Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 59 - Determination of Net Income › Rule 701-59.28 - Apportionment Factor

Current through Register Vol. 47, No. 3, July 24, 2024
In determining the total net taxable income, the
				  apportionable income attributable to this state, as determined by use of the
				  apportionment fraction, shall be added to the nonapportionable income allocable
				  to this state.
(1) Receipts derived
				from transactions and activities in the regular course of trade or business
				which produce business income are included in the denominator of the
				apportionment factor Income which is not subject to the Iowa franchise tax
				shall not be included in the computation of the apportionment factor
(2) The numerator of the apportionment factor
				is that portion of the total receipts included in the denominator of the
				taxpayer attributable to this state during the income year determined as
				follows:
a. Receipts from the lease, rental,
				or other use of real property shall be included in the numerator if the real
				property is located in Iowa.
b.
				Receipts from the sale of tangible personal property shall be included in the
				numerator if the property is delivered or shipped to a purchaser in this state
				regardless of the f.o.b. point or other conditions of the sales.
c. Receipts from the use of tangible personal
				property shall be included in the numerator of the business activity formula to
				the extent that property is utilized in Iowa. The extent of utilization of
				tangible personal property in a state is determined by multiplying the rent by
				a fraction, the numerator of which is the number of days of physical location
				of the property in the state during the rental period in the taxable year and
				the denominator of which is the number of days of physical location of the
				property everywhere during all rental periods in the taxable year. If the
				physical location of the property during the rental period is unknown or not
				ascertainable by the taxpayer, tangible personal property is utilized in the
				state in which the property was located at the time the rental payer obtained
				possession.
d. All royalty income
				from intangible personal property determined to be business income shall be
				included in the numerator of the business activity formula if the taxpayer's
				commercial domicile is in Iowa. All royalty income from tangible personal
				property or real property determined to be business income shall be included in
				the numerator of the business activity formula if the situs of the tangible
				personal property or real property is within Iowa.
e. Interest and other receipts from assets in
				the nature of loans (including federal funds sold and banker's acceptances) and
				installment obligations shall be attributed to the state where the borrower is
				located.
f. Interest income from a
				participating bank's portion of participation loan shall be attributed to the
				state where the borrower is located.
g. Interest income from loans solicited by
				traveling loan officers shall be attributed to the state where the borrower is
				located.
h. Interest or service
				charges from bank, travel, and entertainment credit card receivables and credit
				card holders' fees shall be attributed to the state in which the credit card
				holder resides in the case of an individual or, if a corporation, to the state
				of the corporation's commercial domicile.
i. Merchant discoimt income derived from bank
				and financial corporation credit card holder transactions with a merchant shall
				be attributed to the state in which the merchant is located. It shall be
				presumed that the location of the merchant is the address on the invoice
				submitted by the merchant to the taxpayer
j Receipts for the performance of fiduciary
				services are attributable to the state where the services are principally
				performed.
k. Receipts from
				investments of a bank in securities, the income from which constitutes business
				income, shall be attributed to its commercial domicile except that:
(1) Receipts from securities used to maintain
				reserves against deposits to meet federal and state reserve deposit
				requirements shall be attributed to each state based upon the ratio that total
				deposits in the state bear to total deposits everywhere.
(2) Receipts from securities owned by a bank
				but held by a state treasurer or other public official or pledged to secure
				public or trust funds deposited in the bank shall be attributed to the banking
				office at which the secured deposit is maintained.
l. Receipts (fees or charges) from the
				issuance of traveler's checks and money orders shall be attributed to the state
				where the taxpayer's office is located that issued the traveler's checks. If
				the traveler's checks are issued by an independent representative or agent of
				the taxpayer, the fees or charges shall be attributed to the state where the
				independent representative or agent issued the traveler's checks.
m. Fees, commissions, or other compensation
				for financial services rendered for a customer located in this state or an
				account maintained within this state.
n. Any other gross receipts resulting from
				the operation as a financial organization within the state to the extent the
				items do not represent a recapture of an expense.
o. Receipts from management services if the
				recipient of the management services is located in this state.
p. The net amoimt of global intangible low
				tax income (net GILTI) shall be included in the numerator of the business
				activity formula to the extent that the income arises from the taxpayer's
				ownership of controlled foreign corporation(s) (CFCs) that are an integral part
				of some business activity occurring regularly in Iowa.
(1) If no portion of the net GILTI is part of
				some business activity occurring regularly in or outside of Iowa but the income
				is determined to be business income, the net GILTI shall be included in the
				numerator if the taxpayer's commercial domicile is in this state.
(2) Where net GILTI is included in the Iowa
				apportionment factor, the amount included in the denominator shall be the
				taxpayer's entire net GILTI.
(3)
				"Net GILTI" means the amount of global intangible low tax income as defined in
				Internal Revenue Code (IRC) Section 951 A, less the deduction allowed under IRC
				Section 250(a)(1)(B) (if any).
This rule is intended to implement Iowa Code
				  section422.63.