Louisiana Administrative Code › Title 61 - REVENUE AND TAXATION › Part I - Taxes Collected and Administered by the Secretary of Revenue › Chapter 3 - Corporation Franchise Tax › Section I-306 - Allocation of Taxable Capital

Current through Register Vol. 50, No. 6, June 20, 2024
A.
				General Allocation Formula. Every corporation subject to the corporation
				franchise tax must determine the extent to which its entire franchise taxable
				base is employed in the exercise of its franchise within this state. For all
				taxpayers other than those in the business of manufacturing, the extent of such
				use of total taxable base in the state is determined by multiplying the total
				taxable capital by the ratio obtained through the arithmetical average of the
				ratio of net sales made to customers in the regular course of business and
				other revenues attributable to Louisiana to total net sales made to customers
				in the regular course of business and total other revenues, and the ratio that
				the value of all of the taxpayer's property and assets situated or used by the
				taxpayer in Louisiana bears to all of the taxpayer's property and assets
				wherever situated or used. For taxpayers in the business of manufacturing, the
				extent of such use of total taxable base in the state is determined by
				multiplying the total taxable capital by the ratio of net sales made to
				customers in the regular course of business and other revenues attributable to
				Louisiana to total net sales made to customers in the regular course of
				business and total other revenues.
1. Net
				Sales and Other Revenue. Net sales to be combined with other revenue in
				determining both the numerator and denominator of the revenue ratio for
				purposes of calculating the portion of the taxpayer's total taxable capital to
				be allocated to Louisiana are only those sales made to customers in the regular
				course of the taxpayer's business. In transactions in which raw materials,
				products, or merchandise are transferred to another party at one location in
				exchange for raw materials, products, or merchandise at another location in
				agreements requiring the subsequent replacement with similar property on a
				routine, continuing, or repeated basis, all such transactions shall be
				carefully analyzed to determine whether they constitute sales made to customers
				that should be included in the revenue ratio or whether they constitute
				exchanges that are not sales and should be excluded from the revenue ratio.
				Sales of scrap materials and by-products are construed to meet the requirements
				for inclusion in the revenue ratio. Sales made other than to customers, such
				as, but not limited to, sales of stocks, bonds, futures, options, derivatives,
				and other evidence of investment on the open market, regardless of the
				frequency or volume of those sales, shall not be included in the revenue ratio.
				Similarly, revenues and/or gains on the sale of property other than stock in
				trade shall not be included in the revenue ratio since they generally do not
				meet the specific requirements that only sales made to customers in the regular
				course of business of the taxpayer should be included. Whenever a transaction
				is not a sale to customers in the regular course of business, the amount does
				not constitute other revenue so as to qualify for inclusion in either the
				numerator or the denominator of the allocation ratio.
a. Sales attributable to Louisiana are those
				sales where the goods, merchandise, or property are received in Louisiana by
				the purchaser. Where goods are delivered into Louisiana by public carrier, or
				by other means of transportation, including transportation by the purchaser,
				the place at which the goods are ultimately received after all transportation
				has been completed shall be considered as the place at which the goods are
				received by the purchaser. The transportation in question is the initial
				transportation relating to the sale by the taxpayer.
i. Transportation by Taxpayer or by Public
				Carrier. Where the goods are delivered by the taxpayer in his own equipment, it
				is presumed that such transportation relates to the sale. Where the goods are
				delivered by a common or contract carrier, whether shipped F.O.B. shipping
				point and whether the carrier be a pipeline, trucking line, railroad, airline,
				or some other type of carrier, the place where the goods are ultimately
				received by the purchaser after the transportation incident to the sale has
				ended is deemed to be the place where the goods are received by the
				purchaser.
ii. Transportation by
				Purchaser
(a). Where the transportation
				involved is transportation by the purchaser, it is recognized that it is more
				difficult to determine whether or not the transportation is related to the sale
				by the taxpayer. To be related to the initial sale, the transportation should
				be commenced immediately. However, before a lapse of time is conclusive,
				consideration must be given to the nature and character of the goods purchased,
				the availability of transportation, and other pertinent economic and natural
				circumstances occurring at the time.
(b). The intent of the parties to the sale
				must also be considered. The intent and purpose of the purchaser may be
				determined directly, or by an evaluation of the nature and scope of his
				operation, customs of the trade, customary activities of the purchaser, and all
				pertinent actions and words of the purchaser at the time of the sale.
(c). In order for the transportation by the
				purchaser to be related to the initial sale by the taxpayer to the purchaser,
				such transportation must be generally the same in nature and scope as that
				performed by the vendor or by a carrier. There is no difference between a case
				where a taxpayer in Houston ships F.O.B. Houston to a purchaser in Baton Rouge,
				by common carrier, and a case where all facts are the same except that the
				purchaser goes to Houston in his own vehicle and returns with the goods to
				Baton Rouge.
iii.
				Transportation of Natural Resources by a Public Carrier Pipeline. Generally,
				transportation by public carrier pipelines is accorded the same treatment as
				transportation by any other type of public carrier. However, because of the
				nature and character of the property, the type of carrier, and the customs of
				the trade, the natural resources in the pipeline may become intermixed with
				other natural resources in the pipeline and lose their particular identity.
				Where delivery is made to a purchaser in more than one state, or to different
				purchasers in different states, peculiar problems of attribution arise. In all
				cases possible, attribution will be made in accordance with the rules
				applicable to all public carrier transportation, that is, where it can be shown
				that a taxpayer in one state sold a quantity of crude oil to a purchaser in
				another state, and the oil was transported to the purchaser by public carrier
				pipeline, the sale will be attributed to the state where the crude oil is
				received by the purchaser, even though the crude oil delivered might not be the
				identical oil sold because of commingling in the pipeline. Custom of the trade
				indicates the purchaser buys a quantity of oil of certain quality, but not any
				specific oil.
iv. Storage of
				Property after Purchase
(a). In determining
				the place of receipt by the purchaser after the initial transportation has
				ended, peculiar problems may be created by the storage of the property
				purchased immediately upon purchase and at a place other than the place of
				intended use. The primary problem created by such storage is in determining
				whether or not the storage is of a temporary nature.
(b). In cases where the storage is permanent
				or semipermanent, delivery to the place of storage concludes the initial
				transportation, and the sale is attributed to the place of storage. However,
				where the storage is of a temporary nature, such as that necessitated by lack
				of transportation or by change from one means of transportation to another, or
				by natural conditions, the place of such storage is of no significance.