§ 44-11-14.2 - Allocation and apportionment of regulated investment companies and securities brokerage services.
SECTION 44-11-14.2
§ 44-11-14.2 Allocation and apportionmentof regulated investment companies and securities brokerage services. – (a) Notwithstanding any other provisions of the general laws, any taxpayerlocated within the state which sells management, distribution or administrationservices (including without limitations, transfer agent, fund accounting,custody and other similar or related services) as described in this section toor on behalf of a regulated investment company (as defined in the InternalRevenue Code of 1986, as amended) may elect the allocation and apportionmentmethod for the taxpayer's net income provided for in this section. Theelection, if made, shall be irrevocable for successive periods of five (5)years. All net income derived directly or indirectly from the sale ofmanagement, distribution, or administration services to or on behalf ofregulated investment companies, including net income received directly orindirectly from trustees, and sponsors or participants of employee benefitplans which have accounts in a regulated investment company, shall beapportioned to Rhode Island only to the extent that shareholders of theregulated investment company are domiciled in Rhode Island as follows:
(1) Net income shall be multiplied by a fraction, thenumerator of which shall be Rhode Island receipts from the services during thetaxable year and the denominator of which shall be the total receiptseverywhere from the services for the same taxable year.
(2) For purposes of this section, Rhode Island receipts shallbe determined by multiplying total receipts for the taxable year from eachseparate regulated investment company for which the services are performed by afraction. The numerator of the fraction shall be the average of the number ofshares owned by the regulated investment company's shareholders domiciled inthis state at the beginning of and at the end of the regulated investmentcompany's taxable year, and the denominator of the fraction shall be theaverage of the number of the shares owned by the regulated investment companyshareholders everywhere at the beginning of and at the end of the regulatedinvestment company's taxable year.
(b) Notwithstanding any other provisions of the general laws,any taxpayer which provides securities brokerage services and which operateswithin the state may elect the allocation and apportionment method for thetaxpayer's net income provided for in this section. The election, if made,shall be irrevocable for successive periods of five (5) years. All net incomederived directly or indirectly from the sale of securities brokerage servicesby a taxpayer shall be apportioned to Rhode Island only to the extent thatsecurities brokerage customers of the taxpayer are domiciled in Rhode Island.The portion of net income apportioned to Rhode Island shall be determined bymultiplying the total net income from the sale of the services by a fractiondetermined in the following manner:
(1) The numerator of the fraction shall be the brokeragecommissions and total margin interest paid in respect of brokerage accountsowned by customers domiciled in Rhode Island for the taxpayer's taxable year;and
(2) The denominator of the fraction shall be the brokeragecommissions and total margin interest paid in respect of brokerage accountsowned by all of the taxpayer's customers for the same taxable year.