Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › 1998-1 - Comprehensive Corporation Income Tax Regulations › Rule 26-51-718 - MODIFICATION OF APPORTIONMENT AND ALLOCATION › Rule 3.26-51-718(d) - Publishing

Current through Register Vol. 49, No. 6, June, 2024
The following special rules are established with respect to
					 the apportionment of income derived from the publishing, sale, licensing or
					 other distribution of books, newspapers, magazines, periodicals, trade journals
					 or other printed material.
In General. Except as specifically modified by this
					 regulation, when a taxpayer in the business of publishing, selling, licensing
					 or distributing newspapers, magazines, periodicals, trade journals or other
					 printed material has income from sources both inside and outside of Arkansas,
					 the amount of business income from sources within Arkansas from such business
					 activity shall be determined pursuant to ACA
					 26-51-702
					 to
					 26-51-718.
Definitions. The following definitions apply to the terms
					 contained in this regulation:
(i)
				  "Outer-jurisdictional property" means certain types of tangible personal
				  property, such as orbiting satellites, undersea transmission cables and the
				  like, that are owned or rented by the taxpayer and used in the business of
				  publishing, licensing, selling or otherwise distributing printed material, but
				  which are not physically located in any particular state.
(ii) "Print or printed material" includes,
				  without limitation, the physical embodiment or printed version of any thought
				  or expression including, without limitation, a play, story, article, column or
				  other literary, commercial, educational, artistic or other written or printed
				  work. Printed material may take the form of a book, newspaper, magazine,
				  periodical, trade journal or any other form of printed matter and may be
				  contained on any medium or property.
(iii) " Purchaser" and 'Subscriber" means the
				  individual, residence, business or other outlet which is the ultimate or final
				  recipient of the print or printed material. Neither of such terms shall include
				  a wholesaler or other distributor of print or printed material.
(iv) "Terrestrial facility" shall include any
				  telephone line, cable, fiber optic, microwave, earth station, satellite dish,
				  antennae or other relay system or device that is used to receive, transmit,
				  relay or carry any data, voice, image or other information that is transmitted
				  from or by any outer-jurisdictional property to the ultimate recipient thereof.
Apportionment of Business Income
The Property Factor
Property Factor Denominator
All real and tangible personal property, whether owned or
					 rented, which is used in the taxpayer's business shall be included in the
					 denominator of the property factor. However, outer-jurisdictional property
					 shall not be included in the property factor's denominator.
Property Factor Numerator
All real and tangible personal property owned or rented by
					 the taxpayer and used in Arkansas during the tax year shall be included in the
					 numerator of the property factor. However, outer-jurisdictional property owned
					 or rented by the taxpayer and used in Arkansas during the tax year shall be
					 excluded from the numerator of the property factor.
Example: ABC Newspaper Co. owns a total of $400,000,000 of
					 property everywhere and, in addition, it owns and operates a communication
					 satellite for the purpose of sending news articles to its printing plant in
					 Arkansas, as well as for communicating with its printing plants, news bureaus,
					 employees and agents located in other states and throughout the world. The
					 total value of its real and tangible personal property that was permanently
					 located in Arkansas for the entire tax year was valued at $3,000,000. The total
					 original cost of the satellite is $100,000,000 for the tax year. The taxpayer's
					 mobile property that was used partially within Arkansas, consisting of 40
					 delivery trucks, was determined to have an original cost of $4,000,000. The
					 delivery trucks were used in Arkansas for 95 days.
The total value of property to be attributed to Arkansas
					 would be determined as follows:
Click
					 here to view image
The Payroll Factor
The payroll factor shall be determined according to ACA
					 26-51-713
					 and
					 26-51-714
					 and the regulations promulgated thereunder.
The Sales Factor
Sales Factor Denominator
The denominator of the sales factor shall include the total
					 gross receipts derived by the taxpayer from transactions and activity in the
					 regular course of the taxpayer's trade or business.
Sales Factor Numerator
The numerator of the sales factor shall include all gross
					 receipts of the taxpayer from sources within Arkansas, including, but not
					 limited to, the following:
1. Gross
				  receipts derived from the sale of tangible personal property, including printed
				  materials, delivered or shipped to a purchaser or a subscriber in
				  Arkansas;
2. Except as provided in
				  paragraph 3 below, gross receipts derived from advertising and the sale, rental
				  or other use of the taxpayer's customer lists or any portion thereof shall be
				  attributed to Arkansas as determined by the taxpayer's "circulation factor"
				  during the tax year. The circulation factor shall be determined for each
				  individual publication by the taxpayer of printed material containing
				  advertising and shall be equal to the ratio that the taxpayer's Arkansas
				  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 shall
					 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 and from state
					 to state 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 shall be determined from the taxpayer's books and
					 records;
3. 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 Arkansas 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 Arkansas on the basis of a regional or local geographic area
				  circulation factor and not upon the basis of the circulation factor provided by
				  paragraph 2 above. Such attribution shall be based upon the ratio that the
				  taxpayer's circulation to purchasers and subscribers located in Arkansas 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 shall be permitted only upon the condition that such
				  receipts are not double counted or otherwise included in the numerator of any
				  other state; or
4. In the event
				  that the purchaser or subscriber is the United States Government or that the
				  taxpayer is not taxable in a certain other 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
				  lists, or any portion thereof that would have been attributed by the
				  circulation factor to the numerator of the sales factor for such other state,
				  shall be included in the numerator of the sales factor of Arkansas if the
				  printed material or other property is shipped from an office, store, warehouse,
				  factory, or other place of storage or business located in Arkansas.