| (ii) schedule C special deductions that are excluded from total revenue; (iii) dividends and/or interest on federal obligations that are excluded from total revenue; (iv) interest that is exempt from federal income tax. (C) Dividends and/or interest that are received from a corporation or other sources are apportioned to the legal domicile of the payor. (D) Dividends and/or interest that are received from a national bank are apportioned to Texas if the bank's principal place of business is located in Texas. Dividends and/or interest that are received from a bank that is organized under the Texas Banking Code are apportioned to Texas. (E) A banking corporation may exclude from its Texas gross receipts interest that is earned on federal funds and interest that is earned on securities that are sold under an agreement to repurchase and that are held in a correspondent bank that is domiciled in Texas, but the banking corporation must include the interest in its gross receipts everywhere. (9) Exchanges of property. Exchanges of property are included in gross receipts to the extent that the exchange is recognized as a taxable transaction for federal income tax purposes. Such exchange must be included in receipts based on the gross exchange value, unless otherwise required under this section. (10) Federal enclave. All revenues from a taxable entity's sales, services, leases, or other business activities that are transacted on a federal enclave that is located in Texas are Texas receipts, unless otherwise excepted by this section. (11) Insurance proceeds. (A) Business interruption insurance proceeds are gross receipts when the proceeds are intended to replace lost profits. Such receipts are apportioned to the legal domicile of the payor of the proceeds. (B) Revenues from fire and casualty insurance proceeds are apportioned to the location of the damaged or destroyed property. (12) Internet access fee. A fee that is charged to obtain access to the World Wide Web in Texas is a Texas gross receipt. (13) Leases and subleases. (A) Revenues from the lease or sublease (or rental or subrental) of real property are apportioned to the location of the property. (B) Revenues from the lease or sublease (or rental or subrental) of tangible personal property are apportioned to the location of the property. If the property is used both inside and outside Texas, then lease payments are apportioned based on the number of days that the tangible personal property was used in Texas divided by the number of days that the tangible personal property was used everywhere. If the amount of revenue that is due under the lease is based on mileage, then the lease payments are apportioned based on the number of miles in Texas divided by the number of miles everywhere. (C) If a lump sum is charged for leased or subleased (or rented or subrented) property that is located both inside and outside Texas, then the allocation of such revenue is based on the rental value of each item of property. (D) Revenues from the lease or sublease (or rental or subrental) of a vessel that engages in commerce are apportioned to Texas based on the number of days that the vessel is engaged in commerce in Texas waters divided by the number of days that the vessel is engaged in commerce everywhere. (E) If a lease, sublease, rental, or subrental of real property or tangible personal property is treated as a sale for federal income tax purposes, then the receipts from the transaction are apportioned in the same manner as a sale. Any portion of the payments that the contracting parties designate as interest is interest receipts. (14) Litigation awards. Revenues that are realized from litigation awards are gross receipts that are apportioned to the legal domicile of the payor of the proceeds; however, if the litigation awards are intended to replace receipts for which another apportionment rule is provided in this section, then the apportionment must be made in accordance with that rule. For example, if a taxable entity sues a Delaware corporation to recover on a sale of goods delivered to a Texas location, then a judgment for the amount of that sale would not convert the receipts from Texas receipts to Delaware receipts. See subsection (f) of this section, for the apportionment of receipts from judgments, compromises, or settlements that relate to natural gas production. (15) Loan servicing of real property. Receipts from the servicing of loans secured by real property are apportioned to the location of the collateral real property that secures the loan being serviced. (16) Loans and securities. (A) If a loan or security is treated as inventory of the seller for federal income tax purposes, the gross proceeds of the sale of that loan or security are considered gross receipts. (B) For reports originally due on or after January 1, 2010, if a lending institution categorizes a loan or security as "Securities Available for Sale" or "Trading Securities" under Financial Accounting Standard No. 115, the gross proceeds of the sale of that loan or security are considered gross receipts. In this subparagraph, "Financial Accounting Standard No. 115" means the Financial Accounting Standard No. 115 in effect as of January 1, 2009, not including any changes made after that date. (17) Membership or enrollment fees paid for access to benefits. Membership or enrollment fees paid for access to benefits should be considered gross receipts from the sale of an intangible asset and are apportioned to the legal domicile of the payor. (18) Mixed transactions. If a transaction involves elements of both a sale of tangible personal property and a service, but no documentation exists to show separate charges for the sale and service elements, then the comptroller may determine the amounts that are allocable to each element based on fair values or on any available evidence. (19) Net distributive income. The net distributive income or loss from a passive entity that is included in total revenue is apportioned to the principal place of business of the passive entity. (20) Newspapers or magazines. All advertising revenues of a newspaper or magazine, including those revenues derived from out-of-state advertisements, are apportioned to Texas based on the number of newspapers or magazines distributed in Texas. All other receipts must be apportioned in accordance with the apportionment rules otherwise set out in this section. For example, receipts from sales of newspapers or magazines are to be apportioned based on paragraph (29) of this subsection. (21) Patents, copyrights, and other intangible rights. (A) Receipts from the use of intangibles. (i) Revenues from a patent royalty are included in Texas receipts to the extent that the patent is utilized in production, fabrication, manufacturing, or other processing in Texas. (ii) Revenues from a copyright royalty are included in Texas receipts to the extent that the copyright is utilized in printing or other publication in Texas. (iii) Revenues that the owner of a trademark, franchise, or license receives are included as Texas receipts to the extent the trademark, franchise or license is used in Texas. (iv) Royalties from an affiliated taxable entity that does not transact a substantial portion of its business or regularly maintain a substantial portion of its assets in the United States are excluded from Texas receipts and receipts everywhere. (B) Sales. Sales of intangibles are apportioned based on the location of payor. (22) Radio/television. All advertising revenues of a radio or television station that broadcasts or transmits from a location in Texas constitute Texas receipts, even though some of the listening or viewing audiences are located outside Texas. All other receipts must be apportioned in accordance with the apportionment rules otherwise set out in this section. (23) Real property. Revenues from the sale, lease, rental, sublease, or subrental of real property, including mineral interests, are apportioned to the location of the property. Royalties from mineral interests are considered revenue from real property. (24) Sales taxes. State or local sales taxes that are imposed on the customer, but are collected by a seller are not gross receipts of the seller. However, discounts that a seller is allowed to take in remittance of the collected sales tax are gross receipts to the seller. (25) Securities. Receipts from the sale of securities are apportioned based on the location of the payor. If securities are sold through an exchange, and the buyer cannot be identified, then 7.9% of the revenue is a Texas receipt. (26) Services. Receipts from a service are apportioned to the location where the service is performed. If services are performed both inside and outside Texas, then such receipts are Texas receipts on the basis of the fair value of the services that are rendered in Texas. Cont'd... |
