N.M. Admin. Code § 3.2.115.8

Current through Register Vol. 35, No. 24, December 23, 2024

Section 3.2.115.8 - BUSINESS USE OF PROPERTY

A. The provisions of Section 7-9-27 NMSA 1978 do not apply to property used in connection with the engaging in business in New Mexico. The use of property for business purposes in New Mexico is not exempt from the imposition of the compensating tax.

B. The following examples illustrate the application of Section 7-9-27 NMSA 1978.

(1) Example 1: A, a Colorado corporation, drills oil wells on contract. A moves a rig out of Colorado into New Mexico and sets it up at the well site. A maintains that no compensating tax is due on the value of the rig since A will only be in the state until the one contract is completed. A must report compensating tax measured by the value of the rig. The rig has been brought into New Mexico for business use. If A had leased the rig from a lessor in Colorado, and a substantial portion of the lessor's receipts were derived from leasing, no compensating tax would be imposed on A. However, the receipts of the lessor would be subject to the gross receipts tax.

(2) Example 2: X, a nonresident, obtains a nonresident hunting license for New Mexico. X brings guns and camping gear to New Mexico for the hunt. The use of this equipment is exempt from the compensating tax.

N.M. Admin. Code § 3.2.115.8

9/29/67, 12/5/69, 3/9/72, 11/20/72, 3/20/74, 7/26/76, 6/18/79, 4/7/82, 5/4/84, 4/2/86, 11/26/90, 11/15/96; 3.2.115.8 NMAC - Rn, 3 NMAC 2.27.8 & A, 5/15/01