# 03.04.08.04

### .04 Receipts Factor.

A. The receipts factor is a fraction, the numerator of which is the receipts of the taxpayer in this State during the taxable year and the denominator of which is the receipts of the taxpayer within and without this State during the taxable year. The method of calculating receipts for purposes of the denominator is the same as the method used in determining receipts for purposes of the numerator. The receipts factor shall include only those receipts described in this regulation and which are included in the computation of the apportionable income base for the taxable year.

B. The numerator of the receipts factor shall include:

(1) Receipts from the lease or rental of real property owned by the taxpayer if the property is located within this State or receipts from the sublease of real property if the property is located within this State;

(2) Receipts from the lease of tangible personal property, as described in §C of this regulation;

(3) Interest from loans secured by real property, as described in §D of this regulation;

(4) Interest and fees or penalties in the nature of interest from loans not secured by real property if the borrower is located in this State;

(5) Net gains from the sale of loans, as described in §E of this regulation;

(6) Interest and fees or penalties in the nature of interest from credit card receivables and receipts from fees charged to card holders, such as annual fees, if the billing address of the card holder is in this State;

(7) Net gains, but not less than zero, from the sale of credit card receivables multiplied by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(6) of this regulation and the denominator of which is the taxpayer's total amount of interest and fees or penalties in the nature of interest from credit card receivables and fees charged to card holders;

(8) Credit card issuer's reimbursement fees multiplied by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(6) of this regulation and the denominator of which is the taxpayer's total amount of interest and fees or penalties in the nature of interest from credit card receivables and fees charged to card holders;

(9) Receipts from merchant discount if the commercial domicile of the merchant is in this State, with the receipts computed net of any card holder charge backs, but not reduced by any interchange transaction fees or by any issuer's reimbursement fees paid to another for charges made by its card holders;

(10) Loan servicing fees, as described in §F of this regulation;

(11) Receipts from services not otherwise apportioned under this section if the service is performed:

(a) In this State,

(b) Both within and without this State, the numerator of the receipts factor includes receipts from services not otherwise apportioned under this section, if a greater proportion of the income-producing activity is performed in this State than in any other state, based on cost of performance;

(12) Receipts from investment assets and activities and trading assets and activities, as described in §G of this regulation.

C. Lease of Tangible Personal Property.

(1) Except as described in §C(2) of this regulation receipts from the lease or rental of tangible personal property owned by the taxpayer is included in the receipts factor if the property is located within this State when it is first placed in service by the lessee.

(2) Receipts from the lease or rental of transportation property owned by the taxpayer is included in the receipts factor to the extent that the property is used in this State. The extent an aircraft will be deemed to be used in this State and the amount of receipts that is to be included in the numerator of this State's receipts factor is determined by multiplying all the receipts from the lease or rental of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this State and the denominator of which is the total number of landings of the aircraft. If the extent of the use of any transportation property within this State cannot be determined, then the property will be deemed to be used wholly in the state in which the property has its principal base of operations. A motor vehicle will be deemed to be used wholly in the state in which it is registered.

D. Interest from Loans Secured by Real Property.

(1) Interest and fees or penalties in the nature of interest from loans secured by real property are included in the receipts factor if the property is located within this State. If the property is located both within this State and one or more other states, the receipts described in this subsection are included in the numerator of the receipts factor if more than 50 percent of the fair market value of the real property is located within this State. If more than 50 percent of the fair market value of the real property is not located within any one state, then the receipts described in this subsection shall be included in the numerator of the receipts factor if the borrower is located in this State.

(2) The determination of whether the real property securing a loan is located within this State shall be made as of the time the original agreement was made and subsequent substitutions of collateral shall be disregarded.

E. Net Gains from the Sale of Loans.

(1) Net gains from the sale of loans includes income recorded under the coupon stripping rules of §1286 of the Internal Revenue Code.

(2) The amount of net gains, but not less than zero, from the sale of loans secured by real property included in the numerator is determined by multiplying the net gains by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(3) of this regulation and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property.

(3) The amount of net gains, but not less than zero, from the sale of loans not secured by real property included in the numerator is determined by multiplying the net gains by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(4) of this regulation and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property.

F. Loan Servicing Fees.

(1) Loan servicing fees derived from loans secured by real property are determined by multiplying the fees by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(3) of this regulation and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property.

(2) Loan servicing fees derived from loans not secured by real property are determined by multiplying the fees by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(4) of this regulation and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property.

(3) In circumstances in which the taxpayer receives loan servicing fees for servicing either the secured or the unsecured loans of another, the numerator of the receipts factor shall include those fees if the borrower is located in this State.

G. Receipts from Investment Assets and Activities and Trading Assets and Activities.

(1) Interest, dividends, net gains, but not less than zero, and other income from investment assets and activities, and from trading assets and activities shall be included in the receipts factor. Investment assets and activities and trading assets and activities include, but are not limited to, investment securities, trading account assets, federal funds, securities purchased and sold under agreements to resell or repurchase, options, futures contracts, forward contracts, notional principal contracts such as swaps, equities, and foreign currency transactions. The receipts factor shall include the following amounts:

(a) The amount by which interest from federal funds sold and securities purchased under resale agreements exceeds interest expense on federal funds purchased and securities sold under repurchase agreements;

(b) The amount by which interest, dividends, gains, and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions, exceed amounts paid in lieu of interest, amounts paid in lieu of dividends, and losses from those assets and activities.

(2) The numerator of the receipts factor includes interest, dividends, net gains, but not less than zero, and other income from investment assets and activities, and from trading assets and activities described in §G(1) of this regulation that are attributable to this State.

(3) The amount of interest, dividends, net gains, but not less than zero, and other income from investment assets and activities in the investment account to be attributed to this State and included in the numerator is determined by multiplying all the income from those assets and activities by a fraction, the numerator of which is the gross income from those assets and activities which are properly assigned to a regular place of business of the taxpayer within this State and the denominator of which is the gross income from all those assets and activities.

(4) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements attributable to this State and included in the numerator is determined by multiplying the amount described in §G(1)(a) of this regulation from those funds and securities by a fraction, the numerator of which is the gross income from those funds and securities which are properly assigned to a regular place of business of the taxpayer within this State and the denominator of which is the gross income from all those funds and securities.

(5) The amount of interest, dividends, gains, and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions, but excluding amounts described in §G(3) and (4) of this regulation, attributable to this State and included in the numerator is determined by multiplying the amount described in §G(1)(b) of this regulation by a fraction, the numerator of which is the gross income from the trading assets and activities which are properly assigned to a regular place of business of the taxpayer within this State and the denominator of which is the gross income from all the assets and activities.

(6) The taxpayer shall have the burden of proving that an investment asset or activity or trading asset or activity was properly assigned to a regular place of business outside of this State by demonstrating that the day-to-day decisions regarding the asset or activity occurred at a regular place of business outside this State. Where the day-to-day decisions regarding an investment asset or activity or trading asset or activity occur at more than one regular place of business and one regular place of business is in this State and one regular place of business is outside this State, that asset or activity shall be considered to be located at the regular place of business of the taxpayer where the investment or trading policies or guidelines with respect to the asset or activity are established. Unless the taxpayer demonstrates to the contrary, the policies and guidelines shall be presumed to be established at the commercial domicile of the taxpayer.