Missouri Code of State Regulations › Title 12 - DEPARTMENT OF REVENUE › Division 10 - Director of Revenue › Chapter 2 - Income Tax › Section 12 CSR 10-2.076 - Allocation and Apportionment (Beginning on or After January 1, 2020)

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This rule interprets sections
				  143.431
				  and
				  143.455,
				  RSMo for purposes of the apportionment and allocation of a corporate taxpayer's
				  income where that taxpayer is taxable in another state.
(1) Income Derived from Sources Within this
				State. On or after January 1, 2020, a corporation's income derived from sources
				within Missouri is its federal taxable income allocated to Missouri or
				apportioned to Missouri pursuant to section
				143.455,
				RSMo. Section
				143.455,
				RSMo replaces all methods and tests previously used in Missouri to apportion
				and allocate corporate income, including the 'source of income test' and the
				Multistate Tax Compact three-factor method.
(2) Definitions.
(A) "Allocation" refers to the assignment of
				a portion of net income to a particular state. Any taxpayer subject to the
				taxing jurisdiction of this state shall assign all of its nonapportionable
				income within or without this state in accordance with sections
				143.455.5.-143.455.9., RSMo.
(B)
				"Apportionment" refers to the division of apportionable income between states
				by the use of a formula containing one (1) or more apportionment
				factors.
(C) "Director" or
				"Director of Revenue" shall mean the Missouri Director of Revenue or his/her
				duly authorized agent or designee.
(D) "Franchise tax," as that term is used in
				section 143.455.4., RSMo and in this regulation, means a tax, or a portion of a
				tax, charged for the privilege of doing business in a state.
(E) "Gross receipts" are the gross amounts
				realized (the sum of money and the fair market value of other property or
				services received) on the sale or exchange of property, the performance of
				services, or the use of property or capital in a transaction which produces
				apportionable income in which the income or loss is recognized under the
				Internal Revenue Code, and, where the income of foreign entities is included in
				apportionable income, amounts which would have been recognized under the
				Internal Revenue Code if the relevant transactions or entities were in the
				United States. Amounts realized on the sale or exchange of property are not
				reduced for the cost of goods sold or the basis of property sold.
(F) "Net Income," for purposes of section
				143.455,
				RSMo, means the taxpayer's federal taxable income, net of Missouri additions,
				subtractions and deductions; except, that in section 143.455.10., RSMo the
				phrase "net income" refers to that portion of the taxpayer's federal taxable
				income, net of Missouri additions, subtractions, and deductions which also
				constitutes apportionable income;
(G) "Petition" or "Petitioning," as those
				terms are used in section 143.455.13.(2)-(3), RSMo, means the filing of written
				or electronic document(s) with the director at least sixty (60) days before the
				end of the tax year to which alternative apportionment is sought to apply, in
				the manner prescribed, and containing the following information:
1. The name and tax identification number of
				the taxpayer seeking alternative apportionment;
2. The name, telephone number, email address,
				and mailing address of each individual filing the petition on behalf of the
				taxpayer;
3. A power of attorney
				form (Form 2827) signed by an officer of the corporation authorizing the
				person(s) named in paragraph (2)(G)2. above to serve as an authorized agent
				with respect to any of the tax years to which the alternative apportionment may
				apply and all previous tax years that may be discussed in connection with the
				petition;
4. A statement describing
				with particularity the alternative apportionment method sought;
5. A statement setting forth the facts and
				arguments from the facts to the conclusion that the ordinary allocation and
				apportionment provisions of section
				143.455,
				RSMo do not fairly represent the extent of the corporation's income applicable
				to this state;
6. A statement
				setting forth the facts and arguments from the facts to the conclusion that the
				alternative apportionment method sought by the taxpayer is
				reasonable;
7. A Missouri tax
				return for the first tax year the alternative apportionment method is to be
				applied, completed using the ordinary apportionment and allocation provisions
				of section
				143.455,
				RSMo, and prepared using reasonably estimated figures; and
8. A Missouri tax return for the first tax
				year the alternative apportionment method is to be applied, completed using the
				alternative apportionment method sought, and prepared using reasonably
				estimated figures.
(H)
				"Receipts" has the meaning given in section 143.455.3.(6), RSMo, with the
				following clarifications:
1. Receipts from the
				maturity of a bond or other debt instrument are excluded from the definition of
				"receipts" used in section 143.455.3.(6), RSMo.
2. Receipts from the sale or exchange of a
				security are excluded from the definition of "receipts" used in section
				143.455.3.(6), RSMo, even if the sale or exchange was made as part of a
				corporation's regular business.
3.
				Receipts from the sale or exchange of currency, including foreign currencies or
				cryptocurrencies, are excluded from the definition of "receipts" used in
				section 143.455.3.(6), RSMo.
(I) "Receipts Factor" means the fraction
				stated in section 143.455.10., RSMo, the numerator of which is the total
				receipts of the corporation in Missouri during the tax period and the
				denominator of which is the total receipts of the corporation everywhere during
				the tax period.
(J) "Securities,"
				means any interest or instrument commonly treated as a security as well as
				other instruments which are customarily sold in the open market or on a
				recognized exchange, including, but not limited to, transferable shares of a
				beneficial interest in any corporation or other entity, bonds, debentures,
				notes, and other evidences of indebtedness, accounts receivable and notes
				receivable, cash and cash equivalents including foreign currencies, and
				repurchase and futures contracts.
(K) "Taxpayer" or "Entity" means any
				individual, corporation, partnership, firm, association, or governmental
				unit.
(L) "Ultimate beneficiary of
				the service," as that term is used in section 143.455.12.(1)(c), RSMo and
				except for bartering or similar in-kind transactions, means the entity that
				receives benefit or value from, but does not also receive monetary or
				credit-based payment (other than refunds, cashback, or discount-equivalents) in
				direct connection with, the service at issue. Examples of the ultimate
				beneficiary of the service include:
1. For
				entertainment services, the individual(s) viewing, interacting with,
				experiencing, or otherwise deriving entertainment value from such
				services;
2. For education
				services, the individual(s) receiving instruction, teaching, coaching, or
				lectures from the education provider, regardless of the medium used to transmit
				such educational content (e.g. telephonically or by internet or
				mail);
3. For investment advising
				or investment management services, the location of the ultimate investor,
				determined by ignoring investment intermediaries such as investment funds;
				and
4. For advertising services,
				the entities which have their products, services, or messages advertised
				through the provider of advertising services.