Section 45IAC3.1-1-50. Sales factor for apportionment; sales defined

   Sales Factor─Sales Made in General Business Operations. "Sales" means all gross receipts of the taxpayer which are not subject to allocation as nonbusiness income. The following are examples of "sales" in various situations:

  (1) If the taxpayer's business activity consists of manufacturing and selling or purchasing and reselling goods or products, "sales" includes all gross receipts from the sales of such goods or products (or other property which would be included as inventory of the taxpayer if on hand at the close of the tax year) held by the taxpayer primarily for sale in the ordinary course of business. Gross receipts for this purpose means gross sales price, less returns and allowances, and includes all interest income, service charges, carrying charges, or time-price differential charges incidental to such sales. Federal and state excise taxes (including sales taxes) shall be included as part of such receipts and shall be in the sales factor only if such taxes are included in the gross receipts or gross sales as reported on the taxpayer's Federal returns.

  (2) If the taxpayer's business activity consists of providing services, such as the operation of an advertising agency, or the performance of equipment service contracts or research and development contracts, "sales" includes the gross receipts from the performance of such services including fees, commissions and similar items.

  (3) If the taxpayer is working under a cost plus fixed fee contract, such as the operation of a government owned plant for a fee, gross receipts includes the entire reimbursed cost plus the fee.

  (4) If the taxpayer is in the business of renting real or tangible personal property, "sales" includes the gross receipts from the rental, lease, or licensing the use of the property.

  (5) If the taxpayer is in the business of selling, assigning, or licensing of intangible personal property such as patents and copyrights, "sales" includes the gross receipts therefrom.

  In some cases, certain gross receipts should be disregarded in determining the sales factor to effectuate an equitable apportionment. See Regulation 6-3-2-2(l)(010) [45 IAC 3.1-1-62]. The sales factor should be consistent in the manner described in Regulation 6-3-2-2(c)(030) [45 IAC 3.1-1-42]. (Department of State Revenue; Reg 6-3-2-2(e)(010); filed Oct 15, 1979, 11:15 am: 2 IR 1526; errata, 2 IR 1743)