Title 15 . Revenue

Chapter 20 . (Repealed)

Section 421. Apportionment of petroleum business income of a taxpayer subject to

15 AAC 20.421. Apportionment of petroleum business income of a taxpayer subject to

(a) A taxpayer that is subject to AS 43.20.072 , the unitary business of which is predominantly a petroleum business, shall apportion all unitary business income determined under AS 43.20.072 to this state using the apportionment factor of the entire unitary business determined under AS 43.20.072 and applicable regulations.

(b) If the unitary business of a taxpayer that is subject to 43.20.072 is not predominantly a petroleum business, the taxpayer:

(1) shall segregate its business income determined under AS 43.20.072 and apportion the petroleum business income of its unitary business to this state using the apportionment factor of the entire unitary business determined under AS 43.20.072 and applicable regulations and shall apportion the other business income of its unitary business to this state using the apportionment factor of the entire unitary business determined under AS 43.19 and 15 AAC 19.131 - 15 AAC 19.900;

(2) shall apportion the general overhead and administrative expenses of its unitary business as a part of the taxpayer's other business income; and

(3) may, for assets of domestic corporations included in its combined report, depreciate assets used principally for its other business, using the methods employed for those assets for federal income tax purposes.

(c) For purposes of (a) and (b) of this section, a taxpayer's unitary business is predominantly a petroleum business if the sum of the gross receipts of the petroleum business divided by the gross receipts of the entire unitary business, plus the payroll of the petroleum business divided by the payroll of the entire unitary business, plus the average property and capitalized rents of the petroleum business divided by the average property and capitalized rents of the entire unitary business, divided by three exceeds 50 percent. The gross receipts, payroll, and average property and capitalized rents of the petroleum business and of the entire unitary business shall be determined under AS 43.19 and 15 AAC 19.131 - 15 AAC 19.900.

(d) In this section, "petroleum business" means oil and gas operations and business activities that are related to or incidental to oil and gas operations, in which

(1) "oil and gas operations" include the following activities: exploration, production, refining, manufacturing, processing, transportation, and marketing of oil and gas or any commodity, product, or feedstock derived from oil or gas, including petrochemicals, whether or not acquired from or transferred between parts of the unitary business; and

(2) a business activity is related to or incidental to oil and gas operations if the activity is conducted in the regular course of oil and gas operations, is customary in the oil and gas business, is within the scope of what an oil and gas business does, or is an integral, functional, necessary or operative component of oil and gas operations; activities that are related to or incidental to oil and gas operations include:

(A) sales of non-petroleum goods at gasoline stations or similar wholesale or retail outlets;

(B) centralized financing, insurance, or other service activities that finance, insure, or otherwise provide services to the oil and gas operations; and

(C) sales of tangible and intangible assets used in or acquired for oil and gas operations.

History: Eff. 3/6/98, Register 145

Authority: AS 43.05.080

AS 43.20.031

AS 43.20.072