Current through Register Vol. 35, No. 18, September 24, 2024
A. The following special rules are
established in respect to the apportionment of income from television and radio
broadcasting by a broadcaster that is taxable both in this state and in one or
more other states.
B.
In
general. When a person in the business of broadcasting film or radio
programming, whether through the public airways, by cable, direct or indirect
satellite transmission or any other means of communication, either through a
network (including owned and affiliated stations) or through an affiliated,
unaffiliated or independent television or radio broadcasting station, has
income from sources both within and without this state, the amount of business
income from sources within this state shall be determined pursuant to Article
IV. of the multistate tax compact and the regulations issued thereunder by this
state, except as modified by Section 3.5.19.18 NMAC.
C.
Business and nonbusiness
income. For definitions and regulations for determining whether income
shall be classified as "business" or "nonbusiness" income, see Part 3.5.1
NMAC.
D.
Definitions. The following definitions are applicable to the
terms contained in this section, unless the context clearly requires otherwise.
(1) "Film" or "film programming" means any
and all performances, events or productions telecast on television, including
but not limited to news, sporting events, plays, stories or other literary,
commercial, educational or artistic works, through the use of video tape, disc
or any other type of format or medium. Each episode of a series of films
produced for television shall constitute a separate "film" notwithstanding that
the series relates to the same principal subject and is produced during one or
more tax periods.
(2)
"Outer-jurisdictional" property means certain types of tangible personal
property, such as orbiting satellites, undersea transmission cables and the
like, that are owned or rented by the taxpayer and used in the business of
telecasting or broadcasting, but which are not physically located in any
particular state.
(3) "Radio" or
"radio programming" means any and all performances, events or productions
broadcast on radio, including but not limited to news, sporting events, plays,
stories or other literary, commercial, educational or artistic works, through
the use of an audio tape, disc or any other format or medium. Each episode of a
series of radio programming produced for radio broadcast shall constitute a
separate "radio programming" notwithstanding that the series relates to the
same principal subject and is produced during one or more tax
periods.
(4) "Release" or "in
release" means the placing of film or radio programming into service. A film or
radio program is placed into service when it is first broadcast to the primary
audience for which the program was created. Thus, for example, a film is placed
into service when it is first publicly telecast for entertainment, educational,
commercial, artistic or other purpose. Each episode of a television or radio
series is placed into service when it is first broadcast. A program is not
placed into service merely because it is completed and therefore in a condition
or state of readiness and availability for broadcast or merely because it is
previewed to prospective sponsors or purchasers.
(5) "Rent" shall include license fees or
other payments or consideration provided in exchange for the broadcast or other
use of television or radio programming.
(6) A "subscriber" to a cable television
system is the individual residence or other outlet which is the ultimate
recipient of the transmission.
(7)
"Telecast" or "broadcast" (sometimes used interchangeably with respect to
television) means the transmission of television or radio programming,
respectively, by an electronic or other signal conducted by radiowaves or
microwaves or by wires, lines, coaxial cables, wave guides, fiber optics,
satellite transmissions directly or indirectly to viewers and listeners or by
any other means of communication.
E.
Apportionment of business
income.
(1) In general. The property
factor shall be determined in accordance with Parts 3.5.11 through 3.5.13 NMAC,
the payroll factor in accordance with Parts 3.5.14 and 3.5.15 NMAC and the
sales factor in accordance with Parts 3.5.16 and 3.5.17 NMAC, except as
modified by Section 3.5.19.18 NMAC.
(2) The property factor.
(a) In general.
(i) In the case of rented studios, the net
annual rental rate shall include only the amount of the basic or flat rental
charge by the studio for the use of a stage or other permanent equipment such
as sound recording equipment and the like; except that additional equipment
rented from other sources or from the studio not covered in the basic or flat
rental charge and used for one week or longer (even though rented on a
day-to-day basis) shall be included. Lump-sum net rental payments for a period
which encompasses more than a single income year shall be assigned ratably over
the rental period.
(ii) No value or
cost attributable to any outer-jurisdictional, film or radio programming
property shall be included in the property factor at any time.
(b) Property factor denominator.
(i) All real property and tangible personal
property (other the outer-jurisdictional and film or radio programming
property), whether owned or rented, which is used in the business shall be
included in the denominator of the property factor.
(ii) Audio or video cassettes, discs or
similar medium containing film or radio programming and intended for sale or
rental by the taxpayer for home viewing or listening shall be included in the
property factor at their original cost. To the extent that the taxpayer
licenses or otherwise permits others to manufacture or distribute such
cassettes, discs or other medium containing film or radio programming for home
viewing or listening, the value of said cassettes, discs or other medium shall
include the license, royalty or other fees received by the taxpayer capitalized
at a rate of eight times the gross receipts derived therefrom during the income
year.
(iii) Outer-jurisdictional,
film and radio programming property shall be excluded from the denominator of
the property factor.
(c)
Property factor numerator.
(i) With the
exception of outer-jurisdictional, film and radio programming property, all
real and tangible personal property owned or rented by the taxpayer and used in
this state during the tax period shall be included in the numerator of the
property factor as provided in Section 3.5.11.11 NMAC.
(ii) Outer-jurisdictional, film and radio
programming property shall be excluded from the numerator of the property
factor.
(3)
The payroll factor.
(a) Payroll factor
denominator. The denominator of the payroll factor shall include all
compensation, including residual and profit participation payments, paid to
employees during the income year, including that paid to directors, actors,
newscasters and other talent in their status as employees.
(b) Payroll factor numerator. Compensation
for all employees shall be attributed to the state or states as may be
determined by the application of Parts 3.5.14 and 3.5.15 NMAC.
(4) The sales factor.
(a) Sales factor denominator. The denominator
of the sales 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 excluded under Section 3.5.19.11 NMAC.
(b) Sales factor numerator. The numerator of
the sales factor shall include all gross receipts of the taxpayer from sources
within this state, including, but not limited to the following:
(i) gross receipts, including advertising
revenue, from television film or radio programming in release to or by
television and radio stations located in this state;
(ii) gross receipts, including advertising
revenues, from television or radio programming in release to or by a television
or radio station (independent or unaffiliated) or network of stations for
broadcast shall be attributed to this state in the ratio (hereafter the
"audience factor") that the audience for such station (or owned and affiliated
stations in the case of networks) located in this state bears to the total
audience for such station (of owned and affiliated stations in the case of
networks). The audience factor for film or radio programming shall be
determined by the ratio of the taxpayer's in-state viewing or listening
audience bears to its total viewing or listening audience. Such audience factor
shall be determined either by reference to the books and records of the
taxpayer or by reference to published rating statistics, provided that the
method used by the taxpayer is consistently used from year to year for such
purpose and fairly represents the taxpayer's activity in the state;
(iii) gross receipts from film programming in
release to or by a cable television system shall be attributed to this state in
the ratio (hereafter "audience factor") that the subscribers for such cable
television system located in this state bears to the total subscribers of such
cable television system. If the number of subscribers cannot be determined
accurately from the books and records maintained by the taxpayer, such audience
factor ratio shall be determined on the basis of the applicable year's
subscription statistics located in published surveys, provided that the source
selected is consistently used from year to year for that purpose; and
(iv) receipts from the sale, rental,
licensing or other disposition of video or audio cassettes, discs or similar
medium intended for home viewing or listening shall be included in the sales
factor as provided in Part 3.5.17 NMAC.