15 AAC 19.1110. Apportionment of business income

(a) Property Factor.

(1) The property factor includes the value of all owned and rented aircraft. The use of the taxpayer's owned or rented aircraft in an exchange program with another air carrier does not constitute a rental or subrental, whichever the case may be, of that aircraft by the airline to the other participating airline. That aircraft must be accounted for in the property factor of the taxpayer. Engines, parts, and other expendables, including parts for use in contract overhaul work, will be valued at cost. Landing fees do not constitute rentals in the valuation of property used or rented during the income year.

(2) The denominator of the property factor is the average value of all of the taxpayer's real and tangible personal property owned or rented and used during the income year. The numerator of the property factor is the average value of the taxpayer's real and tangible personal property owned or rented and used in the state during the income year. In determining the numerator of the property factor, all property except aircraft ready for flight, including all attached equipment, must be included in the numerator of the property factor in accordance with AS 43.19.010 , Article IV.10 - .12, and 15 AAC 19.171. Aircraft ready for flight must be included in the numerator of the property factor in the ratio that ground time (hours) of that aircraft in this state bears to the ground time (hours) of that aircraft everywhere, as defined in 15 AAC 19.1190.

(b) The Payroll Factor. The denominator of the payroll factor is the total compensation paid everywhere by the taxpayer during the income year. (See AS 43.19.010 , Article IV.13 - .14 and 15 AAC 19.211 - 15 AAC 19.241.) The numerator of the payroll factor is the total amount paid in this state during the income year by the taxpayer for compensation. With respect to nonflight personnel, compensations paid to those employees must be included in the numerator as provided in AS 43.19.010 , Article IV.13 - .14, and 15 AAC 19.231 and 15 AAC 19.241. With respect to flight personnel (the air crew aboard an aircraft assisting in the operation of the aircraft or the welfare of passengers while in the air), compensation paid to those employees must be included in the ratio that ground time in this state bears to total ground time as defined in 15 AAC 19.1190.

(c) Sales Factor. All revenue derived from transactions and activities in the regular course of the trade or business of the taxpayer which produces business income is included in the denominator of the sales factor. (See AS 43.19.010 , Article IV.1 and 15 AAC 19.011, 15 AAC 19.031, and 15 AAC 19.251.) The numerator of the sales factor is the total revenue of the taxpayer in this state during the income year. With respect to nonflight revenue, the revenue is in this state in accordance with the provisions of AS 43.19.010 , Article IV.16 and .17, and 15 AAC 19.271, 15 AAC 19.281, 15 AAC 19.291, and 15 AAC 19.301. With respect to flight revenue, the total revenue of the taxpayer in this state during the income year is the ratio that ground time in this state bears to total ground time as defined in 15 AAC 19.1190.

History: Eff. 3/31/82, Register 81

Authority: AS 43.05.080

AS 43.19.010

AS 43.20.071 (b)

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