Title 15 . Revenue

Chapter 65 . (Repealed)

Section 110. Gross income

15 AAC 65.110. Gross income

(a) A person's gross income from a mining property in the state equals the sum of

(1) sale price or value actually received, including cash, credits, in-kind exchanges, and other valuable consideration for the mined materials;

(2) advance royalty payments received; however, advance payments may not be included in gross income until the tax year in which the mined material to which the payments relate is actually extracted;

(3) production payments retained in a lease; and

(4) other royalty payments received from mining properties in the state, including royalty payments received in kind; if the payment is in kind, gross income includes the fair market value of the mined material on the date that payment is received.

(b) For the purposes of this section, the sales price of

(1) mined material sold in the state to an affiliate of the person is the greater of

(A) the cash value of the consideration given for the materials sold;

(B) the price attributable to the sale as entered on the person's books and records in accordance with generally accepted accounting principles; or

(C) fair market value;

(2) the person's inventory of mined material, retained by and put to personal use by the person, or transferred from the mining division to another division within the same corporate entity, is the greater of

(A) the price attributable to the mining division for the material as entered on the person's books and records in accordance with generally accepted accounting principles, or

(B) fair market value.

(c) If a person is engaged in a mining operation in the state and mined materials are commingled with non-mining materials to form a refined product such as asphalt paving, concrete, or jewelry, gross income includes the fair market value of the mined materials after they are mined and subjected to ordinary treatment processes but before incorporation into the finished product.

(d) If a person transports mined materials and products containing mined materials out of state before sale of the materials or products, gross income includes the fair market value of the materials before their exportation in the tax year exported, whether or not the mined materials are sold during that tax year.

(e) For the purpose of this section, "fair market value" must be determined by one of the following methods, except that, if fair market value cannot be fairly determined by the use of these methods, the person may request, or the commissioner will, in his or her discretion, require, the use of another method acceptable to the commissioner:

(1) Fair market value may be computed by using the representative market or field price of materials after they are mined and subjected to ordinary treatment processes. "Representative market or field price" is the competitive sales price for ores or minerals of like kind and grade. If no Alaska market exists for a mined material, the representative market or field price is the United States or world market price for a similar kind and grade of resource.

(2) Fair market value may be computed by deducting from the out-of-state sales price of Alaska mined materials the

(A) ordinary and necessary costs incurred to apply non-mining processes to the mined materials before sale;

(B) ordinary and necessary costs incurred to transport the mined materials from the point of completion of ordinary treatment processes to its destination before sale;

(C) ordinary and necessary costs incurred out-of-state in further processing the mined materials to produce a marketable product; and

(D) out-of-state sales expense and other administrative costs incurred to bring the mined materials to the point of sale.

History: Eff. 8/9/86, Register 99

Authority: AS 43.05.080

AS 43.65.010

AS 43.65.060