(4) Apportionment of Apportionable Income.
(a) The Property Factor.
(A) Property Factor Denominator. All real and
tangible personal property, including outer-jurisdictional property, whether
owned or rented, that is used in the business will 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
will 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 will be
included in the numerator of the property factor in the ratio that 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 will 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 will 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 will 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.
Example: One example of the use of
outer-jurisdictional property is where the taxpayer either owns its own
communications satellite or leases the use of uplinks, downlinks or circuits,
or time on a communications satellite for the purpose of sending messages to
its newspaper printing facilities or employees in a state. The state or states
in which any printing facility that receives the satellite communications is
located and the state from which the communications were sent would, under this
rule, apportion the cost of the owned or rented satellite to their respective
property factors based upon the ratio of the in-state use of said satellite to
its total usage everywhere.
Assume that ABC Newspaper Co. owns a total of $400,000,000 of
property everywhere and that, in addition, it owns and operates a communication
satellite for the purpose of sending news articles to its printing plant in
this state, as well as for communicating with its printing plants and
facilities or news bureaus, employees, and agents located in other states and
throughout the world. Also assume that the total value of its real and tangible
personal property that was permanently located in this state for the entire
income year was valued at $3,000,000. Assume also that the total original cost
of the satellite is $100,000,000 for the tax period and that of the 10,000
uplinks and downlinks of satellite transmissions used by the taxpayer during
the tax period, 200 or two percent are attributable to its satellite
communications received in and sent from this state.
Assume further that the company's mobile property that was used
partially within this state, consisting of 40 delivery trucks, was determined
to have an original cost of $4,000,000 and such mobile property was used in
this state for 95 days.
The total value of property to be attributed to this state
would be determined as follows:
Value of property permanently in state: $3,000,000
Value of mobile property:
95/365 (or .260274) x $4,000,000= $1,041,096
Value of leased satellite property used in-state:
.02 x $100,000,000= $2,000,000
Total value of property attributable to state=
$6,041,096
Total property factor %: $6,041,096/$500,000,000=
1.2082%
(b) The Payroll
Factor. The payroll factor will be determined in accordance with OAR
150-314-0415 and the rules thereunder.
(c) The Sales Factor:
(A) Sales Factor Denominator. The denominator
of the sales factor will 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 ORS
314.665 and the rules
thereunder.
(B) Sales Factor
Numerator. The numerator of the sales factor will 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 subsection
(4)(c)(B)(iii), gross receipts derived from advertising and the sale, rental or
other use of the taxpayer's customer lists or any portion thereof will be
attributed to this state as determined by the taxpayer's "circulation factor"
during the tax period. The circulation factor will be determined for each
individual publication by the taxpayer of printed material containing
advertising and will 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 will 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 will 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 subparagraph (4)(c)(B)(ii). Such attribution will 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 will 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, will 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.
