Oklahoma Administrative Code
Title 710 - Oklahoma Tax Commission
Chapter 50 - Income
Subchapter 17 - Oklahoma Taxable Income for Corporations
Part 7 - APPORTIONMENT AND ALLOCATION OF CORPORATE INCOME AND EXPENSE
Section 710:50-17-71 - Apportionment formula factors
Universal Citation: OK Admin Code 710:50-17-71
Current through Vol. 42, No. 1, September 16, 2024
Income or loss derived from a unitary business enterprise shall be apportioned to Oklahoma on the basis of the average of three factors consisting of property, payroll and sales or gross revenue. Notwithstanding the general rule on averaging of the three apportionment factors, for corporations that, on or after July 1, 1997, make an initial investment in property or expansion of their property or facilities in Oklahoma and such initial investment cost or expansion investment costs equals or exceed Two Hundred Million Dollars ($200,000,000.00), the three factors shall be apportioned with property and payroll each comprising twenty-five percent (25%) and sales comprising fifty percent (50%). For such an initial investment or expansion investment occurring after January 1, 2000, a corporation shall qualify for use of the specially-weighted apportionment on or after the time it first incurs any amount or part of such investment cost, if the total amount thereof equals or exceeds Two Hundred Million ($200,000,000.00) within a period not exceeding three (3) years. [See: 68 O.S. § 2358(A)(5) ]
(1) Sales factor.
(A)
Sales factor. The sales
factor shall include only sales and does not include sales or revenue which are
separately allocated. [See: 68 O.S. §
2358(A)(5)(c)
]
(i) Oklahoma does not allow receipts from
items other than sales to be included in the formula even though other types of
income (royalties, interest, capital gains, and other income) are included in
the apportioned income.
(ii)
Receipts from the performance of services shall be included in the numerator of
the fraction if the receipts are derived from customers within this state or if
the receipts are otherwise attributable to this state's marketplace. [See 68
O.S. §
2358(A)(5)
]. A "customer within Oklahoma " means
(I) a customer that is engaged in a trade or
business and maintains a regular place of business in Oklahoma, or
(II) a customer that is not engaged in a
trade or business whose billing address is in Oklahoma. A "billing
address " means the location indicated in the books and records of the
taxpayer as the address of record where the bill relating to the customer's
account is mailed.
(iii)
The provisions of (A), (A)(i) and (A)(ii) of this paragraph apply to the sales
factor for most corporations with the exception of gross receipts being used as
a basis for a financial organization or other organizations whose sales do not
represent their principal activity.
(B)
Throwback of Oklahoma sales.
If taxpayer is not doing business in the destination state of the shipment,
then those sales of tangible personal property are considered to have a situs
in Oklahoma if the property is shipped from an office, warehouse, factory or
other place of storage in Oklahoma.
(C)
Railroad/railway. The
numerator of the fraction shall not be less than the allocation of revenues to
this state as shown in its Annual Report to the Oklahoma Corporation
Commission. [See: 68 O.S. §
2358(A)(5)(c)(2)
]
(D)
Airline, truck or bus
enterprise or freight car, tank car, refrigerator car or other railroad
equipment enterprise. The numerator of the fraction shall include a
portion of revenue from interstate transportation in the proportion that
interstate mileage traveled in Oklahoma bears to total interstate mileage
traveled. [See: 68 O.S. §
2358(A)(5)(c)(3)
]
(E)
Oil, gasoline or gas
pipeline enterprise. The numerator of the fraction shall be either the
total of traffic units of the enterprise within Oklahoma or the revenue
allocated to Oklahoma based on miles moved, at the option of the taxpayer, the
denominator of which shall be the total of traffic units of the enterprise or
the revenue of the enterprise everywhere as appropriate to the numerator. A
"traffic unit" is defined as the transportation for a distance of
one mile of one barrel of oil, one gallon of gasoline or one thousand cubic
feet of natural or casinghead gas, as the case may be. [See: 68
O.S. §
2358(A)(5)(c)(4)
]
(F)
Telephone or telegraph
or other communication enterprise. The numerator of the fraction shall
include both income attributable to interstate operations, and income from
intrastate operations. The determination of gross revenues are to be as
prescribed by accounting systems and procedures promulgated by the Federal
Communications Commission. [See: 68 O.S. §
2358(A)(5)(c)(5)
]
(2) Property factor.
(A)
Original costs
(average). The property factor is the average value at original cost of
the taxpayer's real and tangible personal property owned or rented and used in
this State during the tax period to the total average of all real and tangible
personal property owned or rented and used everywhere. [See: 68
O.S. §
2358(A)(5)(a)
]
(B)
Rolling stock-buses,
trucks, trailers, airplanes, automobiles, and other similar equipment.
The numerator of the fraction shall include a portion of the investment in
transportation and other equipment having no fixed situs, in the proportion
that miles traveled in Oklahoma by such equipment bears to total miles
traveled. [See: 68 O.S. §
2358(A)(5)(a)(1)
]
(C)
Rental property.
Rental property is valued at eight (8) times the net annual rent expense.
[See: 68 O.S. §
2358(A)(5)(a)(2)
]
(D)
Property separately
allocated. Property, the income from which is separately allocated in 68
O.S. §
2358(A)(4),
shall not be included in determining the property factor. [See: 68
O.S. §
2358(A)(5)(a)(1)
]
(3) Payroll factor.
(A)
Payroll
factor. The numerator is the total compensation for services rendered in
the state during the tax period, and the denominator is the total compensation
for services rendered everywhere during the tax period.
(B)
Prior to 1983. Salaries,
wages and other compensation properly classified as general and administrative,
are not part of the computation of the payroll factor for years before
1983.
(C)
Officers.
Officers' salaries, wages and other compensation are not part of the
computation of the payroll factor, for tax years beginning after December 31,
1982. [See: 68 O.S. §
2358(A)(5)(b)
]
(D)
Transportation
enterprises. The numerator of the fraction shall include a portion of
such expenditure in connection with employees operating equipment over a fixed
route, such as trainmen, airline pilots, or bus drivers, in the proportion that
mileage traveled in Oklahoma bears to total mileage traveled by such employees.
[See: 68 O.S. §
2358(A)(5)(b)(1)
]
(E)
Itinerant
employees/traveling salesmen. The numerator of the fraction shall
include a portion of such expenditures in connection with itinerant employees
in this state only a part of the time, in the proportion that time spent in
Oklahoma bears to total time spent in furtherance of the enterprise by such
employees. [See: 68 O.S. §
2358(A)(5)(b)(2)
]
Amended at 15 Ok Reg 2811, eff 6-25-98; Amended at 18 Ok Reg 2810, eff 6-25-01; Amended at 27 Ok Reg 2281, eff 7-11-10
Disclaimer: These regulations may not be the most recent version. Oklahoma may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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