Code of Massachusetts Regulations › 830 CMR - DEPARTMENT OF REVENUE › Title 830 CMR 63.00 - Taxation of corporations › Section 63.38.3 - Apportionment of Income of Motor Carriers

Current through Register 1525, July 5, 2024
(1)
General
. If a motor carrier has income derived from
			 business carried on both within and outside Massachusetts, the Commissioner
			 shall determine the amount of the motor carrier's income derived from business
			 carried on within Massachusetts pursuant to M.G.L. c. 63, § 38, and
			 applicable regulations, in particular
			 830 CMR
			 63.38.1, except to the extent that
			 830 CMR
			 63.38.1 and the applicable regulations are
			 modified pursuant to
			 830 CMR
			 63.38.2. 830 CMR 63.38.3, has been issued
			 pursuant to the commissioner's authority under M.G.L. c. 63, § 38(j).
830 CMR 63.38.3 states rules for determining the property
				factor and the payroll factor of the apportionment formula that applies to
				motor carriers, because the apportionment provisions of M.G.L. c. 63, § 38
				are not reasonably adapted under the Apportionment of Income regulation,
				830 CMR
				63.38.1, to approximate the net income
				derived from business carried on within Massachusetts by a motor carrier with
				respect to the property and payroll factors. The rules for determining the
				sales factor for a motor carrier under the Apportionment of Income regulation,
				830 CMR
				63.38.1(9), particularly at
				830 CMR
				63.38.1(9)(d)4.b.iii.,
				however, are reasonably adapted to approximate such income with respect to the
				sales factor, and are thus not restated in 830 CMR 63.38.3.
See
also
				830 CMR
				63.38.1(9)(d)1.h.,
				"Industry-specific Alternative Apportionment Rules."
Once the property and payroll factors of the apportionment
				formula for a motor carrier are determined under the provisions of 830 CMR
				63.38.3, a taxpayer will use those factors in calculating its apportionment
				percentage under M.G.L. c. 63, § 38, and the applicable
				regulations.
A taxpayer may have characteristics of a motor carrier, a
				courier and package delivery service, as defined in
				830
				CMR 63.38.4, and/or an airline, as defined in
				830 CMR
				63.38.2, as in the example of a taxpayer that
				accepts and delivers a package using both air and ground transportation. In
				such cases, the Apportionment of Income of Courier and Package Delivery
				Services regulation,
				830
				CMR 63.38.4, applies.
(2)
Definitions
.
Mobile Property
, all motor vehicles,
				including trailers, engaged directly in the movement of property or passengers,
				other than vehicles eighty percent or more of whose mileage is traveled in one
				state. Mobile property may be owned, rented, or leased by the motor
				carrier.
Motor Carrier
, any business entity,
				including an individual owner/operator, which engages in the carriage of
				passengers or freight, for compensation, on the public roads or highways. A
				vendor that uses its own vehicles to transport goods that it has sold is not,
				on that account alone, a motor carrier.
Operating Personnel
, personnel who
				operate or travel in mobile property as the predominant activity of their
				employment.
(3)
Determining Property and Payroll Factors for Motor
			 Carriers
.
(a)
Property Factor
. A motor carrier's property factor is
			 a fraction, the numerator and denominator of which are determined according to
			 the following rules.
1. The denominator of
			 the property factor is the average value of all of the motor carrier's real and
			 tangible personal property owned, rented, or leased, and used during the
			 taxable year. All property values are determined according to M.G.L. c. 63,
			 § 38, and
			 830 CMR
			 63.38.1.
2. The numerator of the property factor is
			 the sum of the following two amounts:
a. the
			 value of the real and tangible personal property of the motor carrier, other
			 than mobile property, situated in Massachusetts; and
b. the value of the mobile property owned,
			 rented, or leased and used by the motor carrier in Massachusetts.
3. The value of the mobile
			 property owned, rented, or leased, and used by the motor carrier in
			 Massachusetts is the total value of the motor carrier's mobile property,
			 multiplied by the percentage of miles traveled by the motor carrier's mobile
			 property in Massachusetts.
4.
Example 1
. During the taxable year, Kiepahn Trucking
			 owned real and tangible personal property, other than mobile property, with an
			 average value of $10,000,000. Of this property, a portion with an average value
			 of $5,000,000 was located in Massachusetts. Kiepahn also owned mobile property
			 worth $7,000,000. 30% of Kiepahn's mileage was traveled in Massachusetts. The
			 numerator of Kiepahn's property factor is $5,000,000 (the value of its real and
			 tangible personal property other than mobile property located in Massachusetts)
			 plus $2,100,000 (30% of the value of its mobile property). The denominator of
			 Kiepahn's property factor is $17,000,000 (the total value of Kiepahn's real and
			 tangible personal property, including mobile property). Thus, Kiepahn's
			 property factor equals:
$5,000,000 + $2,100,000 / $17,000,000
or .4176.