N.H. Admin. Code § Rev 304.04

Current through Register No. 50, December 12, 2024

Section Rev 304.04 - Sales Factor

For taxable periods ending before December 31, 2021:

(a) Income producing activity shall include any:

(1) Transaction, procedure, or operation directly engaged in by a business organization resulting in a separately identifiable item of income; or

(2) Activity which creates an obligation of a particular customer to pay specific consideration to the business organization.

(b) The sales factor shall include:

(1) Sales less returns and allowances;

(2) Dividends not eligible for the dividend deduction under RSA 77-A:4, or the factor relief provided in RSA 77-A:3, II(b);

(3) Interest;

(4) Rents;

(5) Royalties;

(6) Capital gain income;

(7) Net gains or losses; and

(8) Other income unless the other income is properly includible as a reduction of an expense or allowance.

(c) The sales factor numerator for separate business organizations and all members of a combined group shall include the sum of:

(1) Sales of tangible personal property, regardless of the conditions of sale delivered in New Hampshire, other than to the United States government;

(2) Sales of tangible personal property originating in New Hampshire to a purchaser in another state in which the business organization is not taxable or subject to tax;

(3) Sales of tangible personal property originating in New Hampshire and delivered to the United States government in any state;

(4) Interest on receivables where the debtor or the encumbered property is located in New Hampshire;

(5) Gross receipts from the lease, rental, or other use of real or personal property located in New Hampshire;

(6) Gross receipts from the licensing or other use of intangible property when such property is used within New Hampshire;

(7) Gains or losses from the sale of property located in New Hampshire;

(8) Capital gains from the sale of business assets located within New Hampshire;

(9) Dividend income received by business organizations domiciled in New Hampshire;

(10) Gross receipts for the rendering of personal services when the services are performed in New Hampshire; and

(11) Other income which is earned in New Hampshire.

(d) The rental, lease, licensing, or other use of tangible or intangible personal property in New Hampshire shall be considered a separate and distinct income producing activity within New Hampshire.

(e) Business organizations utilizing combined reporting shall determine the costs of performance as used in RSA 77-A:3 (c), I and Rev 301.11 for each business organization on a separate entity basis.

(f) When an income producing activity results from the use of personal property within and without New Hampshire during the taxable period, gross receipts attributable to New Hampshire shall be measured by one of the following ratios:

(1) Where the amount of time is the most appropriate measure under the specific facts and circumstances of the business organization's activities, the time the property was used in New Hampshire as compared to the total time of use of the property everywhere during that taxable period; or

(2) Where distance is the most appropriate measure under the specific facts and circumstances of the business organization's activities, the distance traveled or covered in New Hampshire as compared to the total distance traveled or covered everywhere during the taxable period.

(g) Personal services performed in New Hampshire shall be a separate income producing activity performed in New Hampshire unless the business organization demonstrates the activity performed in New Hampshire is completely dependent upon activities performed by the business organization in one or more other states.

(h) The rendering of personal services shall be attributed to New Hampshire if the activity:

(1) Is completely performed in New Hampshire; or

(2) Performed in New Hampshire is a dependent component of a service performed both within and without New Hampshire and a greater proportion of the costs directly associated with performing such service are incurred in New Hampshire.

(i) Costs of performance shall be determined on a separate entity basis consistent with the separate entity treatment provided in RSA 77-A:1, I notwithstanding that the taxpayer files a combined report.

(j) In determining the costs directly associated with the performance of the service in (h) above, the business organization shall allocate all compensation costs, including benefits, of personnel rendering the service based on the amount of time spent rendering the service in New Hampshire as compared to the time spent in rendering the service outside New Hampshire.

(k) Expenses incurred in obtaining or retaining customers or clients, including contract negotiations, shall not be costs directly associated with the performance of the service.

(l) The sales price shall include all interest, carrying charge or time-price differential charges, and excise taxes passed on to the buyer or included as part of the selling price of the product.

(m) Business organizations includible in a combined group shall eliminate all intergroup transactions with other members of the combined group for both the numerator and denominator of the sales factor.

N.H. Admin. Code § Rev 304.04

#2012, eff 5-5-82; ss by #2722, eff 5-23-84; ss by #4192, eff 12-23-86; ss by #5490, eff 10-19-92; ss by #6853, eff 9-23-98; ss by #8709, eff 8-25-06 (formerly Rev 304.05 )

Amended byVolume XXXV Number 06, Filed February 12, 2015 , Proposed by #10758, Effective 1/16/2015, Expires1/16/2025.

Amended by Volume XLI Number 14, Filed April 8, 2021, Proposed by #13177, Effective 3/6/2021, Expires 3/6/2021