Section 12-6-2260 - [Effective for tax years through 2010] Definition of property factor; tangible personal property; determination of value of property(A) The property factor is a fraction in which the numerator is the average value of the taxpayer's real and tangible personal property owned or rented and used in this State during the taxable year and the denominator is the average value of all of the taxpayer's real and tangible personal property owned or rented and used during the taxable year. The property factor does not include property which produces income that is allocated rather than apportioned.(B) As used in this section, tangible personal property means corporeal property such as machinery, tools, implements, equipment, goods, wares, and merchandise, but does not include cash, shares of stock, bonds, notes, accounts receivables, credits, special privileges, franchises, goodwill, or evidences of debt.(C) The average value of property is determined by averaging the values at the beginning and end of the taxable year. If this average does not fairly represent the yearly average because of material changes during the year, the average must be determined on a monthly or daily basis.(D) For purposes of this section, value of property is determined as follows: (1) Inventory is valued using the taxpayer's book accounting practices unless in the department's opinion a different method more accurately reflects net income. If the taxpayer does not take or keep records of periodic inventories or if the method and time of taking the inventories does not accurately reflect the true average inventory, the department may determine the average inventory from information available.(2) For property owned other than inventory, value is the original cost plus any additions or improvements without regard to deductions for depreciation, amortization, write-downs, or similar charges. If this method of valuation results in the taxation of more than one hundred percent of the income of the taxpayer in all the states in which the taxpayer files a return, the department may in its discretion adjust the value of property within this State to bring the percentage to one hundred percent, but in no case can the property in this State be valued at less than eighty percent of the value as defined in this subsection.(3) For rented and leased real and personal property, value is the net annual rental rate multiplied by eight. For rented or leased personal property the department may require a factor other than a multiplier of eight to be used if it better reflects the value. Net annual rental rate means the gross annual rate paid by the taxpayer, less the gross annual rental rate received by the taxpayer for any subrentals of real estate.
(4) In determining the value of property, no deduction may be made for encumbrances on the property.(5) Inventories of unmanufactured tobacco stored in a warehouse in this State for subsequent shipment to a manufacturer in another state, are not considered property used in this State.