J. Apportionment Factors (G.S. 105-130.4)
- General Business Corporations
Effective for taxable years beginning on or after January 1, 1989, corporations
engaged in multistate business activity, other than public utilities and excluded
corporations, are required to apportion to this State all business income
by using a four (4) factor formula. The apportionment formula shall consist
of the sum of the property factor, the payroll factor and twice the sales
factor divided by four (4).
- Property Factor (G.S. 105-130.4) (Section .0800)
- Property Factor-In General
The property factor shall include all real and tangible
personal property owned or rented and used during the
income year to produce business income. The term "real
and tangible personal property" includes land, buildings,
machinery, stocks of goods, equipment and other real and
tangible personal property used in connection with the
production of business income but does not include coin
or currency. See definition of "business income".
Property used in connection with the production of nonbusiness income
which is allocated in accordance with subsections (d) through (h)
of the law shall be excluded from the factor.
Property used in connection with the production of both business and
nonbusiness income shall be included in the factor only to the extent
the property was used in connection with the production of business
income. The method of determining that portion of the value to be
included in the factor will depend upon the facts of each case.
The property factor shall include the average value of property includible
in the factor.
- Property Factor-Property Used for the Production of Business
Property shall be included in the property factor if it is actually
used during the income year for the production of business income.
Property held as reserves or standby facilities or property held as
a reserve source of materials shall be included in the factor. For
example, a plant temporarily idle or raw material reserves not currently
being processed are includible in the factor. Property permanently
idle or idle for the entire taxable year generally is not included
in the factor computation. Property or equipment under construction
during the income year (except inventoriable goods in process) shall
be excluded from the factor until such property is actually used for
the production of business income. If the property is partially used
for the production of business income while under construction, the
value of the property to the extent used shall be included in the
- Property Factor-Consistency in Reporting
The taxpayer shall be consistent in the valuation of property and
in excluding or including property in the property factor in filing
returns with this State. In the event the taxpayer is not consistent
in its reporting, it shall disclose in its return to this State the
nature and extent of the inconsistency.
- Property Factor-Numerator
- The numerator of the property factor shall include the average
value of the taxpayer's real and tangible personal
property owned or rented and used in this State during
the income year for the production of business income.
- Property in transit between locations of the taxpayer to which
it belongs shall be considered to be at the destination for purposes
of the property factor. Property in transit between a buyer and
seller which is included by a taxpayer in the denominator of its
property factor in accordance with its regular accounting practices
shall be included in the numerator according to the state of destination.
- The value of mobile or movable property such as construction
equipment, trucks or leased electronic equipment which
are located within and without this State during the
income year shall be determined for purposes of the
numerator of the factor on the basis of total time
within the State during the income year. An automobile
assigned to a traveling employee shall be included
in the numerator of the factor of the state to which
the employee's compensation is assigned under the
payroll factor or in the numerator of the state in
which the automobile is licensed.
- Property Factor-Valuation of Owned Property
- Property owned by the taxpayer shall be valued at
its original cost. "Original cost" of property
which has a basis other than zero for federal income
tax purposes equals the basis of the property for
federal income tax purposes at the time of acquisition
by the taxpayer and adjusted by subsequent capital
additions or improvements thereto and partial disposition
thereof, by reason of sale, exchange, abandonment,
or any other type of disposition.
"Original cost" of property which has a
zero basis for federal income tax purposes shall equal
the taxpayer's actual cost of the property at the
time of acquisition; provided, however, if the actual
cost is unknown, the original cost shall equal the
fair market value of the property, or, at the option
of the taxpayer, eight times the net annual rental
rate as described in G.S. 105-130.4(j)(2). The valuation
method chosen by the taxpayer must be used consistently
Example (1): Taxpayer acquired a factory building in this
State at a cost of $500,000 and years later, expended $100,000
for major remodeling of the building. Taxpayer files its return
on the calendar year basis and claims a depreciation deduction
in the amount of $22,000 on the building. The value of the building
includible in the numerator and denominator for the property factor
is $600,000 as the depreciation deduction is not taken into account
in determining the value of the building for purposes of the factor.
Example (2): X corporation merges into Y corporation
in a tax-free reorganization under the Internal Revenue
Code. At the time of the merger, X corporation owns
a factory which X built years earlier at a cost of
$1,000,000. X has been depreciating the factory at
the rate of two percent per year, and its basis in
X's hands at the time of the merger is $600,000. Since
the property is acquired by Y in a transaction in
which, under the Internal Revenue Code, the basis
in Y's hands is the same as the basis in X's, Y includes
the property in Ys property factor at X's original
cost, without adjustment for depreciation, i.e., $1,000,000.
Example (3): Corporation Y acquires the assets of corporation
X in a liquidation by which Y is entitled to use its stock cost
as the basis of the X assets under the Internal Revenue Code.
Under these circumstances, Ys cost of the assets is the purchase
price of the X stock, prorated over the X assets.
Example (4): Corporation X was deeded from
local government a potential manufacturing facility
(cost unknown) with a market value of $1,000,000 as
an incentive for locating in the State. Since the
property would have a zero basis for federal income
tax purposes [Code 118(a)], Corporation X includes
the $1,000,000 fair market value of the property in
the computation of its property factor, or at X's
option may include eight times the net annual rental
rate of the property.
- Inventory of stock of goods shall be included in the factor
in accordance with the valuation method used for federal income
tax purposes, except when inventory is valued by use of the LIFO
method, actual cost of the FIFO valuation method shall be used.
- Property acquired by gift or inheritance shall be included in
the factor at its basis for determining depreciation for federal
income tax purposes.
- Property Factor-Rented Property
- Property rented by the taxpayer is valued at eight times the
net amount rent paid during the current income year. Net annual
rent is the total annual rent paid by the taxpayer less amounts
received from subrentals. However, subrentals are not deducted
when they constitute business income. Rental values so determined
are included in the numerator and denominator and are averaged
by including such amounts at the beginning and at the end of the
Example (1): The taxpayer receives subrents from a bakery
concession in a food market operated by the taxpayer. The subrents
are business income and are not deducted from rent paid by the
taxpayer for the food market.
Example (2): The taxpayer rents a 5-story office building
primarily for use in its multistate business, uses three floors
for its offices and subleases two floors to various other businesses
and persons such as professional people, shops and the like. The
subrents are business income and are not deducted from the rent
paid by the taxpayer.
Example (3): The taxpayer rents a 20-story office building
and uses the lower two stories for its general corporation headquarters.
The remaining 18 floors are subleased to others. The subrents
are nonbusiness income and are to be deducted from the rent paid
by the taxpayer.
- "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 and includes:
(1) 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.
Example: A taxpayer, pursuant to the terms of a lease,
pays a lessor $1,000 per month as a base rental and at the end
of the year pays the lessor one percent of its gross sales of
$400,000. The annual rent is $16,000 ($12,000 plus one percent
of $400,000 or $4,000).
(2) 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, and does not include amounts paid as service charges,
such as utilities, janitorial 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.
Example (1): A taxpayer, pursuant to the terms of a lease,
pays the lessor $12,000 a year rent plus taxes in the amount of
$2,000 and interest on a mortgage in the amount of $1,000. The
annual rent is $15,000.
Example (2): A taxpayer stores part of its inventory in
a public warehouse. The total charge for the year was $1,000 of
which $700 was for the use of storage space and $300 for inventory,
insurance, handling and shipping charges and C.O.D. collections.
The annual rent is $700.
- "Annual rent" does not include incidental
day-to-day expenses such as hotel and motel accommodations,
daily rental of automobiles, etc.
- Leasehold improvements shall, for the purposes of the property
factor, be treated as property owned by the taxpayer regardless
of whether the taxpayer is entitled to remove the improvements
or the improvements revert to the lessor upon expiration of the
lease. Hence, the original cost of leasehold improvements shall
be included in the factor.
- Property Factor-Averaging Property Values
As a general rule the average value of property owned
by the taxpayer shall be determined by averaging the values
at the beginning and ending of the income year. However,
the Secretary may require averaging by monthly or other
periodic values if such method of averaging is required
to properly reflect the average value of the taxpayer's
property for the income year.
Averaging by monthly or other periodic values will generally be applied
if substantial fluctuations in the values of the property exist during
the income year or where property is acquired after the beginning
of the income year or disposed of before the end of the income year.
- Payroll Factor (G.S. 105-130.4) (Section .0900)
- Payroll Factor-In General
The payroll factor shall include the total amount paid by the taxpayer
for compensation in connection with earning business income during
the income year.
- Payroll Accounting Method
The total amount "paid" to employees is determined
upon the basis of the taxpayer's accounting method. If
the taxpayer has adopted the accrual method of accounting,
all compensation properly accrued shall be deemed to have
been paid. Notwithstanding the taxpayer's method of accounting,
at the election of the taxpayer, compensation paid to
employees may be included in the payroll factor by use
of the cash method if the taxpayer is required to report
such compensation under such method for unemployment compensation
The taxpayer shall be consistent in the treatment of compensation
paid in filing returns with this State. In the event the taxpayer
is not consistent in its reporting it shall disclose in its return
to this State the nature and extent of the inconsistency.
- The Term "Compensation"
The term "compensation" means wages, salaries,
commissions and any other form of remuneration paid to
employees for personal services. (Payments made to
and independent 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 Internal
Revenue Code. In the case of employees not subject to
the Internal Revenue Code, 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 Internal
- The Term "Employee"
The term "employee" means (1) any officer of
a corporation, or (2) 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 regulation.
- Payroll Factor Includes Only Business Income Compensation and
Excludes Compensation to General Executive Officers
The payroll factor includes only compensation which is attributable
to the business income subject to apportionment. The compensation
of any employee whose activities are connected primarily with nonbusiness
income shall be excluded from the factor. All compensation paid to
general executive officers shall be excluded in computing the payroll
factor. General executive officers shall include the chairman of the
board, president, vice-presidents, secretary, treasurer, comptroller
and any other officer serving in similar capacities.
Example (1): The taxpayer uses some of its employees in the
construction of a storage building which, upon completion, is used
for the production of business income. The wages paid to those employees
are treated as a capital expenditure by the taxpayer. The amount of
such wages is included in the payroll factor.
Example (2): The taxpayer owns various securities
from which nonbusiness income is derived. The management
of the taxpayer's investment portfolio is the only duty
of Mr. X, an employee. The salary paid to Mr. X is excluded
from the payroll factor.
- Denominator of Payroll Factor
Except as provided above, the denominator of the payroll factor is
the total compensation paid everywhere during the income year. Accordingly,
compensation paid to employees whose services are performed entirely
in a state where the taxpayer is exempt from taxation, for example,
by Public Law 86-272, is included in the denominator of the payroll
Example: A taxpayer has employees in its state of legal domicile
(State A) and is taxable in State B. In addition the taxpayer has
other employees whose services are performed entirely in State C where
the taxpayer is exempt from taxation by Public Law 86-272. As to these
latter employees, the compensation will be assigned to State C where
their services are performed (i.e. included in the denominator only
of the payroll factor) even though the taxpayer is not taxable in
- Numerator of Payroll Factor
- Except as provided above, the numerator of the payroll factor
is the total amount paid in this State during the
tax period by the taxpayer for compensation. The tests
to be applied in determining whether compensation
is paid in this State are derived from the Model Unemployment
Compensation Act. Accordingly, if compensation paid
to employees is included in the payroll factor by
use of the cash method of accounting or if the taxpayer
is required to report such compensation under such
method for unemployment compensation purposes, it
shall be presumed that the total wages reported by
the taxpayer to this State for unemployment compensation
purposes constitutes compensation paid in this State
except for compensation excluded under number 5 above.
The presumption may be overcome by satisfactory evidence
that an employee's compensation is not properly reportable
to this State for unemployment compensation purposes.
- Compensation is paid in this State if any one of the following
tests, applied consecutively, are met:
- The employee's service is performed entirely within the
- The employee's service is performed both within
and without the State, but the service performed
without the State is incidental to the employee's
service within the State. The word "incidental"
means any service which is temporary or transitory
in nature, or which is rendered in connection
with an isolated transaction.
- If the employee's services are performed both
within and without this State, the employee's
compensation will be attributed to this State:
- if the employee's base of operations is in this State;
- if there is no base of operations in any state in which
some part of the service is performed, but the place from
which the service is directed or controlled is in this
- if the base of operations or the place from which the
service is directed or controlled is not in
any state in which some part of the service
is performed, but the employee's residence
is in this State.
The words "base of operations" means 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, or to replenish stock
or other materials, repair equipment, or perform any other
functions necessary to the exercise of his trade or profession
at some other point or points.
The words "place from which the service is directed
or controlled" refer to the place from which the
power to direct or control is exercised by the taxpayer.
- Corporations Utilizing Common Paymaster
- A parent corporation or any corporation serving as common paymaster
for payroll purposes shall eliminate all payrolls from the numerator
and denominator of its payrolls factor computation the amounts
paid on behalf of controlled members for which it has charged
such member the exact cost and which does not meet the definition
of compensation insofar as the common paymaster is concerned.
The numerator and denominator of the payrolls factor shall be
determined in accordance with applicable statute after elimination
of the described amounts.
- A subsidiary or otherwise controlled corporation, which is a
member of and/or participant in a common paymaster
plan for payroll purposes, shall include in its numerator
and denominator of the payroll factor computation
amounts paid to its parent corporation or to another
corporation of the controlled group as reimbursement
in whatever form and by whatever label for employee's
compensation as defined. The amounts paid by the subsidiary
or controlled corporation includable in the numerator
and the denominator of the payrolls factor shall be
determined in accordance with applicable statute.
- Sales Factor (G.S. 105-130.4) (Section .1000)
- Sales Factor-Sales Made in General Business Operations
Subsection (a) (7) of G.S. 105-130.4 defines the term
"sales" to mean all gross receipts of the taxpayer
except receipts from the "casual sale" of property
and receipts allocated under subsections (d) through (h)
of G.S. 105-130.4. Thus, for the purposes of the sales
factor, the term "sales" means generally all
gross receipts derived by a taxpayer from transactions
and activities in the course of its regular trade or business
operations which produce business income within the meaning
of subsection (a) (1) of G.S. 105-130.4.
A "casual sale" of property means the sale of
any property which was not purchased, produced or acquired
primarily for sale in the corporation's regular trade
In the case of a taxpayer whose business activity consists of manufacturing
and selling or purchasing and reselling goods or products, “sales”
includes all gross receipts from the sales of such goods or products
(or other property of a kind which would properly be included in the
inventory of the taxpayer if on hand at the close of the taxable year)
held by the taxpayer primarily for sale to customers in the ordinary
course of its trade or business. Gross receipts for this purpose means
gross sales, less returns and allowances, and includes all interest
income, service charges, carrying charges or time-price differential
charges incidental to such sales. Federal and state excise taxes (including
sales taxes) shall be included as part of such receipts if such taxes
are passed on to the buyer or included as part of the selling price
of the product.
- Sales Factor-Sales Incidental To General Business Operations
The term "sales" as a general rule, also includes
gross receipts derived by a taxpayer from business transactions
or activities which are incidental to its principal business
activity and which are includable in business income.
However, substantial amounts of gross receipts arising
from an incidental or occasional sale of a fixed asset
used in connection with the taxpayer's regular trade or
business will be excluded from the sales factor since
such sales constitute a "casual sale" of property
and the inclusion of such gross receipts will not fairly
apportion to this State the income derived by the taxpayer
from its business activity in this State. For example,
gross receipts from the sale of a factory or plant will
be excluded from the sales factor but the gain or loss
on the sale will be included in apportionable income.
Likewise, the "proceeds" from "rollover"
of working capital invested in certificates of deposits,
money market accounts, etc., on a short-term temporary
basis are not considered gross receipts for sales factor
purposes. The earnings of such investments whether labeled
as gains or interest will be the only amounts includable
in the sales factor.
In including or excluding gross receipts, the taxpayer shall be consistent
in the treatment of such gross receipts in filing returns with this
State. In the event the taxpayer is not consistent in its reporting,
it shall disclose in its return to this State the nature and extent
of the inconsistency.
- Sales Factor-Sales Made In Other Types of Business Activity
As applied to a taxpayer engaged in business activity
other than the manufacturing and selling or purchasing
and reselling of property, "sales" includes
the gross receipts as defined in this subject.
- If the business activity consists of providing services,
such as the operation of an advertising agency, or
the performance of equipment service contracts, research
and development contracts, "sales" includes
the gross receipts from the performance of such services
including fees, commissions, and similar items.
- In the case of cost plus fixed fee contracts, such as the operation
of a government-owned plant for a fee, gross receipts includes
the entire reimbursed cost, plus the fee.
- If the business activity is the renting of real
or tangible personal property, "sales" includes
the gross receipts from the rental, lease, or licensing
the use of the property.
- If the business activity is the sale, assignment,
or licensing of intangible personal property such
as patents and copyrights, "sales" includes
the gross receipts therefrom.
- Sales Factor-Numerator
The numerator of the sales factor will include the gross receipts
from sales which are attributable to this State, and includes all
interest income, service charges, carrying charges, or time-price
differential charges incidental to such sales regardless of the place
where the accounting records are maintained or the location of the
contract or other evidence of indebtedness.
Where a taxpayer is not taxable in another state on
its business income but is taxable in another state only because
of nonbusiness income, all sales shall be attributable to this State.
- Sales Factor-What Sales of Tangible Personal Property Are In
- Gross receipts from the sales of tangible personal property
are in this State if the property is delivered or shipped to a
purchaser within this State regardless of the f.o.b. point or
other conditions of sale.
- Property shall be deemed to be delivered or shipped to a purchaser
within this State if the recipient is located in this State, even
though the property is ordered from outside this State.
Example: The taxpayer, with inventory in State
A, sold $100,000 of its products to a purchaser having
branch stores in several states including this State.
The order for the purchase was placed by the purchaser's
central purchasing department located in State B.
$25,000 of the purchase order was shipped directly
to purchaser's branch store in this State. The branch
store in this State is the "purchaser within
this State" with respect to $25,000 of the taxpayer's
- Property is delivered or shipped to a purchaser within this
State if the shipment terminates in this State, even though the
property is subsequently transferred by the purchaser to another
Example: The taxpayer makes a sale to a purchaser who maintains
a central warehouse in this State at which all merchandise purchased
is received. The purchaser reships all the goods to its branch
stores in other states for sale.
All of taxpayer's products shipped to the purchaser's
warehouse in this State is property "delivered
or shipped to a purchaser within this State."
- The term "purchaser within this State"
shall include the ultimate recipient of the property
if the taxpayer in this State, at the designation
of the purchaser, delivers to or has the property
shipped to the ultimate recipient within this State.
Example: A taxpayer in this State sold merchandise
to a purchaser in State A. Taxpayer directed the manufacturer
or supplier of the merchandise in State B to ship
the merchandise to the purchaser's customer in this
State pursuant to purchaser's instructions. The sale
by the taxpayer is “in this State."
- When property being shipped by a seller from the state of origin
to consignee in another state is diverted while enroute to a purchaser
in this State, the sales are in this State.
Example: The taxpayer, a produce grower in
State A, begins shipment of perishable produce to
the purchaser's place of business in State B. While
enroute the produce is diverted to the purchaser's
place of business in this State where the taxpayer
is subject to tax. The sale by the taxpayer is attributed
to this State.
- Sales Factor-Sales To United States Government
- Gross receipts from the sales of tangible personal property
to the United States Government are in this State if the property
is shipped to or received or accepted by the United States Government
in this State. For the purposes of this regulation, only sales
for which the United States Government makes direct payment to
the seller pursuant to the terms of its contract constitute sales
to the United States Government. Thus, as a general rule, sales
by a subcontractor to the prime contractor, the party to the contract
with the United States Government, do not constitute sales to
the United States Government.
Example (1): A taxpayer contracts with General Services
Administration to deliver X number of trucks which were paid for
by the United States Government. The United States Government
is the purchaser.
Example (2): The taxpayer is a subcontractor to a prime
contractor with the National Aeronautics and Space Administration
and contracts to build a component of a rocket for $1,000,000.
The sale of the subcontractor to the prime contractor is not a
sale to the United States Government.
- When the United States Government is the purchaser
of property which remains in the possession of the
taxpayer in this State for further processing under
another contract, or for other reasons, "shipment"
is deemed to be made at the time of acceptance by
the United States Government.
- Sales Factor-Numerator-Other Receipts Constituting Business Income
- Subsection (1) (3) of G.S. 105-130.4 contains provisions for
including gross receipts from other business income transactions
in the numerator of the sales factor. Under this subsection gross
receipts are attributed to this State if:
The term "income producing activity" means the act or
acts directly engaged in by the taxpayer, or by anyone
acting on the taxpayer's behalf, in the regular course
of its trade or business for the ultimate purpose
of obtaining gains or profits.
- the receipts are from real or tangible personal property
located in this State; or
- the receipts are from intangible property and are received
from sources in this State; or
- the receipts are from services and the income producing
activity which gave rise to the receipts is performed within
- Except for receipts from the casual sale of property, as defined
above, receipts described above from other transactions constituting
business income shall be attributed to this State as set forth
- Gross receipts from the sale, lease, rental or other use
of real property are in this State if the real property is
located in this State.
- Gross receipts from the rental, lease, licensing the use
of, or other use of tangible property shall be assigned to
this State if the property is within this State during the
entire period of rental, lease, license or other use. If the
property is within and without this State during such period,
gross receipts attributable to this State shall be based upon
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 such period.
- Gross receipts from intangible personal property shall be
attributed to this State if they are received from sources
within this State.
- Gross receipts for the performance of personal services
are attributable to this State to the extent such services
are performed in this State. If the services are performed
partly within and without this State, such receipts shall
be attributed to this State based upon the ratio which the
time spent in performing such services in this State bears
to the total time spent in performing such 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 such gross receipts. Personal service
not directly connected with the performance of the contract
or other obligation, as for example, time expended in negotiating
the contract, is excluded from the computations.
Example (1): The taxpayer, a road show, gave theatrical
performances at various locations in State X and in this State
during the income year. All gross receipts from performances
given in this State are attributed to this State.
Example (2): The taxpayer, a public opinion survey
corporation, conducted a poll by its employees in State X
and in this State for the sum of $9,000. The project required
600 man hours to obtain the basic data and prepare the survey
report. Two hundred of the 600 man hours were expended in
this State. The receipts attributable to this State are $3,000.
|200 man hours
||x $9,000 = $3,000
|600 man hours
- Public Utilities, Excluded Corporations and Air or Water Transportation
Corporations Apportionment Factors (G.S. 105-130.4)
- Railroad Companies
All business income of a railroad company must be apportioned to North
Carolina by multiplying the income by a fraction, the numerator of which
is the railway operating revenue from business done within North Carolina
and the denominator of which is the total railway operating revenue everywhere.
- Telephone Companies
All business income of a telephone company must be apportioned to this
State by multiplying the income by a fraction, the numerator of which
is gross operating revenue from local service in North Carolina plus gross
operating revenue from toll services performed wholly within North Carolina
plus the proportion of revenue from interstate toll services attributable
to North Carolina as shown by the records of the company plus the gross
operating revenue in North Carolina from other service less the uncollectible
revenue in North Carolina, and the denominator of which is the total gross
operating revenue everywhere less total uncollectible revenue.
- Motor Carriers of Property and/or Passengers
All business income of a motor carrier of property and/or
passengers must be apportioned by multiplying the income by
a fraction, the numerator of which is the number of vehicle
miles in North Carolina and the denominator of which is the
total number of vehicle miles of the company everywhere. The
word "vehicle miles" shall mean miles traveled by
vehicles owned or operated by the company hauling property
or passengers for a charge or traveling on a scheduled route.
- Telegraph Companies
All apportionable income of a telegraph company must be apportioned by
multiplying the income by a fraction, the numerator of which is the property
factor plus the payroll factor plus the sales factor and the denominator
of which is three.
- Excluded Corporations, including Construction Contractors, and Other
All business income of an excluded corporation and all other
public utilities must be apportioned by multiplying business
income by the sales factor as defined in G.S. 105-130.4. "Excluded
corporation" means any company engaged in business as
a building or construction contractor, a securities dealer,
loan company or company which receives more than fifty percent
(50%) of its ordinary gross income from investments in and/or
dealings in intangible property. A building or construction
contractor is a business so classified in the Standard Industrial
Classification Manual published by the Federal Office of Management
- Air or Water Transportation Corporations
All business income of an air or water transportation corporation
must be apportioned by a fraction, the numerator of which
is the corporation's revenue ton miles in this state and the
denominator of which is the corporation's revenue ton miles
everywhere. The term "revenue ton mile" means one
ton of passengers, freight, rail, or other cargo carried one
mile. In making this computation, a passenger is considered
to weigh two hundred pounds.
Revenue ton miles in this State are determined for air transportation
companies from the flights, landings and/or departures from locations
in this State; and for water transportation companies from dockings and/or
departures from locations in this State.