New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter I - Franchise and Certain Business Taxes › Subchapter A - Business Corporation Franchise Tax › Part 4 - APPORTIONMENT › Subpart 4-1 - GENERAL › Section 4-1.3 - Lump sum payments

Current through Register Vol. 46, No. 28, July 10, 2024
(a) When
					 a sale is comprised of both a digital product and a digital service, both of
					 which are apportioned under Subpart 4-3 of this Part, the receipt cannot be
					 divided into separate components for purposes of the application of the rules
					 in such Subpart and is considered to be one receipt, regardless of whether the
					 components are separately stated for billing purposes.
(b) Except as provided in subdivision (a) of
					 this section, in the case of the sale of multiple assets or services in one
					 transaction, the proceeds from the sale shall be reasonably divided among the
					 types of assets or services sold by the corporation and the receipts or net
					 gains from each type must be apportioned using the applicable rule in section
					 210-A and the applicable rules in this Subchapter. If the receipt or net gain
					 cannot be reasonably divided, the corporation should use the rule that is the
					 most reflective for the type of income generated. A corporation cannot use the
					 rules for intermediary transactions provided for in sections
					 4-3.8 and
					 4-4.8  of this Subpart unless
					 almost all of the activities carried on under the agreement are intermediary
					 transactions. Full details regarding the sale and the division of the proceeds
					 and gain must be submitted with the corporation's report.
(c) Examples.
Example 1: Corporation B sells all the assets of one of
						its divisions for a gain, which is properly reported as business income. The
						assets sold consisted of real property, tangible personal property, and
						goodwill. The portion of the gain attributable to the sale of tangible personal
						property shall be apportioned to New York State using the rules for net gains
						from the sale of tangible personal property in section
						4-2.1  of this Part, the portion
						attributable to the sale of real property shall be apportioned to New York
						State using the rules for net gains from the sale of real property in section
						4-2.2  of this Part, and the
						portion attributable to the sale of goodwill shall be apportioned to New York
						State using the rules for other services and other business receipts in Subpart
						4-4 of this Part.
Example 2: Book Corp sells electronic books and physical
						books through its website. Customers purchase a bundle of both an electronic
						and physical book, the price of which includes a discounted price of the
						electronic and physical book, but the breakdown is not separately stated. For
						bundled purchases, the electronic book is available for immediate download by
						the customer and the physical book is shipped from Book Corp to the customer.
						Customer B, with a New York billing address, purchases a bundled purchase of an
						electronic and a physical book commingled into one receipt. As the receipt
						cannot be reasonably divided between the electronic book and the physical book,
						the entire receipt should be sourced as a sale of tangible personal
						property.