Net income of these corporations, other than interest,
dividends, rents and royalties, which is not specifically allocated by
701-503.2 (422) and
701-503.6 (422) shall be
apportioned as follows:
(1) Railroads
shall determine their Iowa proportion of gross receipts or gross revenue from
railroad operations by the following methodology:
a. Freight revenue. Freight revenue within
and without Iowa shall be determined for each individual freight movement by
taking the proportion of car and locomotive miles traveled in Iowa to total car
and locomotive miles traveled within and without Iowa for the individual
freight movement and applying such individual percentage to the gross receipts
derived from the individual freight movement. Empty mileage that does not
produce gross receipts shall not be used.
b. Passenger revenue. Passenger revenue
within and without Iowa shall be determined by use of the same principles
applicable to freight revenue.
c.
Switching revenue. Unless the switching revenue is accounted for in the freight
revenue or passenger revenue categories, it shall be determined in accordance
with subrule 503.6(1).
d.
Miscellaneous revenue. Nonexclusive examples of miscellaneous revenues include
demurrage revenue, station services revenue, storage revenue, railway property
rental, joint facility revenue, and amounts received from government
authorities. These revenues shall be attributed to the state in which they were
earned.
e. All of the above classes
of revenues shall be aggregated and combined with other gross receipts or gross
revenues from sources within Iowa to compose the numerator. The denominator
shall be computed in accordance with 701-subrule 503.2(2).
(2) Airline, truck and bus line companies,
water transportation companies, freight car and equipment companies shall
determine their Iowa proportion of gross receipts or gross revenues derived
from transportation operations by taking the proportion of mileage traveled in
Iowa to the total mileage traveled within and without the state.
(3) Oil, gasoline, gas and other pipeline
companies shall determine the proportion of transportation revenue derived from
interstate business that is attributable to Iowa by the proportion of Iowa
traffic units to total traffic units. The "traffic unit" of an oil pipeline is
defined as the transportation of one barrel of oil for a distance of one mile;
the "traffic unit" of a gasoline pipeline is defined to be the transportation
of one barrel of gasoline for a distance of one mile; and a "traffic unit" of a
gas pipeline is defined to be the transportation of 1,000 cubic feet or one
dekatherm of natural or casinghead gas for a distance of one mile. The taxpayer
may use either 1,000 cubic feet or one dekatherm as a "traffic unit" as long as
the numerator and denominator are computed on the same basis. Any other
pipeline company will use the definition of the "traffic unit" which would most
nearly describe the substance transported.
(4) Telecommunications companies shall
determine the Iowa proportion of gross receipts or gross revenues from
telecommunication operations by the following methodology:
a. Gross receipts or gross revenues from
local service in this state are attributable to this state.
b. Gross receipts or gross revenues from toll
services originating and terminating in this state are attributable to this
state.
c. Gross receipts or gross
revenues from interstate toll services originating in this state and charged to
an Iowa service address are attributable to this state.
d. Gross receipts or gross revenues from
interstate toll services terminating in this state and charged to an Iowa
service address are attributable to this state.
e. Gross receipts or gross revenues from the
sale of phone cards in this state are attributable to this state.
f. Gross receipts or gross revenues from the
sale of telecommunication services to resellers of telecommunication services
for telecommunication services used for local service in this state are
attributable to this state.
g.
Gross receipts or gross revenues from the sale of telecommunication services to
resellers of telecommunication services for telecommunication services used for
toll services originating and terminating in this state are attributable to
this state.
h. Gross receipts or
gross revenues from the sale of telecommunication services to resellers of
telecommunication services for telecommunication services used for interstate
toll services originating in this state are attributable to this
state.
i. Gross receipts or gross
revenues from Internet access originating in this state and charged to an Iowa
service address are attributable to this state.
j. Gross receipts or gross revenues from
cellular phone services originating in this state and charged to an Iowa
service address are attributable to this state.
k. Gross receipts or gross revenues from
personal communication services originating in this state and charged to an
Iowa service address are attributable to this state.
l. Gross receipts or gross revenues from
paging services originating in this state and charged to an Iowa service
address are attributable to this state.
m. Services originating in this state and
charged to an Iowa service address are attributable to this state.
n. Gross receipts from cable television,
satellite television, and community antenna television services, including
gross receipts from providing Internet access, charged to an Iowa service
address are attributable to this state.
o. Any other gross receipts or gross revenues
from fees, access charges, toll services or other charges for communication
services charged to an Iowa service address are attributable to this state. See
Goldberg v. Sweet, 488 U.S.
252, 102 L.Ed. 2d 607, 109 S.Ct.
582 (1989).
p. All of the above
classes of revenues shall be aggregated and combined with other gross receipts
or gross revenues from sources within Iowa to compose the numerator. The
denominator shall be computed in accordance with 701-subrule
503.2(2).
q. "Telecommunications"
is an electronic mode of transmitting data, information, and audio and video
signals and includes but is not limited to both one-way and two-way signals
using land-line phones, cellular phones, paging devices, satellites, and
microwave systems. Telecommunications is a medium or mode of delivery, not the
actual content of the information transmitted over the medium.
Telecommunications does not include broadcast radio and television. See subrule
503.7(5).
r. The term
"telecommunication companies" includes but is not limited to: telephone
companies; resellers of telephone services; cellular phone companies; personal
communication service providers; paging service providers; radio communication
providers; Internet access providers; cable television, satellite television,
community antenna television companies; and other companies of a similar type.
If a taxpayer feels that the allocation and apportionment
method as prescribed by Iowa Code subsection
422.33(2) and
in this subrule, in the taxpayer's case, results in an injustice, the taxpayer
may petition the department for permission to determine the taxable net income,
both allocable and apportionable, to this state on some other basis. See rule
701-503.9
(422).
(5) Radio
and television companies doing business within and without Iowa shall determine
their Iowa proportion of gross receipts or gross revenues derived from
broadcasting operations by taking the proportion of the Iowa population served
by broadcasting to the total population served by broadcasting. The population
served by broadcasting shall be determined by a recognized market survey such
as Arbitron. As used in this rule the term "population served by broadcasting"
includes all of the residents of the broadcasting area, whether or not these
residents individually elect to receive the broadcasts.
Example: A television company has its studio and transmitter
in state A. The activities of the employees and corporate officers of the
television company in Iowa include solicitation of advertising, covering
special news events and covering athletic events. The broadcast signal also
reaches state B but the television company does not conduct any activities in
state B. The population served by broadcasting is as follows: 100,000 in Iowa,
100,000 in state A, and 50,000 in state B for a total population served by
broadcasting of 250,000. The television company's apportionment factor would be
computed as follows: The numerator would be the Iowa population served by
broadcasting and the denominator would be the total population served by
broadcasting (100,000 รท 250,000 = 40%).
Subrule 503.7(5) is effective for tax years beginning on or
after January 1, 1988.
(6)
Corporations in the business of publishing, selling, licensing, or distributing
newspapers, magazines, periodicals, trade journals, or other printed material,
or which publish, sell, license or distribute in a filmed or microfilmed image,
or in an electronic media, an electronic virtual storage system or broadcasts
any of the above items which have been traditionally disseminated in a printed
format shall determine the Iowa portion of gross receipts by the following
methodology:
a. Gross receipts from the sale
of tangible personal property including printed materials, electronic storage
media, fees for use of an electronic virtual storage system or fees to receive
a broadcast delivered, shipped or broadcast to a purchaser or a subscriber in
this state.
b. Gross receipts from
advertising shall be attributed to Iowa as determined by the taxpayer's
circulation factor during the tax period. The circulation factor shall be
determined for each individual publication of the taxpayer containing
advertising and shall be equal to the ratio that the taxpayer's Iowa
circulation to purchasers and subscribers of its printed material, electronic
storage media, electronic virtual storage system or broadcasts containing
advertising bears to its total circulation to purchasers and subscribers
everywhere.
The circulation factor for an individual publication shall be
determined by reference to the rating statistics as reflected in such sources
as the Audit Bureau of Circulations or other comparable sources, provided that
the source selected is consistently used from year to year for such purpose. If
none of the foregoing sources are available, or, if available, none is in a
form or content sufficient for such purposes, then the circulation factor shall
be determined from the taxpayer's books and records.
c. When specific items of advertisement can
be shown, upon clear and convincing evidence, to have been distributed solely
to a limited regional or local geographic area of which this state is a part,
the taxpayer may petition, or the director may require, that all or a portion
of such receipts be attributed to this state on the basis of a regional or
local geographic area circulation factor and not upon the basis of the
circulation factor provided by
"b" above.
Such attribution shall be based on the ratio that the
taxpayer's circulation to purchasers and subscribers located in this state
bears to its total circulation to purchasers and subscribers located within
such regional or local geographic area. This alternative attribution method
shall be permitted only on the condition that such receipts are not double
counted or otherwise included in the numerator of any other
state.
(7) Utility
companies shall determine their Iowa gross receipts or gross revenues from
transporting natural or casinghead gas for others that is attributable to Iowa
by the proportion of Iowa traffic units to total traffic units. The "traffic
unit" is defined to be the transportation of 1,000 cubic feet or one dekatherm
of natural or casinghead gas for a distance of one mile. Where the
transportation is less than one mile, the taxpayer must accumulate the
fractions of one mile into one-mile increments for purposes of computing
"traffic units." The taxpayer may use either 1,000 cubic feet or one dekatherm
as a "traffic unit" as long as the numerator and denominator are computed on
the same basis.
If a taxpayer feels that the allocation and apportionment
method as prescribed by Iowa Code subsection
422.33(2) and
in this subrule, in the taxpayer's case, results in an injustice, the taxpayer
may petition the department for permission to determine the taxable net income,
both allocable and apportionable, to this state on some other basis. See rule
701-503.9
(422).
(8) Utility companies
shall determine their Iowa gross receipts or gross revenues from transporting
electricity for others that is attributable to Iowa by the proportion of Iowa
traffic units to total traffic units. The "traffic unit" is defined to be the
transportation of 1,000 kilowatt-hours of electricity for a distance of one
mile. Where the transportation is less than one mile, the taxpayer must
accumulate the fractions of one mile into one-mile increments for purposes of
computing "traffic units."
If a taxpayer feels that the allocation and apportionment
method as prescribed by Iowa Code subsection
422.33(2) and
in this subrule, in the taxpayer's case, results in an injustice, the taxpayer
may petition the department for permission to determine the taxable net income,
both allocable and apportionable, to this state on some other basis. See rule
701-503.9 (422).
This rule is intended to implement Iowa Code section
422.33.
