PURPOSE: This rule sets forth the uniform provisions concerning multistate allocation and apportionment of income from trucking companies which were enacted by the Multistate Tax Commission.

1. (1) General. As used in this rule, the term trucking company means a motor common carrier, a motor contract carrier or an express carrier which primarily transports tangible personal property of others by motor vehicle for compensation. Where a trucking company has income from sources both within and without Missouri, the amount of business income from sources within Missouri shall be determined pursuant to this rule, unless the taxpayer elects to apportion pursuant to section 143.451.4, RSMo. In those cases, the first step is to determine what portion of the trucking company’s income constitutes business income and what portion constitutes nonbusiness income under section 32.200 (Article IV.1.), RSMo and the rules that interpret those provisions. Nonbusiness income is directly allocable to specific states pursuant to the provisions of section 32.200 (Article IV.4–8.), RSMo. Business income is apportioned among the states in which the business is conducted and pursuant to the property, payroll and sales apportionment factors set forth in this rule. The sum of the items of nonbusiness income directly allocated to Missouri plus the amount of business income attributable to Missouri constitutes the amount of the taxpayer’s entire net income which is subject to tax in Missouri.
2. (2) Business and Nonbusiness Income. For definitions, rules and examples for determining business and nonbusiness income, see 12 CSR 10-2.075.

3. (3) Apportionment of Business Income. In general, the property factor shall be determined in accordance with section 32.200 (Article IV.10–12), RSMo, the payroll factor in accordance with section 32.200 (Article IV.13 and 14.), RSMo and the sales factor in accordance with section 32.200 (Article IV.15.–17.), RSMo, except as modified by this rule.

   1. (A) The Property Factor. Owned property shall be valued at its original cost and property rented from others, including purchased transportation, shall be valued at eight (8) times the net annual rental rate in accordance with section 32.200 (Article IV.11.), RSMo and the rules that interpret those provisions. To the extent that the taxpayer’s records reflect a separate charge incurred for the use of purchased transportation attributable to the property used, this separate charge shall be used in calculating the value of rented property. If a charge is not separated from that attributable to the compensation paid for the operator of the purchased transportation, the total combined charge shall be reduced by twenty percent (20%) to determine the portion of the charge attributable solely to the value of the rented property. Mobile property, other than purchased transportation, which is owned by other trucking companies and temporarily used by the taxpayer in its business and for which a per-diem or mileage charge is made shall not be included in the property factor as rented property. Mobile property which is owned by the taxpayer and temporarily used by other trucking companies in their business and for which a perdiem or mileage charge is made by the taxpayer shall be included in the property factor of the taxpayer.

   2. (B) General Definitions. The following definitions are applicable to the numerator and denominator of the property factor, as well as other apportionment factor descriptions:

      1. 1. Average value of property means the

amount determined by averaging the values at the beginning and end of the income tax year, but the Department of Revenue may require the averaging of monthly values during the income year or this averaging as is necessary to reflect properly the average value of the trucking company’s property (see section 32.200 (Article IV.12.), RSMo and the rules that interpret those provisions);

1. 2. Mobile property means all motor

vehicles, including trailers, engaged directly in the movement of tangible personal property, except for support vehicles used predominantly in a local capacity. Mobile property shall include purchased transportation;

1. 3. A mobile property mile is the move-

ment of a unit of mobile property a distance of one (1) mile whether loaded or unloaded;

1. 4. Original cost is deemed to be the

basis of the property for federal income tax purposes (prior to any federal income tax adjustments, except for subsequent capital additions and improvements or partial dispositions) or, if the property has no basis, the valuation of this property for Interstate Commerce Commission purposes. If the original cost of property is unascertainable under the foregoing valuation standard, the property is included in the property factor at its fair market value as of the date of acquisition by the taxpayer (see section 32.200 (Article IV.11.), RSMo);

1. 5. Property used during the course of

the income year includes property which is available for use in the taxpayer’s trade or business during the income year;

1. 6. Purchased transportation means the

taxpayer’s use of a motor vehicle owned and operated by another for the purpose of transporting tangible personal property for which a charge, whether based upon a per diem, mileage or other basis, is incurred;

1. 7. Temporarily used means the use of

any mobile property owned by another for a period not to exceed thirty (30) days during any income year;

1. 8. The value of owned real and tangible

personal property means its original cost (see section 32.200 (Article IV.11.), RSMo and the rules that interpret those provisions); and

1. 9. The value of rented real and tangible

personal property means the product of eight (8) times the net annual rental rate (see section 32.200 (Article IV.11.), RSMo and the rules that interpret those provisions).

1. (C) The Denominator and Numerator of the Property Factor. The denominator of the property factor shall be the average value of all the taxpayer’s real and tangible personal property owned or rented and used during the income year. The numerator of the property factor shall be the average value of the taxpayer’s real and tangible personal property owned or rented and used in Missouri during the income year. In the determination of the numerator of the property factor, all property, except mobile property as defined in this rule, shall be included in the numerator of the property factor in accordance with section 32.200 (Article IV.10.–12.), RSMo and 12 CSR 10-2.075. Mobile property, as defined in this regulation, which is located within and without Missouri during the income year shall be included in the numerator of the property factor in the ratio which mobile property miles in Missouri bear to the total mobile property miles.
2. (D) The Payroll Factor. The denominator of the payroll factor is the compensation paid everywhere by the taxpayer during the income year for the production of business income (see section 32.200 (Article IV.13. and 14.), RSMo and 12 CSR 10-2.075). The numerator of the payroll factor is the total compensation paid in Missouri during the income year by the taxpayer. With respect to all personnel, except those performing services within and without Missouri, compensation paid to these employees shall be included in the numerator as provided in section 32.200 (Article IV.13. and 14.), RSMo and 12 CSR 10-2.075. Compensation paid to employees performing services within and without Missouri shall be included in the numerator of the payroll factor in the ratio which their services performed in Missouri bear to their services performed everywhere based on mobile property miles.

3. (E) The Sales (Revenue) Factor.

   1. 1. General. All revenue derived from

transactions and activities in the regular course of the taxpayer’s trade or business which produce business income shall be included in the denominator of the revenue factor (see section 32.200 (Article IV.1.), RSMo and 12 CSR 10-2.075). The numerator of the revenue factor is the total revenue of the taxpayer. The total state revenue of the taxpayer other than revenue from hauling freight, mail and express shall be attributable to this state in accordance with section 32.200 (Article IV.15.–17.), RSMo and 12 CSR 10-2.075.

1. 2. Numerator of the sales (revenue) fac-

tor from freight, mail and express. The total revenue of the taxpayer attributable to Missouri during the income year from hauling freight, mail and express shall be—

1. A. Intrastate. All receipts from any

shipment which both originates and terminates within Missouri; and

1. B. Interstate. That portion of the

receipts from movements or shipments passing through, into or out of Missouri as determined by the ratio which the mobile property miles traveled in Missouri bear to the total mobile property miles traveled from points of origin to destination.

1. (4) Records. The taxpayer shall maintain the records necessary to identify mobile property and to enumerate by state the mobile property miles traveled by mobile property as those terms are used in this rule. These records are subject to review by the Department of Revenue or its agents.

2. (5) De Minimus Nexus Standard. Notwithstanding any provision contained in this rule, 12 CSR 10-2.011 shall not apply to require apportionment of income to Missouri if during the course of the income tax year, the trucking company neither—

   1. (A) Owns nor rents any real or personal

property in Missouri except mobile property;

1. (B) Makes any pickups or deliveries

within Missouri;

1. (C) Travels more than twenty-five thou-

sand (25,000) mobile property miles within Missouri, provided that the total mobile property miles traveled within Missouri during the income tax year does not exceed three percent (3%) of the total mobile property miles traveled in all states by the trucking company during that period; nor

1. (D) Makes more than twelve (12) trips

into this state.

AUTHORITY: sections 32.200 (Article VII) and 143.961, RSMo 1994.* Original rule filed Jan. 18, 1989, effective May 11, 1989.

*Original authority: 32.200, RSMo 1967 and 143.961, RSMo 1972.