Title 15 . Revenue

Chapter 21 . (Repealed)

Section 290. Deduction for general overhead and administrative expense

15 AAC 21.290. Deduction for general overhead and administrative expense

(a) Subject to the limitation in (b) of this section, a deduction is allowed in determining a taxpayer's taxable production income during a year, for the taxpayer's general overhead and administrative expense during that year which is properly allocated (on the basis of personnel time sheets, office space or another basis having general currency in the oil and gas industry) to (1) operations for leases or properties in the state, (2) acquiring leases or properties in the state, or (3) exploration in the state. Where general overhead and administrative expense is properly allocated to an activity described in the preceding sentence that is conducted both within and outside the state, that general overhead and administrative expense must be allocated to in-state activity on the basis of the relative acreage involved in that activity which is in the state; however, the department will, in its discretion, authorize or require another basis for this allocation if that other basis is more appropriate than acreage.

(b) Unless a corporation demonstrates to the satisfaction of the department that it paid or incurred greater actual expenses for general overhead and administrative costs (including a reasonable amount of profit, if any, that is actually allocated to general overhead and administrative activities for purposes of reporting that year's earnings and profits to the stockholders) attributable to deriving income from oil or gas production in the state, the deduction under (a) of this section for a taxpayer's general overhead and administrative expense for any year may not exceed an amount equal to the general overhead and administrative expense worldwide (including a reasonable amount of profit, if any, that is actually allocated to general overhead and administrative activities for purposes of reporting that year's earnings and profits to stockholders) during that year for the consolidated business of which the taxpayer is a part, multiplied by a fraction of whose numerator equals the net book value (as of the end of that year) for financial accounting purposes of the taxpayer's real and tangible personal property of the type described in 15 AAC 21.250 and 15 AAC 21.260 (excluding the estimated value of the taxpayer's remaining oil and gas reserves), and whose denominator is the net book value (as of the end of that year) for financial accounting purposes of all real and tangible personal property (excluding the estimated value of remaining oil and gas reserves) worldwide of the consolidated business of which the taxpayer is a part.

History: Eff. 2/22/79, Register 69; am 3/26/82, Register 81

Authority: AS 43.05.080

AS 43.19.010 ,

Art. IV, § 18

AS 43.21.020

AS 43.21.090