Apportionment of taxable income. The following definitions are applicable to the terms used in the apportionment factor descriptions. Cost of aircraft by type means the average original cost or value of aircraft by type which are ready for flight. Original cost means the initial federal tax basis of the property plus the value of capital improvements to such property, except that, for this purpose, it shall be assumed that Safe Harbor Leases are not true leases and do not affect the original initial federal tax basis of the property. Net annual rental rate means the annual rental rate paid by the taxpayer.
Revenue service means the use of aircraft ready for flight for the production of revenue.
Departures means for purposes of these regulations all takeoffs, whether they be regularly scheduled or charter flights, that occur during revenue service. The transportation revenue derived from transactions and activities in the regular course of the trade or business of the taxpayer and miscellaneous sales of merchandise, etc., are included in the denominator of the revenue factor. Passive income items such as interest, rental income, dividends, etc., will not be included in the denominator nor will the proceeds or net gains or losses from the sale of aircraft be included. The numerator of the revenue factor is the total revenue of the taxpayer in this state during the income year. The ratio of departures of aircraft in this state weighted as to the cost and value of aircraft by type as compared to total departures similarly weighted multiplied by the total transportation revenue.