipment service contracts or research and development
contracts, "sales" includes the gross receipts from the performance of such
services including fees, commissions and similar items.
(4) In the case of a taxpayer engaged in
renting real or tangible property, "sales" includes the gross receipts from the
rental, lease or licensing the use of the property.
(5) In the case of a taxpayer engaged in the
sale, assignment or licensing of intangible personal property, such as patents
and copyrights, "sales" includes the gross receipts therefrom.
(6) If a taxpayer derives receipts from the
sale of equipment used in its business, such receipts constitute "sales". For
example, a truck express company owns a fleet of trucks and sells its trucks
under a regular replacement program. The gross receipts from the sales of the
trucks are included in the sales factor.
B. In some cases certain gross receipts
should be disregarded in determining the sales factor in order that the
apportionment formula will operate fairly to apportion to this state the income
of the taxpayer's trade or business.
C. In filing returns with this state, if the
taxpayer departs from or modifies the basis for excluding or including gross
receipts in the sales factor used in returns for prior years, the taxpayer
shall disclose in the return for the current year the nature and extent of the
modification.
D. If the returns or
reports filed by the taxpayer with all states to which the taxpayer reports
under the Uniform Division of Income for Tax Purposes Act or Article IV of the
multistate tax compact are not uniform in the inclusion or exclusion of gross
receipts, the taxpayer shall disclose in its return to this state the nature
and extent of the variance.
