Fla. Admin. Code R. 12C-1.0155
(1) For the purposes of the sales factor, the term “sales” means all gross receipts received by the taxpayer from transactions and activities in the regular course of its trade or business.
(f) Income from intangible personal property.
1. Where the income producing activity in respect to business income from intangible personal property can be readily identified, such income is included in the denominator of the sales factor and, if the income producing activity occurs in Florida, in the numerator of the sales factor as well. For example, usually the income producing activity can be readily identified in respect to interest income received on deferred payments on sales of tangible personal property and income from the sale, licensing, or other use of intangible personal property. The sale or licensing of the use of a trade name, trademark, or patent will be attributable to the state in which the trade name, trademark, or patent is used.
2. Where business income from intangible property cannot readily be attributed to any particular income producing activity of the taxpayer, such income cannot be assigned to the numerator of the sales factor for any state and shall be excluded from the denominator of the sales factor. For example, where business income in the form of dividends received on stock, royalties received on patents or copyrights, or interest received on bonds, debentures or government securities results from the mere holding of the intangible personal property by the taxpayer, such dividends and interest shall be excluded from the denominator of the sales factor.
3. In the case of a taxpayer engaged in the sale, assignment, or licensing of intangible personal property such as patents and copyrights, “sales” includes the gross receipts therefrom.
(j) Intercompany sales. When a consolidated return is filed, intercompany sales may be included in the sales factor. Indications that the amounts may be included as sales include the following factors:
1. Amounts called sales on the books;
2. Amounts invoiced as sold to related party;
3. Actual payment from related party; or
4. Amounts included in consolidated federal income tax return as “gross receipts or sales.”
(k) Professional sports teams.
1. Receipts from player contract transactions, franchise fees, etc., are regarded as intangible business income and shall be assigned to the state in which the income-producing activity which is directly related to such receipts occurs. If there is no income-producing activity which directly relates to such receipts, such as the receipt of franchise fees for new league members, such receipts shall ordinarily be excluded from both the numerator and denominator of the sales factor.
2. Concession income and any other receipts not otherwise specifically covered shall be assigned to the physical location where the activity which gives rise to such receipts occurs.
(2) Florida sales. The numerator of the sales factor includes gross receipts attributed to Florida which were derived by the taxpayer from transactions and activities in the regular course of its trade or business. All interest income, service charges, carrying charges, or time-price differential charges incident to such gross receipts shall be included, regardless of the place where the account records are maintained or the location of the contract or other evidence of indebtedness.
(a) Sales of Tangible Personal Property in Florida. Gross receipts from sales of tangible personal property are in Florida if the property is delivered or shipped to a purchaser within Florida regardless of the F.O.B. point, other conditions of the sales, or the ultimate destination of the property. Tangible personal property shipped by common or contract carriers will use a destination test to determine whether the sale is a Florida sale or a sale outside Florida.
1.a. Property shall be deemed to be delivered or shipped to a purchaser within Florida if the recipient is located in Florida, even though the property is ordered from outside Florida.
b. Example: The taxpayer, with inventory in State A, sold $100,000 of its products to a purchaser having branch stores in several states including Florida. The order for the purchase was placed by the purchaser’s central purchasing department, located in State B. $25,000 of the purchaser’s order was shipped directly to purchaser’s branch store in Florida. The branch store in Florida is the “purchaser within Florida” with respect to $25,000 of the taxpayer’s sales.
2.a. Property is delivered or shipped to a purchaser within Florida if the shipment terminates in Florida, even though the property is subsequently transferred by the purchaser to another state.
b. Example: The taxpayer makes a sale to a purchaser who maintains a central warehouse in Florida at which all merchandise purchases are received. The purchaser reships the goods to its branch stores in other states for sale. All of the taxpayer’s products shipped to the purchaser’s warehouse in Florida are property “delivered or shipped to a purchaser within Florida.”
3.a. With respect to sales made to a citrus cooperative by a grower-member, the grower-member’s sales factor shall be the same as the sales factor for the most recent taxable year of the citrus cooperative-processor. With respect to sales made to a Florida processor by a grower-participant, the grower participant’s sales factor shall be the same as the sales factor for the most recent taxable year of the Florida processor. A copy of the processor’s sales factor as furnished to the grower-member or grower-participant shall be attached to the grower-member’s or grower-participant’s corporate income tax return, Form F-1120, which is incorporated by reference in Rule 12C-1.051, F.A.C.
b. If there is delivery of citrus fruit in Florida, other than citrus fruit delivered by a cooperative for a grower-member, citrus fruit delivered by a grower-member to a cooperative, or citrus fruit delivered by a grower-participant to a Florida processor, the sale will be a Florida sale. For example, if a citrus grower delivers fruit to a processor or middle-man for cash, the sale is considered to be a Florida sale, regardless of any subsequent shipment of the fruit outside Florida.
4.a. The term “purchaser within Florida” includes the ultimate recipient of the property if the taxpayer in Florida, at the designation of the purchaser, delivers to or has the property shipped to the ultimate recipient within Florida.
b. Example: A taxpayer in Florida 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 Florida pursuant to purchaser’s instructions. The sale by the taxpayer is in Florida.
5.a. When property being shipped by a seller from the state of origin to a consignee in another state is diverted while en route to a purchaser in Florida, the sales are in Florida.
b. 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 en route the produce is diverted to the purchaser’s place of business in Florida, where the taxpayer is subject to tax. The sale by the taxpayer is attributed to Florida.
(d) 1. The receipts from vessels carrying passengers to international waters where passengers cannot disembark from the vessel at points other than the origination point (cruises to nowhere); fishing boats; or party boats will be measured upon the port-day method. The port-day method measures the ratio of days in port inside the state, including port days to stock and clean the boat, to total port days. This ratio is multiplied by the total receipts to determine the numerator of the sales factor. Only the time that a vessel is moored to a wharf or pier is considered in computing the days spent in port.
(II) The lease receipts for the leased aircraft multiplied by a fraction, the numerator of which is lessee’s revenue miles in Florida for their fleet of similar aircraft and the denominator of which is the lessee’s revenue miles everywhere for their fleet of similar aircraft.
b. The phrase “revenue miles” is defined by Section 220.151(2), F.S., and paragraph 12C-1.0151(2)(b), F.A.C.
c. The method used (the actual revenue miles for the aircraft or the fleet average of the lessee) must be consistent with the method for determining the property factor, as described in paragraph 12C-1.0153(4)(d), F.A.C. Once the method is elected, the taxpayer must petition the Department of Revenue to change the method of valuation for subsequent taxable years. The taxpayer must petition the Department for the change by filing, on or before the due date for filing of the return for the taxable year, with extension, either: a written request for a technical assistance advisement under Section 213.22, F.S. and rule Chapter 12-11, F.A.C.; or, a petition for a declaratory statement under Section 120.565, F.S.
2. Aircraft leasing companies.
a. Corporations leasing aircraft to airlines that fly the aircraft into Florida must elect to measure receipts in Florida using one of the following methods:
(e) Personal Services.
1. Gross receipts for the performance of personal services are attributable to Florida if such services are performed in Florida.
2.a. If services relating to a single item of income are performed partly within and partly without Florida, the gross receipts for the performance of such services shall be attributable to Florida only if a greater portion of the services were performed in Florida, based on costs of performance.
b. The term “costs 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 taxpayer’s trade or business. Where independent contractors are used to complete a contract, the term “costs of performance” will include amounts paid to the independent contractors.
3. Where services are performed partly within and partly without this state, the services performed in each state may constitute a separate income producing activity, even though the client is billed a lump sum amount. In such cases, the gross receipts for the performance of services attributable to this state shall be measured by 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 services not directly connected with the performance of the contract or other obligation, as for example, time expended in negotiating the contract, are excluded from the computations.
(f) Intangible personal property in Florida.
1. The rental, leasing, licensing, or other use of a trade name, trademark, or patent to a business entity located in Florida will be considered a Florida sale. The mere holding of intangible personal property is not, of itself, an income producing activity.
2. Franchises. The franchise fees paid to rent, lease, license, or otherwise use a trade name and system of sales are Florida sales if the franchise location is in the state.
(g) Telecommunications. For purposes of this rule, gross receipts from telecommunications services include those earned by the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.
1. Intrastate charges for telecommunications services are Florida sales.
2. Interstate communications. Telecommunications charges are Florida sales if the communication originates or terminates in Florida and the bill is charged to a Florida telecommunications number or device, Florida telephone number or telephone, or Florida customer.
(h) Computer related sales.
1. Hardware delivered in Florida constitutes Florida sales.
2. Canned software programs are Florida sales if delivered to a customer in Florida.
3. Customized software programs are Florida sales when the customization of the programs is done in Florida. That is, when technical advice to customize a program is rendered on site in Florida, the sale will be considered a Florida sale.
4. Licensing fees for software are Florida sales to the extent the software is used in Florida.
5. Interactive networks.
a. Where there are charges to Florida customers for direct access to a data base, these charges are considered Florida sales. These charges include, but are not limited to, fees to access the network, fees based on the number of information requests made, time charges for connection to the data base and lines, and information retrieval from the data base.
b. Where there are charges by a corporation located in Florida to Florida customers for access to third party data bases, all charges will be considered Florida sales, regardless of where the third-party data bases are located.
c. Where a foreign (out-of-state) corporation charges Florida customers for access to third party data bases, all charges will be considered Florida sales except for charges directly related to the retrieval of information from the third-party data base.
d. When a P.C. or mainframe is physically located in Florida, a corporation will have a “Florida customer” for purposes of this subparagraph.
(3) Sales factor for financial organizations.
Rulemaking Authority 213.06(1), 220.51 FS. Law Implemented 220.15 FS. History–New 5-17-94, Amended 3-18-96, 10-2-01, 1-8-19.