1. (a) The percentage of the taxpayer's business receipts allocable to New York State is determined by:

   1. (1) ascertaining the taxpayer's business receipts within New York State during the period covered by the report; and

   2. (2) dividing the sum of the New York State business receipts by the taxpayer's total business receipts within and without New York State during such period.

      For purposes of this section, the term business receipts means gross income received in the regular course of the taxpayer's business, provided such receipts are includible in the computation of the taxpayer's entire net income for the taxable year.

2. (b) All business receipts for the period covered by the report, computed on a cash or accrual basis according to the method of accounting used in the computation of its entire net income, must be taken into account. The following business receipts are allocable to New York State:

   1. (1) 100 percent of receipts from sales of tangible personal property where shipments are made to points within New York State;
   2. (2) 100 percent of receipts from services performed in New York State;
   3. (3) 100 percent of rentals from property situated in New York State;
   4. (4) 100 percent of royalties from the use of patents or copyrights in New York State; and
   5. (5) all other business receipts earned in New York State.
3. (c) If a taxpayer receives a lump sum in payment for services and also for materials or other property, the sum received must be apportioned on a reasonable basis. That part apportioned to services performed is includible in receipts from services performed, and that part apportioned to materials or other property is includible in receipts from sales. Full details must be submitted with the taxpayer's report. (See sections 4-4.2 and 4-4.3 of this Subpart.)
4. (d) For rules relating to discretionary adjustments of the business allocation percentage, see Subpart 4-6 of this Part.

Tax Law, § 210(3)(a)(2) and (6)