Kansas Administrative Regulations

Regulation Number:92-12-100
Agency Title: KANSAS DEPARTMENT OF REVENUE
Article Title: Income Tax
Tax Type:Individual Income Tax; Corporate Income Tax
Brief Description:Sales factor; sales other than sales of tangible personal property
in this state.
Keywords:


Body:

92-12-100 Sales factor; sales other than sales of tangible personal property in this state. (a) Gross receipts from transactions other than sales of tangible personal property (including transactions with the United States government) are attributed to this state if the income producing activity which gave rise to the receipts is performed wholly within this state. Also, gross receipts are attributed to this state, if, with respect to a particular item of income, the income producing activity is performed within and without this state but the greater proportion of the income producing activity is performed in this state, based on costs of performance.
The term ``income producing activity'' applies to each separate item of income and means the transactions and activity directly engaged in by the taxpayer in the regular course of its trade or business for the ultimate purpose of obtaining gains or profit. Such activity does not include transactions and activities performed on behalf of a taxpayer, such as those conducted on its behalf by an independent contractor. Accordingly, income producing activity includes but is not limited to the following: (1) The rendering of personal services by employees or the utilization of tangible and intangible property by the taxpayer in performing a service.
(2) The sale, rental, leasing, licensing or other use of real property.
(3) The rental, leasing, licensing or other use of tangible personal property.
(4) The sale, licensing or other use of intangible personal property.
The mere holding of intangible personal property is not, of itself, an income producing activity.
The term ``costs of performance'' means direct costs determined in a manner consistent with generally accepted accounting principles and in accordance with accepted conditions or practices in the trade or business of the taxpayer.
(b) The following are special rules for determining when receipts from the income producing activities described below are in this state: (1) Gross receipts from the sale, lease, rental or licensing of real property are in this state if the real property is located in this state.
(2) Gross receipts from the rental, lease, or licensing of tangible personal property are in this state if the property is located in this state. The rental, lease, licensing or other use of tangible personal property in this state is a separate income producing activity from the rental, lease, licensing or other use of the same property while located in another state; consequently, if property is within and without this state during the rental, lease or licensing period, gross receipts attributable to this state shall be measured by the ratio which the time the property was physically present or was used in this state bears to the total time or use of the property everywhere during such period.
(3) Gross receipts for the performance of personal services are attributable to this state to the extent such services are performed in this state. If services relating to a single item of income are performed partly within and partly without this state, the gross receipts for the performance of such services shall be attributable to this state only if a greater proportion of the services was performed in the state, based on costs of performance. Usually, where services are performed partly within and partly without this state, the services performed in each state will constitute a separate income producing activity; in such case the gross receipts for the performance of services attributable to this state shall be measured by the ratio which the time spent in performing such services in this state bears to the total time spent in performing such services everywhere. Time spent in performing services includes the amount of time expended in the performance of a contract or other obligation which gives rise to such gross receipts. Personal service not directly connected with the performance of the contract or other obligation, as for example, time expended in negotiating the contract, is excluded from the computations. (Authorized by K.S.A. 79-3236, 79-3287, 79-4301; effective May 1, 1979.)