Administrative Rules of Montana › Department 42 - REVENUE › Chapter 42.25 - NATURAL RESOURCES TAXES › Subchapter 42.25.11 - Net Proceeds Tax on Miscellaneous Mines › Rule 42.25.1105 - COMPUTATION OF GROSS VALUE

Current through Register Vol. 13, July 5, 2024
(1) Gross value for
				purposes of the mines net proceeds will be determined at the point where mining
				processes end and manufacturing or non-mining processes begin as discussed in
				ARM 42.25.1104.
(2) Listed in the order in which they are to
				be considered, gross value at the point of valuation will be determined using
				one of the following methods:
(a) The
				producer's actual sales prices for mineral products sold at the point of
				valuation will be considered the best evidence of value provided the sales are
				arm's length and represent approximately 30% of total mineral production. Sales
				of less than 30% of total production may be acceptable indicators of value if
				the sales price per unit is corroborated with other representative market data
				for minerals of like kind and grade. Upon request, the producer must provide
				documentation for this method to the department.
(b) If the producer does not have the sales
				information discussed in (2) (a) above, a market survey of other producers'
				sales of like kind and grade mineral products may be done. If this method is
				used, the producer must obtain market data for three or more other producers.
				This data must represent the results of competitive transactions in markets
				with a substantial number of unrelated buyers and sellers. The producer must
				document that all values used are for minerals of comparable quality sold in
				quantities approximating the producer's level of production. It may also be
				necessary to consider the geographic area served by the markets used for
				comparison. Upon request, the producer must provide all information obtained
				that supports this method to the department.
(c) If the information required by (2) (a)
				and (b) above is not available, the proportionate profits method may be used to
				compute a value in the absence of adequate market data. The general formula for
				this computation is:
Direct costs through
valuation point
Taxable value/unit = ___________ x Sales price/unit
Total direct costs
(i) Direct costs through the valuation point
				will include overburden removal, drilling, blasting, loading, hauling,
				crushing, sorting, drying, mine reclamation, production taxes and royalties and
				any other direct costs incurred through the valuation point.
(ii) Total direct costs will include, in
				addition to those noted above, all direct costs applied to the mineral products
				up to the point of production of the first marketable product or group of
				products that have not been manufactured or fabricated. These costs will
				typically include grinding, burning or calcining, blending with other materials
				and treatment effecting a chemical change.
(iii) The sales price per unit will be the
				weighted average price of the first marketable product or group of
				substantially similar products sold in significant quantities by the
				producer.
(iv) Only direct costs
				may be used in computing the cost ratio for the formula. No costs that benefit
				the operation as a whole or are not directly related to a specific phrase of
				the mining or processing of the mineral product will be included in the
				ratio.
(d) If warranted
				by an unusual situation, the department may use an alternative valuation
				method.