(b) Pursuant to the authority provided in Arkansas Code § 26-51-718(c) and § 26-5-101(IV)(18)(c), the secretary determines that for purposes of computing the sales factor of a passive intangible holding company, sales or receipts arising from an intragroup intangible licensing transaction are in this state and shall be included in the numerator of the sales factor as follows:

1. (1) If the licensing agreement states a method of measuring the activity between the licensor and licensee which accurately reflects the licensor’s business activity attributable to this state, then the sales or receipts shall be included in the numerator of the sales factor as provided in the licensing agreement;

2. (2) If the licensing agreement does not state a method of measuring the activity between the licensor and licensee, then the measuring activity shall be based on one (1) of the following methods that accurately reflects the licensor’s business activity attributable to this state:

   1. (A) If licensee is engaged in an activity which generates sales or receipts, the numerator of the sales factor shall include licensee’s percentage of sales in this state compared to the licensee’s total sales;
   2. (B) If licensee is engaged in an activity which does not generate sales or receipts, the numerator of the sales factor shall include licensee’s percentage of units produced or cost of units produced in this state compared to the licensee’s total units produced or total cost of units produced; or
   3. (C) If neither of the above methods accurately represent the licensor’s business activity in this state, the licensor may petition for or the secretary may require any other method which will accurately represent the licensor’s business activity attributable to this state; and
3. (3) If the licensing agreement states a method of measuring the activity between the licensor and licensee in addition to a specifically stated dollar amount, the sales or receipts attributable to this state shall be based on the stated measuring activity plus the specifically stated dollar amount computed based on one (1) of the methods stated in subdivision (b)(2) of this section that accurately reflects the licensor’s business activity attributable to this state.