§ 44-11-14 - Allocation of income from business partially within state.
SECTION 44-11-14
§ 44-11-14 Allocation of income frombusiness partially within state. – (a) In the case of a taxpayer deriving its income from sources both within andoutside of this state or engaging in any activities or transactions both withinand outside of this state for the purpose of profit or gain, its net incomeshall be apportioned to this state by means of an allocation fraction to becomputed as a simple arithmetical mean of three (3) fractions:
(1) The first of these fractions shall represent that partheld or owned within this state of the average net book value of the totaltangible property (real estate and tangible personal property) held or owned bythe taxpayer during the taxable year, without deduction on account of anyencumbrance thereon;
(2) The second fraction shall represent that part of thetaxpayer's total receipts from sales or other sources during the taxable yearwhich is attributable to the taxpayer's activities or transactions within thisstate during the taxable year; meaning and including within that part, as beingthus attributable, receipts from:
(i) Gross sales of its tangible personal property (inventorysold in the ordinary course of business) where:
(A) Shipments are made to points within this state; or
(B) Shipments are made from an office, store, warehouse,factory or other place of storage in this state and the taxpayer is not taxablein the state of the purchase.
(ii) Gross income from services performed within the state;
(iii) Gross income from rentals from property situated withinthe state;
(iv) Net income from the sale of real and personal property,other than inventory sold in the ordinary course of business as described inparagraph (i) of this subdivision, or other capital assets located in the state;
(v) Net income from the sale or other disposition ofsecurities or financial obligations; and
(vi) Gross income from all other receipts within the state;
(3) The third fraction shall represent that part of the totalwages, salaries, and other compensation to officers, employees, and agents paidor incurred by the taxpayer during the taxable year which is attributable toservices performed in connection with the taxpayer's activities or transactionswithin this state during the taxable year.
(b) Notwithstanding any of the provisions of this section,revenue and expenses subject to the gross earnings tax pursuant to chapter 13of this title shall not be included in the calculation described in thissection.