Cal. Code Regs. Tit. 18, §§ 25137-9 - Railroads-Allocation and Apportionment of Income

(a) Apportionment of Business Income. The property, payroll and sales factors of the apportionment formula for a railroad shall be computed pursuant to Section 25128 through 25137 of the Revenue and Taxation Code and the regulations adopted pursuant thereto (in Article 2.5 of Group 17 of this subchapter) except as provided in this regulation.

(1) Property Factor

(A) Definitions

1. "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 as currently required 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 (Reg. 25130(a)(1)).

2. "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.

3. 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.

4. A "car-mile" is a movement of a unit of car equipment a distance of one mile.

(B) General--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.

(C) Numerator

1. 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 25129- 25131, California Revenue and Taxation Code, inclusive, and California Administrative Code, Title 18, Regulations Section 25129-25131, inclusive.

2. 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 the ratio which "locomotive-miles" and "car-miles" in the state bear to the total everywhere.

(2) Payroll Factor--Compensation paid to enginemen and trainmen or individuals engaged in similar activities, performing services on interstate trains shall be included in the numerator of the payroll factor in the ratio which the compensation required to be reported to this state for withholding tax purposes under the provisions of 49 USC 11504 bears to the total compensation required to be reported to the Internal Revenue Service.

(3) Receipts Factor

(A) General--Per diem and mileage charges which are collected by the taxpayer shall be excluded from the receipts factor.

(B) Numerator

1. 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 (except mail and express handled in passenger service) 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 on the lines of the taxpayer in this state bears to the total miles traveled by such movement or shipment on the lines of the taxpayer from point of origin to destination.

2. The total revenue of the taxpayer in this state from the transportation of passengers 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 the miles traveled by such transportation on the lines of the taxpayer in this state bears to the total miles traveled in such transportation on the lines of the taxpayer from point of origin to destination.

(b) For taxable years beginning on or after January 1, 2013, pursuant to Section 25128.7, Revenue and Taxation Code, only the receipts factor references in this regulation are applicable, unless subdivision (b) of Section 25128, Revenue and Taxation Code, applies.

Notes

Cal. Code Regs. Tit. 18, §§ 25137-9

1. New section filed 6-15-87; operative 7-15-87 (Register 87, No. 25).
2. Change without regulatory effect adding subsection (b) and amending NOTE filed 12-9-2013 pursuant to section 100, title 1, California Code of Regulations (Register 2013, No. 50).

Note: Authority cited: Section 19503, Revenue and Taxation Code. Reference: Section 25137, Revenue and Taxation Code.

1. New section filed 6-15-87; operative 7-15-87 (Register 87, No. 25).
2. Change without regulatory effect adding subsection (b) and amending Note filed 12-9-2013 pursuant to section 100, title 1, California Code of Regulations (Register 2013, No. 50).