New Mexico Administrative Code › Title 3 - TAXATION › Chapter 5 - UNIFORM DIVISION OF INCOME FOR TAX PURPOSES › Part 19 - EQUITABLE ADJUSTMENT OF STANDARD ALLOCATION OR APPORTIONMENT › Section 3.5.19.13 - SPECIAL RULES - RAILROADS

Current through Register Vol. 35, No. 13, July 16, 2024
A. The special rules established in Section
				3.5.19.13 NMAC apply to railroads.
B.
In general.
Where a
				railroad has income from sources both within and without this state, the amount
				of business income from sources within this state shall be determined pursuant
				to this section. In such cases, the first step is to determine what portion of
				the railroad's income constitutes "business" income and which portion
				constitutes "nonbusiness" income under Section
				7-4-2 NMSA 1978 and
				Sections 3.5.1.9 and 3.5.1.10 NMAC. Nonbusiness income is directly allocable to
				specific states pursuant to the provisions of Sections
				7-4-5
				through
				7-4-9
				NMSA 1978, inclusive. Business income is apportioned among the states in which
				the business is conducted pursuant to property, payroll and sales apportionment
				factors set forth in this section. The sum of the items of nonbusiness income
				directly allocated to this state and the amount of business income attributable
				to this state constitutes the amount of the taxpayer's entire net income which
				is subject to tax by this state.
C.
Business and nonbusiness income.
For definitions and rules for
				determining business and nonbusiness income, see Sections 3.5.1.9 and 3.5.1.10
				NMAC.
D.
Apportionment of
				business income.
(1) In general. The
				property factor shall be determined in accordance with Parts 3.5.11 through
				3.5.13 NMAC and the sales factor in accordance with Parts 3.5.14 and 3.5.15
				NMAC, inclusive, except as modified in this section.
(2) The property factor.
(a) Property valuation. Owned property shall
				be valued at its original cost and property rented from others shall be valued
				at eight (8) times the net annual rental rate in accordance with Section
				7-4-12
				NMSA 1978. Railroad cars owned and operated by other railroads and temporarily
				used by the taxpayer in its business and for which a per diem or mileage charge
				is made are not included in the property factor as rented property. Railroad
				cars owned and operated by the taxpayer and temporarily used by other railroads
				in their business and for which a per diem charge is made by the taxpayer are
				included in the property factor of the taxpayer.
(b) General definitions. The following
				definitions are applicable to the numerator and denominator of the property
				factor.
(i) "Original cost" is deemed to be
				the basis of the property for federal income tax purposes (prior to any federal
				income tax adjustments except for subsequent capital additions, improvements
				thereto or partial dispositions); or, if the property has no such basis, the
				valuation of such property for interstate commerce commission purposes. If the
				original cost of property is unascertainable under the foregoing valuation
				standards, the property is included in the property factor at its fair market
				value as of the date of acquisition by the taxpayer.
(ii) "Rent" does not include the per diem and
				mileage charges paid by the taxpayer for the temporary use of railroad cars
				owned or operated by another railroad.
(iii) The "value" of owned real and tangible
				personal property shall mean its original cost.
(iv) "Average value" of property means the
				amount determined by averaging the values at the beginning and ending of the
				income tax year, but the department may require the averaging of monthly values
				during the income year or such averaging as necessary to effect properly the
				average value of the railroad's property.
(v) The "value" of rented real and tangible
				personal property means the product of eight (8) times the net annual rental
				rate.
(vi) "Net annual rental rate"
				means the annual rental rate paid by the taxpayer less any annual rental rate
				received by the taxpayer from subrentals.
(vii) "Property used during the income year"
				includes property which is available for use in the taxpayer's trade or
				business during the income year.
(viii) A "locomotive-mile" is the movement of
				a locomotive (a self-propelled unit of equipment designed solely for moving
				other equipment) a distance of one mile under its own power.
(ix) A "car-mile" is a movement of a unit of
				car equipment a distance of one mile.
(c) The denominator and numerator of the
				property factor.
(i) The denominator of the
				property factor shall be the average value of all of the taxpayer's real and
				tangible personal property owned or rented and used during the income year. The
				numerator of the property factor shall be the average value of the taxpayer's
				real and tangible personal property owned or rented and used in this state
				during the income year.
(ii) In
				determining the numerator of the property factor, all property except mobile or
				movable property such as passenger cars, freight cars, locomotives and freight
				containers which are located within and without this state during the income
				year shall be included in the numerator of the property factor in accordance
				with Sections
				7-4-11
				through
				7-4-13
				NMSA 1978, inclusive, and Parts 3.5.11 through 3.5.13 NMAC,
				inclusive.
(iii) Mobile or movable
				property such as passenger cars, freight cars, locomotives and freight
				containers which are located within and without this during the income year
				shall be included in the numerator of the property factor in the ratio which
				"locomotive-miles" and "car-miles" in the state bear to the total
				everywhere.
(3) The payroll factor.
(a) The denominator of the payroll factor is
				the total compensation paid everywhere by the taxpayer during the income year
				for the production of business income. The numerator of the payroll factor is
				the total amount paid in this state during the income year by the taxpayer for
				compensation. With respect to all personnel except enginemen and trainsmen
				performing services on interstate trains, compensation paid to such employees
				shall be included in the numerator as provided in Sections
				7-4-14
				and
				7-4-15
				NMSA 1978 and Parts 3.5.14 and 3.5.15 NMAC.
(b) With respect to enginemen and trainmen
				performing services on interstate trains, compensation paid to such employees
				shall be included in the numerator of the payroll factor in the ratio which
				their services performed in this state bear to their services performed
				everywhere. Compensation for services performed in this state should be deemed
				to be the compensation reported or required to be reported by such employees
				for determination of their income tax liability to this state.
(4) The sales (revenue) factor.
(a) In general.
(i) All revenue derived from transactions and
				activities in the regular course of the trade or business of the taxpayer which
				produces business income, except per diem and mileage charges which are
				collected by the taxpayer, is included in the denominator of the revenue
				factor.
(ii) The numerator of the
				revenue factor is the total revenue of the taxpayer in this state during the
				income year. The total revenue of the taxpayer in this state during the income
				year, other than revenue from hauling freight, passengers, mail and express,
				shall be attributable to this state in accordance with Sections
				7-4-16,
				7-4-17
				and
				7-4-18
				NMSA 1978 and Parts 3.5.16 through 3.5.18 NMAC.
(b) Numerator of sales (revenue) factor from
				freight, mail and express. The total revenue of the taxpayer in this state
				during the income year for the numerator of the revenue factor from hauling
				freight, mail and express shall be attributable to this state as follows:
(i) all receipts from shipments which both
				originate and terminate within this state; and
(ii) that portion of the receipts from each
				movement or shipment passing through, into, or out of this state is determined
				by the ratio which the miles traveled by such movement or shipment in this
				state bear to the total miles traveled by such movement or shipment from point
				of origin to destination.
(c) Numerator of sales (revenue) factor from
				passengers. The numerator of the sales (revenue) factor shall include:
(i) all receipts from the transportation of
				passengers (including mail and express handled in passenger service) which both
				originate and terminate within this state; and
(ii) that portion of the receipts from the
				transportation of interstate passengers (including mail and express handled in
				passenger service) determined by the ratio which revenue passenger miles in
				this state bear to the total everywhere.