1. (1) 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 tax period. However, the Commissioner may require or allow averaging by monthly values if that method of averaging is required to properly reflect the average value of the taxpayer's property for the tax period.

   1. (a) Averaging by monthly values will generally be applied if substantial fluctuations in the values of the property exist during the tax period or if property is acquired after the beginning of the tax period or disposed of before the end of the tax period.

      1. 1. EXAMPLE: The monthly value of the taxpayer's property was as follows:

         January	$2,000	July	$15,000
         February	2,000	August	17,000
         March	3,000	September	23,000
         April	3,500	October	25,000
         May	4,500	November	13,000
         June	10,000	December	2,000
         	$25,000		$95,000
         		Total	120,000

         The average value of the taxpayer's property includable in the property factor for the income year is determined as follows:

         $120,00012 = $10,000

   2. (b) Averaging with respect to rented property is achieved automatically by the method of determining the net annual rental rate of such property as set forth in Rule 810-27-1-.11.

2. (2) Applicability.

   1. (a) For tax periods beginning on or after January 1, 2021, the property factor is no longer considered in calculating a taxpayer’s Alabama apportionment factor.

   2. (b) The provisions of this rule are applicable for tax periods beginning on or after January 1, 2021, when:

      1. 1. A taxpayer petitions and is granted approval from the department to employ an alternative apportionment method in accordance with §40-27-1, Code of Ala. 1975.
      2. 2. Measuring against nexus thresholds pursuant to §40-18-31.2, Code of Ala. 1975.

Author: Holly H. Coon, Jennifer Reynolds, Christina Hall, CPA, Kathleen Abrams

Statutory Authority: Code of Ala. 1975, §§40-2A-7(a)(5), 40-18-57.

History: New Rule: Filed May 11, 2016, effective June 25, 2016. Amended: Published February 28, 2022, effective April 14, 2022.