The mere holding of intangible personal property is not, of itself, an income producing activity.
EXAMPLE:
The taxpayer contracts with a customer to perform a service for $1,000,000 in this state and State B. The taxpayer's own costs of performance for this service are $500,000 for both this state and State B. For this state, the taxpayer also hires a subcontractor to perform the service at a cost of $100,000 in this state. Both taxpayer's own costs of performance of $500,000 in both this state and State A and the $100,000 paid by the taxpayer to the subcontractor of the taxpayer and will be taken into account in assigning the costs of performance to a state and ultimately the $1,000,000 receipt to the sales factor numerator.
EXAMPLE:
Taxpayer is the owner of 10 railroad cars. During the year, the total of the days each railroad car was present in this state was 50 days. The receipts attributable to the use of each of the railroad cars in this state are a separate item of income and shall be determined as follows:
(10 x 50) = (500/3650) x Total Receipts = Receipts Attributable to this State
EXAMPLE (i):
Taxpayer, a road show, gave theatrical performances at various locations in State X and in this state during the tax period. All gross receipts from performances given in this state are attributed to this state.
EXAMPLE (ii):
The taxpayer, a public opinion survey corporation, conducted a poll by its employees in State X and in this state for a sum of $9,000.The project required 600 person hours to obtain the basic data and prepare the survey report. Two hundred of the 600 person hours were expended in this state. The receipts attributable to this state are $3,000.
(200 person hours x $9,000)/600 person hours
EXAMPLE:
The taxpayer, a satellite TV provider, contracts with its customer, an owner of apartment buildings, to provide and install satellite dishes for $1,000,000 in this state. The taxpayer then subcontracts with and pays agent or independent contractor X to install the satellite dishes in this state for $750,000. The taxpayer can reasonably determine at the time of filing its return that its cost of performance is in this state because that is the only location where installation services were performed. The taxpayer's cost of performance of $750,000 paid to X will be assigned to this state pursuant to subsection (d)(3)(A) for purposes of assigning the $1,000,000 receipt to the numerator of the sales factor.
EXAMPLE:
The taxpayer, a satellite TV provider, contracts with its customer, an owner of apartment buildings, to provide and install satellite dishes for $1,000,000 in this state and States A and B on an as needed basis. The taxpayer then subcontracts with and pays agent or independent contractor X to install the satellite dishes in this state and States A and B for $200 per installation. The taxpayer's records show that X installed 1,000 satellite dishes each in this state and State A and 1,750 satellite dishes in State B. The taxpayer can reasonably determine at the time of filing its return the costs of performing installation services in each state because the taxpayer's records indicate the number of installations in each state and the taxpayer's contract with X indicate the cost of each installation. The taxpayer's cost of performance is $200,000 in both this State and State A and is $350,000 in State B. The taxpayer's greater cost of performance is $350,000 in State B ($200 x 1,750) and will be assigned to State B pursuant to subsection (d)(3)((B) for purposes of assigning the $1,000,000 receipt to the numerator of the sales factor.
EXAMPLE:
The taxpayer, a satellite TV provider, contracts with its customer, an owner of apartment buildings, to provide and install satellite dishes for $1,000,000 in this state and States A and B on an as needed basis. The taxpayer then subcontracts with and pays agent or independent contractor X to install the satellite dishes in this state and States A and B for $200 per installation. The taxpayer's records show that X installed 1,000 satellite dishes each in this state and State A and 1,750 satellite dishes in State B. The contract between the taxpayer and X does not indicate the taxpayer's costs associated with X's installation of the satellite dishes in each state. However, the taxpayer's contract with its customer indicates that the activity will take place in this state and States A and B, and the taxpayer's records indicate the number of installations in each state. Accordingly, the taxpayer can reasonably determine at the time of filing its return the costs of performing installation services in each state. The taxpayer's cost of performance is $200,000 in both this State and State A and is $350,000 in State B. The taxpayer's greater cost of performance of $350,000 will be assigned to State B pursuant to subsection (d)(3)(C) for purposes of assigning the $1,000,000 receipt to the numerator of the sales factor.
EXAMPLE:
The taxpayer, a satellite TV provider, contracts with its customer, an owner of apartment buildings that is domiciled in State A, to provide and install satellite dishes for $1,000,000 in this state and States A and B. The taxpayer subcontracts with and pays X to install the satellite dishes in this state and States A and B for $750,000. The contract between the taxpayer and X and the contract between the taxpayer and its customer do not indicate the taxpayer's costs associated with X's installation of the satellite dishes in each state. The $750,000 cost of X's performance of its contractual duties will be assigned to State A pursuant to subsection (d)(3)(D) for purposes of assigning the $1,000,000 receipt to the sales factor numerator.
EXAMPLE:
The taxpayer, a satellite TV provider, contracts with its customer, an owner of apartment buildings, to provide and install satellite dishes in this state and States A and B for $1,000,000. The taxpayer contracts with X to install the satellite dishes in this state and States A and B for $750,000. The contract between the taxpayer and X and the contract between the taxpayer and its customer do not indicate the taxpayer's costs associated with X's installation of the satellite dishes in each state. The customer's domicile is not determinable. The $750,000 cost of performance paid to X will not be taken into account pursuant to subsection (d)(3)(E) for purposes of assigning the $1,000,000 to the numerator of the sales factor.
Cal. Code Regs. Tit. 18, § 25136
Note: Authority cited: Section 19503, Revenue and Taxation Code. Reference: Section 25136, Revenue and Taxation Code.