Code of Maine Rules › 18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES › 125 - BUREAU OF REVENUE SERVICES › Chapter 801 - APPORTIONMENT › Section 125-801-09 - Property value and factor

Current through 2024-29, July 17, 2024
The assessor may require taxpayers to provide information on
				  tax returns on property value and factor. The property factor also may be used
				  in appropriate circumstances in determining an apportionment variation, as
				  provided under
				  36 M.R.S.
				  §5211(17). The property
				  factor is a fraction, the numerator of which is the average value of the
				  taxpayer's real and tangible personal property owned or rented and used in
				  Maine during the tax period, and the denominator of which is the average value
				  of all the taxpayer's real and tangible personal property owned or rented and
				  used during the tax period.
A.
Real and tangible personal property
. The term "real and tangible
				personal property" includes land, buildings, machinery, stocks of goods,
				equipment, and other real and tangible personal property but does not include
				coin or currency.
B.
Property
				used during the taxable year
. Property is included in the property
				factor if it is actually used or is available for use or capable of being used
				during the tax period by the taxpayer. Property held in reserve or standby
				facilities or property held as a reserve source of materials must be included
				in the factor. For example, a plant temporarily idle or raw material reserves
				not currently being processed are includable in the factor. Property or
				equipment under construction during the tax period (except inventoriable goods
				in process) must be excluded from the factor until such property is actually
				used by the taxpayer. If the property is partially used by the taxpayer while
				under construction, the value of the property to the extent used must be
				included in the property factor. Property used by the taxpayer must remain in
				the property factor until its permanent withdrawal is established by an
				identifiable event such as its sale or the lapse of an extended period of time
				(normally, five years) during which the property is held for sale.
C.
Property in transit; mobile
				property
. Property in transit between locations of the taxpayer to which
				it belongs is considered to be located at the destination for purposes of the
				property factor. Property in transit between a buyer and seller that is
				included by a taxpayer in the denominator of its property factor in accordance
				with its regular accounting practices must be included in the numerator
				according to the state of destination. The value of mobile or movable property,
				such as construction equipment, trucks or leased electronic equipment, that is
				located both within and without this State during the taxable year, is
				determined for purposes of the numerator of the property factor on the basis of
				total time within Maine during the taxable year. Automobiles assigned to
				traveling employees are included in the numerator of the factor of the state to
				which the employee's compensation is assigned under the payroll
				factor.
D.
Valuation of owned
				property
. Property owned by the taxpayer is valued at its original cost.
				"Original cost" means the basis of the property for federal income tax purposes
				(prior to any federal adjustments) at the time of acquisition by the taxpayer
				and adjusted by subsequent capital additions or improvements thereto and
				partial disposition thereof, by reason of sale, exchange, abandonment, etc.
				However, capitalized intangible drilling and development costs are included in
				the factor whether or not they have been expensed for either federal or state
				tax purposes. If the original cost cannot be ascertained, the property must be
				included in the factor at its fair market value as of the date of its
				acquisition by the taxpayer.
Generally, the average value of all property owned by the
				  taxpayer is determined by averaging the values at the beginning and ending of
				  the tax period. However, the assessor may require or allow averaging of monthly
				  values if substantial fluctuations in the values of the property exist during
				  the taxable year or if property is acquired after the beginning of the taxable
				  year or disposed of before the end of the taxable year.
E.
Valuation of rented property
.
				Property rented by the taxpayer is valued at 8 times the net annual rental
				rate. Subrentals are not deducted.
If property is used at no charge or rented for a rate other
				  than a reasonable market rate, the property must be included in the property
				  factor on the basis of a reasonable market rental rate.
The "annual rental rate" is the amount paid as rent for the
				  property for a twelve-month period. When property is rented for less than a
				  twelve-month period, the net rent paid for the actual period of rental
				  constitutes the "annual rental rate" for the tax period.
However, when a taxpayer has rented property for a term of 12
				  or more months and the current tax period covers a period of less than 12
				  months, the net rent paid for the short tax period must be annualized. If the
				  rental term is for less than 12 months, the rent must not be annualized beyond
				  its term. Rent will not be annualized because of the uncertain duration when
				  the rental term is on a month-to-month basis.
"Rent" is the actual sum of money or other consideration
				  payable, directly or indirectly, by the taxpayer or for its benefit for the use
				  of the property and includes:
(1) Any
				amount payable for the use of real or tangible personal property, or any part
				thereof, whether designated as a fixed sum of money or as a percentage of
				sales, profits or otherwise;
(2)
				Any amount payable as additional rent or in lieu of rents, such as interest,
				taxes, insurance, repairs or any other items required to be paid by the terms
				of the lease or other arrangement but does not include amounts paid as service
				charges, such as utilities, janitor services, etc. If a payment includes rent
				and other charges unsegregated, the amount of rent must be determined by
				consideration of the relative values of the rent and the other items.
"Rent" does not include incidental day-to-day expenses such
				  as hotel or motel accommodations, daily rental of automobiles, etc. "Rent" does
				  not include royalties based on extraction of natural resources, whether
				  represented by delivery or purchase. For this purpose, a royalty includes any
				  consideration conveyed or credited to a holder of an interest in property that
				  constitutes a sharing of current or future production of natural resources from
				  such property, irrespective of the method of payment or how such consideration
				  may be characterized, whether as a royalty, advance royalty, rental or
				  otherwise.
Leasehold improvements are treated as property owned by the
				  taxpayer regardless of whether the taxpayer is entitled to remove the
				  improvements or of whether the improvements revert to the lessor upon
				  expiration of the lease.