The following definitions apply to this sub-chapter:
(1) "Allocation" refers to the
assignment of non-business income to a particular state.
(2) "Annual rent" is the actual sum of
money or other consideration payable, directly or indirectly, by the taxpayer
or for its benefit for the use of the property.
(a) Annual rent includes:
(i) any amount payable for the use of real or
tangible personal property, or any part thereof, whether designated as a fixed
sum of money or as a percentage of sales, profits, or otherwise;
(ii) any amount payable as additional rent or in
lieu of rents, such as interest, taxes, insurance, repairs, or any other items
which are required to be paid by the terms of the lease or other arrangement,
not including amounts paid as service charges, such as utilities, janitor
services, etc. If a payment includes
rent and other charges unsegregated, the amount of rent shall be determined by
consideration of the relative values of the rent and the other items.
(iii) any amount payable for a delay rental as
defined by U.S. Treasury regulations Section 1.612-3 (1980) , which defines
delay rental as follows: A delay rental
is an amount paid for the privilege of deferring development of the property
and which could have been avoided by abandonment of the lease, or by
commencement of development operations, or by obtaining production.
(b) "Annual rent" does not include:
(i) incidental day-to-day expenses such as hotel
or motel accommodations, daily rental of automobiles, etc.
(ii) royalties based on extraction of natural
resources, whether represented by delivery or purchase. For this purpose, a royalty includes an
amount paid to a holder of an interest in real property which constitutes a
sharing of current or future production of natural resources from such property,
whether denominated as a royalty, advance royalty, rental, or otherwise.
(3) "Annual rental rate" is the amount
paid as rental for the property for a 12-month period (i.e., the amount of the
annual rent) . Where property is rented
for less than a 12-month period, the rent paid for the actual period of rental
shall constitute the "annual rental rate" for the tax period.
However, where a taxpayer has rented property for a term of 12 or more months
and the current tax period covers a period of less than 12 months (due, for
example, to a reorganization or change of accounting period) , the rent paid for
the short period shall be annualized.
If the rental term is for less than 12 months, the rent shall not be
annualized beyond its term. Rent shall
not be annualized because of the uncertain duration when the rental term is on
a month-to-month basis.
(4) "Apportionment" refers to the
division of business income between states by the use of a formula containing
apportionment factors.
(5) "Average value" of property means
the amount determined by averaging the values at the beginning and ending of
the income tax year, but the department may require the averaging of monthly
values during the income year or such averaging as necessary to effect properly
the average value of the property. (See
ARM 42.26.237.)
(6) The term "base of operations" is
the place of more or less permanent nature from which the employee starts his
work and to which he customarily returns in order to receive instructions from
the taxpayer or communications from his customers or other persons, to
replenish stock or other materials, repair equipment, or to perform any other
function necessary to exercise his trade or profession at some other point or
points. The term "place from which
the service is directed or controlled" refers to the place from which the
power to direct or control is exercised by the taxpayer.
(7) "Basis in the hands of the
taxpayer" means the taxpayer's federal income tax basis in the asset at
the time of sale.
(8) "Business activity" refers to the
transactions and activity occurring in the regular course of a particular trade
or business of a taxpayer.
(9) The term "compensation" means
wages, salaries, commissions, and any other form of remuneration paid to
employees for personal services.
Payments made to an indepen-dent contractor or any other person not
properly classifiable as an employee are excluded. Only amounts paid directly to employees are included in the
payroll factor. Amounts considered paid
directly include the value of board, rent, housing, lodging, and other benefits
or services furnished to employees by the taxpayer in return for personal
services; provided, that such amounts constitute income to the recipient under
the federal IRC. In the case of
employees not subject to the federal IRC, e.g., those employed in foreign
countries, the determination of whether such benefits or services would constitute
income to the employees shall be made as though such employees were subject to
the federal IRC.
(10) The term "employee" means any
officer of the corporation; or any individual who, under the usual common law
rules applicable in determining the employer-employee relationship, has the
status of an employee. Generally, a
person will be considered to be an employee if he is included by the taxpayer
as an employee for purposes of the payroll taxes imposed by
the Federal Insurance Contributions Act; except that, since certain individuals are
included within the term "employees" in the Federal Insurance
Contributions Act who would not be employees under the usual common law rules,
it may be established that a person who is included as an employee for purposes
of the Federal Insurance Contributions Act is not an employee for purposes of
this rule.
(11) "Gross receipts" means the total
receipts received by the taxpayer less any expenses attributable to the sale.
(12) "Mobile property" means all motor
vehicles, including trailers, engaged directly in the movement of tangible
personal property.
(13) A "mobile property mile" is the
movement of a unit of mobile property a distance of one mile whether loaded or
unloaded.
(14) "Net annual rental rate" means the
annual rental rate paid by the taxpayer less any annual rental rate received by
the taxpayer from sub-rentals.
(15) "Net receipts" means gross
receipts minus the basis of the asset in the hands of the taxpayer.
(16) "Original cost" is deemed to be
the basis of the property for federal income tax purposes (prior to any federal
income tax adjustments, except for subsequent capital additions, improvements
thereto, or partial dispositions) ; or, if the property has no such basis, the
valuation of such property for interstate commerce commission purposes. If the original cost of property is
unascertainable under the foregoing valuation standards, the property is
included in the property factory at its fair market value as of the date of
acquisition by the taxpayer. (See ARM
42.26.235.)
(17) "Property used during the income
year" includes property which is available for use in the taxpayer's trade
or business during the income year.
(18) The term "real and tangible personal
property" includes land, buildings, machinery, stocks of goods, equipment,
and other real and tangible personal property but does not include coin or
currency.
(19) "Taxpayer" means any corporation,
partnership, firm, association, disregarded entity, governmental unit or
agency, or person acting as a business entity.
(20) "Transportation revenue" means
revenue earned by transporting passengers, freight and mail as well as revenue
earned from liquor sales, pet crate rentals, etc.
(21) "Unitary relationship" means a
relationship between members of a combined group sufficient to satisfy the
definition of a "unitary business" pursuant to 15-31-301, MCA.
(22) The "value" of owned real and
tangible personal property shall mean its original cost. (See ARM 42.26.235.)
(23) The "value of rented" real and
tangible personal property means the product of eight times the net annual
rental rate. (See ARM 42.26.236.)