Current through Register Vol. 35, No. 18, September 24, 2024
The following special rules are established with respect to
the apportionment of income derived from the publishing, sale, licensing or
other distribution of books, newspapers, magazines, periodicals, trade journals
or other printed material.
A.
In General. Except as specifically modified by this
regulation, when a person in the business of publishing, selling, licensing or
distributing newspapers, magazines, periodicals, trade journals or other
printed material has income from sources both within and without this state,
the amount of business income from sources within this state from such business
activity shall be determined pursuant to the provisions of the Uniform Division
of Income for Tax Purposes Act, Section
7-4-1 through
7-4-21, NMSA
1978.
B.
Definitions. The following definitions are applicable to the
terms contained in this regulation, unless the context clearly requires
otherwise.
(1) "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 publishing, licensing, selling or
otherwise distributing printed material, but which are not physically located
in any particular state.
(2) "Print
or printed material" includes, without limitation, the physical embodiment or
printed version of any thought or expression including, without limitation, a
play, story, article, column or other literary, commercial, educational,
artistic or other written or printed work. The determination of whether an item
is or consists of print or printed material shall be made without regard to its
content. Printed material may take the form of a book, newspaper, magazine,
periodical, trade journal or any other form of printed matter and may be
contained on any medium or property.
(3) "Purchaser" and "subscriber" mean the
individual, residence, business or other outlet which is the ultimate or final
recipient of the print or printed material. Neither of such terms shall mean or
include a wholesaler or other distributor of print or printed
material.
(4) "Terrestrial
facility" shall include any telephone line, cable, fiber optic, microwave,
earth station, satellite dish, antennae or other relay system or device that is
used to receive, transmit, relay or carry any data, voice, image or other
information that is transmitted from or by any outer-jurisdictional property to
the ultimate recipient thereof.
C.
Apportionment of business
income.
(1) The property factor.
(a) Property factor denominator. All real and
tangible personal property, including outer-jurisdictional property, whether
owned or rented, which is used in the business shall be included in the
denominator of the property factor.
(b) Property factor numerator.
(i) 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.
(ii) Outer-jurisdictional 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 in the ratio which the value
of such property that is attributable to its use by the taxpayer in business
activities in this state bears to the total value of such property that is
attributable to its use in the taxpayer's business activities everywhere. The
value of outer-jurisdictional property to be attributed to the numerator of the
property factor of this state shall be determined by the ratio that the number
of uplinks and downlinks (sometimes referred to as "half-circuits") that were
used during the tax period to transmit from this state and to receive in this
state any data, voice, image or other information bears to the total number of
uplinks and downlinks or half-circuits that the taxpayer used for transmissions
everywhere. Should information regarding such uplink and downlink or
half-circuit usage not be available or should such measurement of activity not
be applicable to the type of outer jurisdictional property used by the
taxpayer, the value of such property to be attributed to the numerator of the
property factor of this state shall be determined by the ratio that the amount
of time (in terms of hours and minutes of use) or such other measurement of use
of outer jurisdictional property that was used during the tax period to
transmit from this state and to receive in this state any data, voice, image or
other information bears to the total amount of time or other measurement of use
that was used for transmissions everywhere.
(iii) Outer-jurisdictional property shall be
considered to have been used by the taxpayer in its business activities within
this state when such property, wherever located, has been employed by the
taxpayer in any manner in the publishing, sale, licensing or other distribution
of books, newspapers, magazines or other printed material and any data, voice,
image or other information is transmitted to or from this state either through
an earth station or terrestrial facility located in this state.
(2) The payroll factor.
The payroll factor shall be determined in accordance with Sections
7-4-14
and
7-4-15,
NMSA 1978 and the regulations promulgated thereunder.
(3) 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 that may be excluded under NMAC 3.5.19.11.
(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 derived from the sale of
tangible personal property, including printed materials, delivered or shipped
to a purchaser or a subscriber in this state.
(ii) Except as provided in subparagraph Item
iii of Subparagraph b of Paragraph 3 of Subsection C, gross receipts derived
from advertising and the sale, rental or other use of the taxpayer's customer
lists or any portion thereof shall be attributed to this state as determined by
the taxpayer's "circulation factor" during the tax period. The circulation
factor shall be determined for each individual publication by the taxpayer of
printed material containing advertising and shall be equal to the ratio that
the taxpayer's in-state circulation to purchasers and subscribers of its
printed material bears to its total circulation to purchasers and subscribers
everywhere. The circulation factor for an individual publication shall be
determined by reference to the rating statistics as reflected in such sources
as audit bureau of circulations or other comparable sources, provided that the
source selected is consistently used from year to year for such purpose. If
none of the foregoing sources are available, or, if available, none is in form
or content sufficient for such purposes, then the circulation factor shall be
determined from the taxpayer's books and records.
(iii) When specific items of advertisements
can be shown, upon clear and convincing evidence, to have been distributed
solely to a limited regional or local geographic area in which this state is
located, the taxpayer may petition, or the department may require, that a
portion of such receipts be attributed to the sales factor numerator of this
state on the basis of a regional or local geographic area circulation factor
and not upon the basis of the circulation factor provided by Item ii of
Subparagraph b of Paragraph 3 of Subsection C. Such attribution shall be based
upon the ratio that the taxpayer's circulation to purchasers and subscribers
located in this state of the printed material containing such specific items of
advertising bears to its total circulation of such printed material to
purchasers and subscribers located within such regional or local geographic
area. This alternative attribution method shall be permitted only upon the
condition that such receipts are not double counted or otherwise included in
the numerator of any other state.
(iv) In the event that the purchaser or
subscriber is the United States government or that the taxpayer is not taxable
in a state, the gross receipts from all sources, including the receipts from
the sale of printed material, from advertising, and from the sale, rental or
other use of the taxpayer's customer's lists, or any portion thereof that would
have been attributed by the circulation factor to the numerator of the sales
factor for such state, shall be included in the numerator of the sales factor
of this state if the printed material or other property is shipped from an
office, store, warehouse, factory, or other place of storage or business in
this state.