Rhode Island Code of Regulations
Title 280 - Department of Revenue
Chapter 20 - Division of Taxation
Subchapter 25 - Business Corporation Tax
Part 9 - Apportionment of Net Income (280-RICR-20-25-9)
Section 280-RICR-20-25-9.5 - Definitions

A. "Apportionment" means the formula used to determine the amount of income that is attributable to Rhode Island by a combined group or any other taxpayer.

B. "Arithmetical mean" means the sum of the factors available to the taxpayer divided by the number of fractions used.

C. "Billing address" means the location indicated in the books and records of the taxpayer as the primary mailing address relating to a customer's account as of the time of the transaction as kept in good faith in the normal course of business and not for tax avoidance purposes.

D. "Broadcast customer" means a person who has a direct contractual relationship with a broadcaster from whom the broadcaster derives gross receipts. The term "broadcast customer" includes but is not limited to an advertiser or licensee.

E. "Broadcaster" means a taxpayer that is engaged in the business of broadcasting, and includes a television network, a cable program network, and a television distribution company. The term "broadcaster" does not include a Platform Distribution Company such as a cable system operator or a direct broadcast satellite system operator.

F. "Broadcasting" means the transmission of film programming by an electronic or other signal conducted by microwaves, wires, lines, coaxial cables, wave guides, fiber optics, satellite transmissions, or through any other means of communication directly or indirectly to viewers and listeners.

G. "Business customer" means a customer that is a business operating in any form, including an individual that operates a business through the form of a sole proprietorship. Sales to a non-profit organization, to a trust, to the United States Government, to any foreign, state, or local government, or to any agency or instrumentality of such government shall be treated as sales to a business customer and shall be assigned consistent with the rules that apply to receipts from such sales.

H. "C corporation" means a corporation organized under subchapter C of the Internal Revenue Code, as defined in Section 1504 of that subchapter. For the purposes of this Regulation, the term includes those entities treated as C corporations for federal tax purposes, so long as such entities would qualify as a corporation, as defined in this Regulation.

I. "Combined group" means a group of two or more corporations in which more than fifty percent (50%) of the voting stock of each member corporation is directly or indirectly owned by a common owner or owners, either corporate or non-corporate, or by one or more of the member corporations, and that are engaged in a unitary business.

J. "Commercial domicile" has the meaning set forth in R.I. Gen. Laws § 44-14-14.2.

K. "Common ownership" means more than fifty percent (50%) of the voting control of each member of the group is directly or indirectly owned by a common owner or owners, either corporate or non-corporate, whether or not the owner or owners are members of the combined group.

L. "Corporation" has the meaning set forth in R.I. Gen. Laws § 44-11-1(4), and for purposes of mandatory unitary combined reporting under the Rhode Island General Laws, includes an LLC, partnership, or other entity electing to be taxed as a corporation for federal tax purposes. Although a partnership or other pass-through entity may not always be considered a corporation includible in the combined group on an entity basis as a member, when a partnership or other pass-through entity is directly or indirectly held by a corporation, the business conducted by such a partnership or pass-through entity is considered the business of the corporation to the extent of the corporation's distributive share of the partnership or pass-through entity net income.

M. "Cost of performance sourcing" means the sourcing method used for gross receipts from transactions other than sales of tangible personal property under the three-factor apportionment formula set forth in § 9.9 of this Part.

N. "Division of Taxation" means the Rhode Island Department of Revenue, Division of Taxation. The Division of Taxation may also be referred to as the "Division" or the "Tax Division."

O. "Documentary evidence" means journals, books of account, invoices, expense reports, or other records maintained in the regular course of business, or any other records required to be maintained for legal or accounting purposes.

P. "Film programming" means one (1) or more performances, events, or productions (or segments of performances, events, or productions) intended to be distributed for visual and auditory perception, including but not limited to news, entertainment, sporting events, plays, stories, or other literary, commercial, educational, or artistic works.

Q. "Income-producing activity" means, for each separate item of income, the transactions and activity directly engaged by the taxpayer for the ultimate purpose of obtaining profit or gain. For apportionment purposes, such activity does not include transactions and activities performed on behalf of a taxpayer, such as those conducted on the taxpayer's behalf by an independent contractor. Income-producing activity includes, but is not limited to:

R. "Individual customer" means any customer that is not a business customer.

S. "Intangible property" within the meaning of this Regulation generally includes, without limitation, copyrights; patents; trademarks; trade names; brand names; franchises; licenses; trade secrets; trade dress; information; know-how; methods; programs; procedures; systems; formulae; processes; technical data; designs; licenses; literary, musical, or artistic compositions; information; ideas; contract rights including broadcast rights; agreements not to compete; goodwill and going concern value; securities; and computer software.

T. "Market based sourcing" means the sourcing method used for gross receipts from transactions other than sales of tangible personal property under the single sales factor apportionment formula set forth in § 9.8 of this Part.

U. "Place of order" means the physical location from which a customer places an order for a sale other than a sale of tangible personal property from a seller, resulting in a contract with the seller.

V. "Platform Distribution Company" means a cable service provider, a direct broadcast satellite system, an internet content distributor or any other distributor that directly charges viewers for access to any film programming.

W. "Single sales factor" means the apportionment fraction set forth in § 9.8 of this Part. The sales factor may also be referred to as the "receipts factor" or "gross receipts factor".

X. "State where a contract of sale is principally managed by the customer," means the primary location at which an employee or other representative of a customer serves as the primary contact person for the seller with respect to the implementation and day-to-day execution of a contract entered into by the seller with the customer.

Y. "Taxpayer" means and includes any person subject to taxation under the Rhode Island General Laws. For tax years beginning on or after January 1, 2015, a combined group is included within the definition of taxpayer.

Z. "Three-factor apportionment" means the apportionment formula set forth in § 9.9 of this Part. The three-factor apportionment formula takes into account the property factor, the payroll factor, and the sales factor of the trade or business of the taxpayer.

AA. "Unitary business" means the activities of a group of two or more corporations under common ownership that are sufficiently interdependent, integrated or interrelated through their activities so as to provide mutual benefit and produce a significant sharing or exchange of value among them or a significant flow of value between the separate parts.