New Mexico Administrative Code › Title 3 - TAXATION › Chapter 2 - GROSS RECEIPTS TAXES › Part 1 - GENERAL PROVISIONS › Section 3.2.1.14 - GROSS RECEIPTS - GENERAL

Current through Register Vol. 35, No. 13, July 16, 2024
A. Credit card sales: Gross receipts of the
				seller of property or services or the lessor of property include the full sale
				or lease contract amount of any property or service sold or of any property
				leased when payment is made through the use of a credit card which has been
				issued by a third party. The seller or lessor may not deduct from gross
				receipts the amount charged by the credit card company for converting the
				account into cash.
B. Consideration
				other than money:
(1) If the consideration
				received by the seller or lessor for the item sold or leased or for the service
				performed is in a form other than money, the fair market value of the
				consideration received or the fair market value of the item sold or of the
				lease or of the service performed must be included in gross receipts. The value
				of the consideration received or the item sold or of the lease or of the
				service performed is the fair market value at the time of the
				transaction.
(2) Example 1: X has
				Y, a garage owner, repair X's automobile. In exchange for the service performed
				by Y, X gives Y a deer rifle. The fair market value of the rifle at the time of
				the transaction is the measure of Y's gross receipts.
(3) Example 2: X, a New Mexico construction
				company, contracts with Y Electric Co-op Association for the construction of
				transmission lines. The contract requires X to furnish all materials and labor
				for a fixed price; however, it permits a reduction of the contract price in the
				amount of the value of materials furnished by Y. The gross receipts of X
				include the value of any material supplied by the cooperative.
(4) Example 3: X is a firm engaged in the
				construction business in New Mexico. The receipts of X from the sale of a
				completed construction project include the value of construction services
				performed by the buyer of the construction project pursuant to a "sweat labor
				contract" if the performance of services are required to fulfill a contractual
				obligation of X. A "sweat labor contract", as used in this example, is a
				contract whereby the buyer of a completed construction project agrees to
				perform certain construction services for the seller of the construction
				project as partial payment of the sale price of the construction
				project.
(5) Example 4: M agrees to
				drill an oil well for the XYZ Oil Company. The contract provides that M will
				drill the well for $7.50 per foot and a one-eighth interest in the minerals
				which belong to XYZ. The well, when completed, produces forty barrels of oil
				per day for a period which is expected to last for 10 years. M admits that the
				$7.50 per foot that is received from drilling the well are gross receipts
				subject to the gross receipts tax. M questions whether the value of the
				one-eighth interest is gross receipts. The value of the mineral interest is
				consideration and must be included in M's gross receipts. It will be valued at
				its fair market value at the time the well is completed.
(6) Example 5: The A Oil Company hires the B
				Drilling Company to drill a well on its property. A furnishes drill bits to B,
				but A has the right to deduct the rental value of the bits from the total
				footage or day rate price it agrees to pay B for the drilling. The use of the
				drill bits is partial consideration, furnished by A, for the performance of the
				drilling service by B and the reasonable value of their use must be included in
				B's gross receipts. A also must include the rental value of the bits in its
				gross receipts because it is leasing the drill bits to B. However, if A
				furnishes drill bits to B and does not have the right to deduct the rental
				value of the bits from the total footage or day rate price which it has agreed
				to pay B for the drilling, then no amounts from the drill bit transaction are
				includable in either A's or B's gross receipts. The same applies if B furnishes
				the drill bits.