North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1200 - SALE OF INTANGIBLE PROPERTY › Section 05G .1201 - ASSIGNMENT OF RECEIPTS

Current through Register Vol. 39, No. 2, July 15, 2024
The assignment of receipts to a state or states in the instance of a
													 sale or exchange of intangible property depends upon the nature of the intangible property sold. For purposes
													 of this Section, a sale or exchange of intangible property includes a license of that property where the
													 transaction is treated for tax purposes as a sale of all substantial rights in the property and the receipts
													 from the transaction are not contingent on the productivity, use, or disposition of the property.
(1) In the case of a sale or exchange of intangible property where the
											  property sold or exchanged is a contract right, government license, or similar intangible property that
											  authorizes the holder to conduct a business activity in a specific geographic area, the receipts from the
											  sale shall be assigned to a state to the extent that the intangible property is used or is authorized to be
											  used within the state. If the intangible property is used or may be used only in this State, the taxpayer
											  shall assign the receipts from the sale to North Carolina. If the intangible property is used or is
											  authorized to be used in North Carolina and one or more other states, the taxpayer shall assign the receipts
											  from the sale to North Carolina to the extent that the intangible property is used in or authorized for use
											  in North Carolina, through the means of a reasonable approximation.
(2) In the case of a sale or exchange of intangible property where the
											  receipts from the sale or exchange are contingent on the productivity, use, or disposition of the property,
											  the receipts from the sale shall be assigned by applying the rules set forth in Section .1100 of this
											  Subchapter.
(3) In the case of a sale or exchange of intangible
											  property where the substance of the transaction resembles a sale of goods or services and where the receipts
											  from the sale or exchange do not derive from payments contingent on the productivity, use, or disposition of
											  the property, the receipts from the sale shall be assigned by applying the rules set forth in Rule .1105 of
											  this Subchapter.
(4) Receipts from the sale of intangible
											  property shall not be included in the sales factor in any case when the sale does not give rise to receipts
											  within the meaning of Rule .0401 of this Subchapter. In addition, in any case where the sale of intangible
											  property results in receipts within the meaning of Section .0400 of this Subchapter, those receipts shall be
											  excluded from the numerator and the denominator of the taxpayer's sales factor if the receipts are not
											  referenced in G.S. 105.130.4(l). The sale of intangible property that is excluded from the numerator and
											  denominator of the taxpayer's sales factor under this provision includes the sale of business "goodwill," the
											  sale of an agreement not to compete, or similar intangible value.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).