- (a) The term manufacturing means the process of working raw materials into wares suitable for use or which gives new shapes, new quality or new combinations to matter which already has gone through some artificial process by the use of machinery, tools, appliances and other similar equipment.
- (b) The term property used in the production of goods includes machinery, equipment or other tangible property which is principally used in the repair and service of other machinery, equipment or other tangible property used principally in the production of goods and includes all facilities used in the production operation, including storage of material to be used in production and of the products that are produced. Since property and equipment used to store raw materials and finished goods are included in the meaning of manufacturing, property and equipment at the raw material warehouse and at the finished goods warehouse of a manufacturer qualify, provided that the property and equipment are principally used in storing the raw materials or finished goods. Property used to transport raw materials to the raw materials warehouse or finished goods to customers does not qualify. Property used for transportation of goods during the manufacturing process qualifies. However, transportation equipment used on public roads does not qualify. A public warehouse used to store the taxpayer's goods does not qualify.
- (c) The term principally used means more than 50 percent. A building or addition to a building is principally used in production where more than 50 percent of its usable business floor space is used in storage and production. Floor space used for bathrooms, cafeterias and lounges is not usable business floor space. Space used for offices, accounting, sales and distribution is not used in production. Dual purpose machinery is principally used in production when it is used in production more than 50 percent of its operating time.
- (d) The term cost means the basis of property as defined in section 1012 of the Internal Revenue Code.
- (e) The term other basis means the adjusted basis for determining gain or loss used as the basis for depreciation pursuant to section 167(g) of the Internal Revenue Code.
Tax Law, § 210, subd. 12(b)
As used in this Subpart, the following terms have these meanings: