West Virginia Code of State Rules
Agency 110 - Tax
Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT
Series 110-13 - Business And Occupational Tax
Section 110-13-2 - Imposition of Privilege Tax

Universal Citation: 110 WV Code of State Rules 110-13-2

Current through Register Vol. XLI, No. 38, September 20, 2024

2.1. Until June 1, 1995, for taxable months or taxable years beginning after February 28, 1989, there is levied and shall be collected annual privilege taxes, on account of business and other activities, and in the amount to be determined by the application of rates against values or gross income as set forth in W. Va. Code ''11-13-2d, 11-13-2e, 11-13-2m and 11-13-2n.

2.2. For taxable months or taxable years beginning after May 31, 1995, there is levied and shall be collected annual privilege taxes on account of business and other activities, and in the amount to be determined by the application of rates against the measure of the tax as set forth in Sections 2d, 2e, 2m, 2n and 2o of this rule.

2.3. Sales to affiliates.

2.3.1. In determining value in sales from one to another of affiliated companies or persons, or under other circumstances where the relation between the buyer and seller is such that the gross proceeds from the sale are not indicative of the true value of the subject matter of the sale, the tax shall be levied upon the fair market value of the subject matter sold, corresponding as nearly as possible to the gross proceeds which have been or would be realized from the sale of the same or similar electrical energy, utility service or products of like quality or character where no common interest exists between a buyer and a seller but the circumstances and conditions, including time and place of sale, are otherwise similar. The term "affiliated companies or persons" includes but is not limited to "affiliated groups" as defined by Internal Revenue Code 1504(a) and "parent and subsidiary corporations" as defined by W. Va. Code '11-23-3.

2.3.2. In determining value in regard to sales from one to another of affiliated companies or persons, or under other circumstances where the relation between the seller and buyer is such that gross proceeds from the sale are not indicative of the true value of the subject matter of the sale, the following rules shall be applied in the order stated.
2.3.2.1. Whenever sales are made to affiliates, the value shall correspond to the gross proceeds from the sale of similar electrical energy, utility service or products of like quality and character and in similar quantities between persons of no common interest.

2.3.2.2. If there are no sales between parties of no common interest by which the taxpayer may value his or her sales to affiliates, the value shall correspond to the gross proceeds from sales by the taxpayer to nonrelated purchasers of similar electrical energy, utility service or products of like quality and character and in similar quantities and shall include all subsidies and bonuses.

2.3.2.3. In the absence of sales of similar electrical energy, utility service or products as a guide to value, the value may be determined by a cost basis. In those cases there shall be included every item of cost attributable to the particular matter sold, including direct and indirect overhead, costs. There shall be added to this total cost the average markup realized by the taxpayer on all electrical energy, utility service or products sold.

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