Title 15 . Revenue

Chapter 20 . (Repealed)

Section 900. Definitions

15 AAC 20.900. Definitions

(a) In AS 43.20 and this chapter,

(1) "combined method of reporting" means an accounting method used to determine the income attributable to activities in the state of a taxpayer that is a member of a group of corporations conducting a unitary business; the use of this method requires that information relating to the worldwide unitary income and the denominators of the apportionment factors of all related nexus and non-nexus entities that are members of the unitary group be reported as part of the taxpayer's return; this method is sometimes referred to as the "combined method of accounting;"

(2) "department" means the Department of Revenue;

(3) "does business in" is a nexus standard and includes owning or operating business facilities or property, conducting business activities, being a member of a partnership that transacts business, or any other activity from which income is realized or derived;

(4) "domestic corporation" has the meaning given to it by Internal Revenue Code section 7701(a) (26 U.S.C. 7701(a));

(5) "federal taxable income" is income subject to apportionment under 15 AAC 20.300;

(6) "financial statement" means a statement of income, expenses, assets, liabilities, and stockholders' equity, certified by an independent certified public accountant (or as appropriate, the foreign counterpart of a certified public accountant, such as a chartered accountant), and prepared for the purposes of reporting that year's earnings and profits to the stockholders;

(7) "state" means any state of the United States, the District of Columbia, and Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country or political subdivision thereof;

(8) "taxpayer" means a corporation subject to AS 43.20;

(9) "United States" means the fifty states, the District of Columbia, the Commonwealth of Puerto Rico, and possessions of the United States.

(b) In AS 43.20.073 and 15 AAC 20.330 - 15 AAC 20.390,

(1) "does not conduct significant economic activity" means the corporation's business is substantially limited to transactions that permit favorable tax treatment because of the corporation's presence in the country and that would not otherwise be available to other members of the water's edge combined group;

(2) "income tax at a rate" means the maximum statutory rate of taxes based on or measured by net income or profit actually imposed on the corporation, and includes only taxes levied at the federal or national level;

(3) "payments for intangible property" includes royalties, license fees, and interest, but does not include reimbursed costs such as management fees, accounting fees, service charges, and reimbursed payroll costs;

(4) "tax haven corporation" means a corporation identified in AS 43.20.073 (a)(5);

(5) "United States income tax rate on the income tax base of the corporation in the United States" means the maximum federal statutory rate applicable to the taxable income of the corporation before any applicable credits or any other reductions in the tax; if the corporation does not have taxable income in the United States, the rate is the rate that would be applied to income of the corporation if it earned income in the United States.

(c) For purposes of AS 43.20.043 , AS 43.20.072 , and 15 AAC 20.410 - 15 AAC 20.530,

(1) "commercial production" means the production of oil or gas for purposes of sale or other beneficial use not associated with the exploration and development of the field in which the lease or property lies, except when the sale or beneficial use is incidental to the testing of an unproved well or unproved completion interval;

(2) "economic interest" has the meaning given to it by 26 C.F.R. 1.611-1(b) on April 14, 1982 and does not include, for example, an interest represented by a supply or service agreement with persons or foreign governments relating to a lease or property if that agreement represents only the right to operate the lease or property or the right to purchase oil or gas from that property;

(3) "lease or property" means any economic interest (as defined in (2) of this subsection) in any right, title, or interest in or right to extract oil or gas including

(A) a mineral interest;

(B) a leasehold interest;

(C) a working interest, royalty interest, overriding royalty interest, production payment, net profit interest, carried interest or any other interest in a lease, sublease, concession, joint venture, sharing arrangement, or other agreement for oil and gas exploration, development, or production;

(D) a working interest, royalty interest, overriding royalty interest, production payment, net profit interest, carried interest or any other interest in an agreement for unitization or pooling under the provisions of Internal Revenue Code section 614(b)(3) (26 U.S.C. 614(b)(3)) as that section read on April 14, 1982;

(4) "oil and gas" means either oil or gas or both, as appropriate;

(5) "production interest" means a royalty interest or a working interest;

(6) "royalty interest" means a basic royalty, overriding royalty, production payment (excluding loan repayment), net profit interest, or carried interest, in the production of oil and gas;

(7) "working interest" means any interest (including fee title) in the production of oil and gas that is not a royalty interest.

History: Eff. 7/2/77, Register 62; am 3/6/98, Register 145; am 3/25/2004, Register 169

Authority: AS 43.05.080

AS 43.19.010

AS 43.20.043

AS 43.20.072

AS 43.20.073

Editor's note: Before Register 81 (April 1982), the provisions of 15 AAC 20.900(1) - (4) were located in 15 AAC 20.200, and the history note for 15 AAC 20.900 includes the history of former 15 AAC 20.200.