Florida Administrative Code › 12 - DEPARTMENT OF REVENUE › 12C - Corporate, Estate and Intangible Tax › Chapter 12C-1 - CORPORATE INCOME TAX › Section 12C-1.0155 - Sales Factor for Apportionment

Current through Reg. 50, No. 138; July 16, 2024
(1)
				For the purposes of the sales factor, the term "sales" means all gross receipts
				received by the taxpayer from transactions and activities in the regular course
				of its trade or business.
(a) Sales of
				tangible personal property. In the case of a taxpayer engaged in manufacturing
				and selling or purchasing and reselling goods or products, "sales" includes all
				gross receipts from the sales of such goods or products. Gross receipts for
				this purpose means gross sales, without regard to returns and allowances, and
				includes all interest income, service charges, carrying charges, or time-price
				differential charges incidental to such sales. Any federal or state taxes, such
				as federal manufacturers' excise taxes, shall be included as part of such gross
				receipts if such taxes constitute a part of the selling price. Federal and
				state excise taxes (including sales taxes) shall not be included in gross
				receipts when the statutes imposing such taxes require the taxpayer to add
				these taxes as a separate item to the selling price of the taxable transaction
				and to collect the tax from the purchaser.
(b) Sales of business assets. If a taxpayer
				derives receipts from the sale of equipment used in its business, such receipts
				constitute a "sale." For example, a truck express company owns a fleet of
				trucks and sells its trucks under a regular replacement program. The gross
				receipts from the sales of the trucks are included in the sales factor. If
				amounts of gross receipts arising from an incidental or occasional sale of a
				fixed asset used in the regular course of the taxpayer's trade or business
				would materially distort the sales factor, the taxpayer may petition the
				Department, or the Department is authorized to require, pursuant to section
				220.152, F.S., and rule
				12C-1.0152, F.A.C., an
				adjustment to the sales factor.
(c)
				Installment sales. Installment sales, including interest associated with the
				sale, are included in the sales factor as gross receipts are
				received.
(d) Rentals. Rental
				income is included in the sales factor if 10 percent or more of the taxpayer's
				total income reported on the federal tax return consists of leasing or renting
				real or tangible personal property. In the case of a taxpayer engaged in
				renting real or tangible personal property, "sales" includes the gross receipts
				from the rental, lease, or licensing the use of the property.
(e) Sales for construction contractors. If
				the percentage-of-completion method is used, the sales factor includes only
				that portion of the contract price that reflects the percentage of the contract
				completed. If the completed-contract method is used, the sales factor includes
				that portion of the gross receipts (progress billings) received or accrued
				during the year.
(f) Income from
				intangible personal property.
1. Where the
				income producing activity in respect to business income from intangible
				personal property can be readily identified, such income is included in the
				denominator of the sales factor and, if the income producing activity occurs in
				Florida, in the numerator of the sales factor as well. For example, usually the
				income producing activity can be readily identified in respect to interest
				income received on deferred payments on sales of tangible personal property and
				income from the sale, licensing, or other use of intangible personal property.
				The sale or licensing of the use of a trade name, trademark, or patent will be
				attributable to the state in which the trade name, trademark, or patent is
				used.
2. Where business income from
				intangible property cannot readily be attributed to any particular income
				producing activity of the taxpayer, such income cannot be assigned to the
				numerator of the sales factor for any state and shall be excluded from the
				denominator of the sales factor. For example, where business income in the form
				of dividends received on stock, royalties received on patents or copyrights, or
				interest received on bonds, debentures or government securities results from
				the mere holding of the intangible personal property by the taxpayer, such
				dividends and interest shall be excluded from the denominator of the sales
				factor.
3. In the case of a
				taxpayer engaged in the sale, assignment, or licensing of intangible personal
				property such as patents and copyrights, "sales" includes the gross receipts
				therefrom.
(g)
				Disposition of partnership interest. The gross receipts from the sale of an
				interest in a partnership are included in "sales."
(h) Sales of services. In the case of a
				taxpayer engaged in providing services, such as the operation of an advertising
				agency, the performance of equipment service contracts, or research and
				development contracts, "sales" includes the gross receipts from the performance
				of such services including fees, commissions, and similar items.
(i) Management fees. Generally, management
				fees charged from a parent corporation to a subsidiary are excluded from the
				sales factor. If the fees are just a pass-through of corporate overhead
				expenditures, the fees will not be included in "sales." However, where the
				parent is not a vendor of tangible personal property or a "financial
				organization" and the preponderance of its gross receipts are management fees,
				these may be used in construction of the sales factor. In the case of a parent
				holding company, management fees are clearly in "its trade or business" and,
				therefore, includable in the sales factor.
(j) Intercompany sales. When a consolidated
				return is filed, intercompany sales may be included in the sales factor.
				Indications that the amounts may be included as sales include the following
				factors:
1. Amounts called sales on the
				books;
2. Amounts invoiced as sold
				to related party;
3. Actual payment
				from related party; or
4. Amounts
				included in consolidated federal income tax return as "gross receipts or
				sales."
(k) Professional
				sports teams.
1. Receipts from player contract
				transactions, franchise fees, etc., are regarded as intangible business income
				and shall be assigned to the state in which the income-producing activity which
				is directly related to such receipts occurs. If there is no income-producing
				activity which directly relates to such receipts, such as the receipt of
				franchise fees for new league members, such receipts shall ordinarily be
				excluded from both the numerator and denominator of the sales factor.
2. Concession income and any other receipts
				not otherwise specifically covered shall be assigned to the physical location
				where the activity which gives rise to such receipts
				occurs.