Section 15.19.301. Sales other than sales of tangible personal property in this state.

	(a)  In General. AS 43.19.010, Article IV.17, provides for the inclusion in the numerator of the sales factor, gross receipts from transactions other than sales of tangible personal property (including transactions with the United States government); under this section gross receipts are attributed to this state if the income-producing activity which gave rise to the receipts is performed wholly within this state. Also, gross receipts are attributed to this state if, with respect to a particular item of income, the income-producing activity is performed within and outside of this state but the greater proportion of the income-producing activity is performed in this state, based on costs of performance.  
	(b)  Income-Producing Activity Defined. The term "income-producing activity" applies to each separate item of income and means the transactions and activity directly engaged in by the taxpayer in the regular course of its trade or business for the ultimate purpose of obtaining gains or profit. Such activity does not include transactions and activities performed on behalf of a taxpayer, such as those conducted on its behalf by an independent contractor. Accordingly, income-producing activity includes, but is not limited to, the following:  
		(1) rendering personal services by employees or the use of tangible and intangible property by the taxpayer in performing a service;  
		(2) selling, renting, leasing, licensing or other use of real property;  
		(3) renting, leasing, licensing, or other use of tangible personal property; or  
		(4) selling, licensing, or other use of intangible personal property; except that merely holding intangible personal property is not, of itself, an income-producing activity.  
	(c)  Costs of Performance Defined. The term "cost of performance" means direct costs determined in a manner consistent with generally accepted accounting principles and in accordance with accepted conditions or practices in the trade or business of the taxpayer.  
	(d)  Application.  
		(1) In General. Receipts (other than from sales of tangible personal property) in respect to a particular income-producing activity are in this state if  
			(A) the income-producing activity is performed wholly within the state; or  
			(B) the income-producing activity is performed both within and outside of this state and the proportion of the income-producing activity performed in this state is greater than in any other state, based on costs of performance.  
		(2) Special Rules. The following are special rules for determining when receipts from the income-producing activities described below are in this state:  
			(A) Gross receipts from the sales, lease, rental or licensing of real property are in this state if the real property is located in this state.  
			(B) Gross receipts from the rental, lease, or licensing of tangible personal property are in this state if the property is located in this state. Renting, leasing, licensing, or other use of tangible personal property in this state is a separate income-producing activity from renting, leasing, licensing, or other use of the same property while located in another state; consequently, if property is within and outside of this state during the rental, lease, or licensing period, gross receipts attributable to this state must be measured by the ratio which the time the property was physically present or was used in this state bears to the total time or use of the property everywhere during that period.  
			(C) Gross receipts for the performance of personal services are attributable to this state to the extent those services are performed in this state. If services relating to a single item of income are performed partly within and partly outside of this state, the gross receipts for the performance of those services are attributable to this state only if a greater portion of the services was performed in this state, based on costs of performance. Usually, where services are performed partly within and partly outside of this state the services performed in each state will constitute a separate income-producing activity; in such a case, the gross receipts for the performance of services attributable to this state must be measured by the ratio which the time spent in performing those services in this state bears to the total time spent in performing those services everywhere. Time spent in performing services includes the amount of time expended in the performance of a contract or other obligation which gives rise to those gross receipts. Personal service not directly connected with the performance of the contract or other obligation is excluded from the computations.  

Authorities

43.05.080;43.19.010

Notes

Reference

15 AAC 19.1110
15 AAC 19.302

Authority

AS 43.05.080 AS 43.19.010

History

Eff. 5/24/78, Register 66; am 3/31/82, Register 81