Florida Senate - 2009                        COMMITTEE AMENDMENT
       Bill No. SB 2546
       
       
       
       
       
       
                                Barcode 346858                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  04/01/2009           .                                
                                       .                                
                                       .                                
                                       .                                
       —————————————————————————————————————————————————————————————————




       —————————————————————————————————————————————————————————————————
       The Committee on Finance and Tax (Altman) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. This act may be cited as the “Florida Fair
    6  Business Competition Act.”
    7         Section 2. Paragraph (a) of subsection (15) and paragraph
    8  (a) of subsection (16) of section 196.012, Florida Statutes, are
    9  amended to read:
   10         196.012 Definitions.—For the purpose of this chapter, the
   11  following terms are defined as follows, except where the context
   12  clearly indicates otherwise:
   13         (15) “New business” means:
   14         (a)1. A business establishing 10 or more jobs to employ 10
   15  or more full-time employees in this state, which manufactures,
   16  processes, compounds, fabricates, or produces for sale items of
   17  tangible personal property at a fixed location and which
   18  comprises an industrial or manufacturing plant;
   19         2. A business establishing 25 or more jobs to employ 25 or
   20  more full-time employees in this state, the sales factor of
   21  which, as defined by s. 220.15(4) s. 220.15(5), for the facility
   22  with respect to which it requests an economic development ad
   23  valorem tax exemption is less than 0.50 for each year the
   24  exemption is claimed; or
   25         3. An office space in this state owned and used by a
   26  corporation newly domiciled in this state; provided such office
   27  space houses 50 or more full-time employees of such corporation;
   28  provided that such business or office first begins operation on
   29  a site clearly separate from any other commercial or industrial
   30  operation owned by the same business.
   31         (16) “Expansion of an existing business” means:
   32         (a)1. A business establishing 10 or more jobs to employ 10
   33  or more full-time employees in this state, which manufactures,
   34  processes, compounds, fabricates, or produces for sale items of
   35  tangible personal property at a fixed location and which
   36  comprises an industrial or manufacturing plant; or
   37         2. A business establishing 25 or more jobs to employ 25 or
   38  more full-time employees in this state, the sales factor of
   39  which, as defined by s. 220.15(4) s. 220.15(5), for the facility
   40  with respect to which it requests an economic development ad
   41  valorem tax exemption is less than 0.50 for each year the
   42  exemption is claimed; provided that such business increases
   43  operations on a site colocated with a commercial or industrial
   44  operation owned by the same business, resulting in a net
   45  increase in employment of not less than 10 percent or an
   46  increase in productive output of not less than 10 percent.
   47         Section 3. Paragraph (b) of subsection (5) of section
   48  213.053, Florida Statutes, is amended to read:
   49         213.053 Confidentiality and information sharing.—
   50         (5) Nothing contained in this section shall prevent the
   51  department from:
   52         (b) Disclosing to the Chief Financial Officer the names and
   53  addresses of those taxpayers who have claimed an exemption
   54  pursuant to former s. 199.185(1)(i) or a deduction pursuant to
   55  former s. 220.63(5).
   56         Section 4. Section 213.054, Florida Statutes, is amended to
   57  read:
   58         213.054 Persons claiming tax exemptions or deductions;
   59  annual report.—The Department of Revenue shall be responsible
   60  for monitoring the utilization of tax deductions authorized
   61  pursuant to chapter 81-179, Laws of Florida. On or before
   62  September 1 of each year, the department shall report to the
   63  Chief Financial Officer the names and addresses of all persons
   64  who have claimed a deduction pursuant to former s. 220.63(5).
   65         Section 5. Subsection (1) of section 220.02, Florida
   66  Statutes, is amended to read:
   67         220.02 Legislative intent.—
   68         (1) It is the intent of the Legislature in enacting this
   69  code to impose a tax upon all corporations, organizations,
   70  associations, and other artificial entities which derive from
   71  this state or from any other jurisdiction permanent and inherent
   72  attributes not inherent in or available to natural persons, such
   73  as perpetual life, transferable ownership represented by shares
   74  or certificates, and limited liability for all owners. It is
   75  intended that any limited liability company that is classified
   76  as a partnership for federal income tax purposes and formed
   77  under chapter 608 or qualified to do business in this state as a
   78  foreign limited liability company not be subject to the tax
   79  imposed by this code. It is the intent of the Legislature to
   80  subject such corporations and other entities to taxation
   81  hereunder for the privilege of conducting business, deriving
   82  income, or existing within this state. This code is not intended
   83  to tax, and shall not be construed so as to tax, any natural
   84  person who engages in a trade, business, or profession in this
   85  state under his or her own or any fictitious name, whether
   86  individually as a proprietorship, or in partnership with others
   87  when classified as a partnership for federal income tax
   88  purposes, or as a member or a manager of a limited liability
   89  company classified as a partnership for federal income tax
   90  purposes; any estate of a decedent or incompetent; or any
   91  testamentary trust. However, a corporation or other taxable
   92  entity which is or which becomes partners with one or more
   93  natural persons shall not, merely by reason of being a partner,
   94  exclude from its net income subject to tax its respective share
   95  of partnership net income. It is the intent of the Legislature
   96  to follow the classification of organizations under the Internal
   97  Revenue Code to the greatest extent possible when not in
   98  conflict with the express provisions of this code. This
   99  statement of intent shall be given preeminent consideration in
  100  any construction or interpretation of this code in order to
  101  avoid any conflict between this code and the mandate in s. 5,
  102  Art. VII of the State Constitution that no income tax be levied
  103  upon natural persons who are residents and citizens of this
  104  state.
  105         Section 6. Paragraphs (e) and (r) of subsection (1) of
  106  section 220.03, Florida Statutes, are amended, and subsection
  107  (6) is added to that section, to read:
  108         220.03 Definitions.—
  109         (1) SPECIFIC TERMS.—When used in this code, and when not
  110  otherwise distinctly expressed or manifestly incompatible with
  111  the intent thereof, the following terms shall have the following
  112  meanings:
  113         (e) “Corporation” includes all domestic corporations;
  114  foreign corporations qualified to do business in this state or
  115  actually doing business in this state; joint-stock companies;
  116  limited liability companies, partnerships, and other entities of
  117  any type which are taxable as corporations for federal income
  118  tax purposes under chapter 608; common-law declarations of
  119  trust, under chapter 609; corporations not for profit, under
  120  chapter 617; agricultural cooperative marketing associations,
  121  under chapter 618; professional service corporations, under
  122  chapter 621; foreign unincorporated associations, under chapter
  123  622; private school corporations, under chapter 623; foreign
  124  corporations not for profit which are carrying on their
  125  activities in this state; and all other organizations,
  126  associations, legal entities, and artificial persons which are
  127  created by or pursuant to the statutes of this state, the United
  128  States, or any other state, territory, possession, or
  129  jurisdiction. The term “corporation” does not include
  130  proprietorships, even if using a fictitious name; partnerships
  131  of any type, as such, except as otherwise described in this
  132  paragraph; limited liability companies that are taxable as
  133  partnerships for federal income tax purposes; state or public
  134  fairs or expositions, under chapter 616; estates of decedents or
  135  incompetents; testamentary trusts; or private trusts.
  136         (r) “Nonbusiness income” means an amount that cannot be
  137  included in apportionable income rents and royalties from real
  138  or tangible personal property, capital gains, interest,
  139  dividends, and patent and copyright royalties, to the extent
  140  that they do not arise from transactions and activities in the
  141  regular course of the taxpayer’s trade or business. The term
  142  “nonbusiness income” does not include income from tangible and
  143  intangible property if the acquisition, management, and
  144  disposition of the property constitute integral parts of the
  145  taxpayer’s regular trade or business operations, or any amounts
  146  which could be included in apportionable income without
  147  violating the due process clause of the United States
  148  Constitution. For purposes of this definition, the term “income”
  149  means gross receipts less all items of loss, expense, or
  150  deduction, whether directly or indirectly attributable thereto,
  151  which were used to reduce adjusted federal income in the current
  152  taxable year or in a previous taxable year. For purposes of this
  153  definition, “income” means gross receipts less all expenses
  154  directly or indirectly attributable thereto. Functionally
  155  related dividends are presumed to be business income.
  156         (6)PARTNERSHIPS.—A corporation that is a general or
  157  limited partner in a partnership, as such, that conducts
  158  business in this state, that earns or receives income in this
  159  state, or that exists in this state is subject to taxation under
  160  this chapter when the partnership activities, if conducted
  161  directly by the corporation, would subject the corporation to
  162  taxation under this chapter. In the case of a tiered partnership
  163  arrangement, the activities of any partnership occupying a lower
  164  tier of a tiered partnership arrangement are imputed,
  165  proportionally, to all partners holding interests in the
  166  partnership occupying higher tiers. A “tiered partnership
  167  arrangement” is one in which some or all of the interests in one
  168  partnership, or lower-tier partnership, are held by a second
  169  partnership, or upper-tier partnership. A tiered partnership
  170  arrangement may have two or more tiers. For purposes of this
  171  subsection, the term “partnership” includes a limited liability
  172  company that has made a federal election to be taxed as a
  173  partnership or as a disregarded entity.
  174         Section 7. Paragraph (a) of subsection (1) of section
  175  220.13, Florida Statutes, is amended, paragraph (m) is added to
  176  subsection (2) of that section, and subsection (3) is added to
  177  that section, read:
  178         220.13 “Adjusted federal income” defined.—
  179         (1) The term “adjusted federal income” means an amount
  180  equal to the taxpayer’s taxable income as defined in subsection
  181  (2), or such taxable income of more than one taxpayer as
  182  provided in s. 220.131, for the taxable year, adjusted as
  183  follows:
  184         (a) Additions.—There shall be added to such taxable income:
  185         1. The amount of any tax upon or measured by income,
  186  excluding taxes based on gross receipts or revenues, paid or
  187  accrued as a liability to the District of Columbia or any state
  188  of the United States which is deductible from gross income in
  189  the computation of taxable income for the taxable year.
  190         2. The amount of interest which is excluded from taxable
  191  income under s. 103(a) of the Internal Revenue Code or any other
  192  federal law, less the associated expenses disallowed in the
  193  computation of taxable income under s. 265 of the Internal
  194  Revenue Code or any other law, excluding 60 percent of any
  195  amounts included in alternative minimum taxable income, as
  196  defined in s. 55(b)(2) of the Internal Revenue Code, if the
  197  taxpayer pays tax under s. 220.11(3).
  198         3. In the case of a regulated investment company or real
  199  estate investment trust, an amount equal to the excess of the
  200  net long-term capital gain for the taxable year over the amount
  201  of the capital gain dividends attributable to the taxable year.
  202         4. That portion of the wages or salaries paid or incurred
  203  for the taxable year which is equal to the amount of the credit
  204  allowable for the taxable year under s. 220.181. This
  205  subparagraph shall expire on the date specified in s. 290.016
  206  for the expiration of the Florida Enterprise Zone Act.
  207         5. That portion of the ad valorem school taxes paid or
  208  incurred for the taxable year which is equal to the amount of
  209  the credit allowable for the taxable year under s. 220.182. This
  210  subparagraph shall expire on the date specified in s. 290.016
  211  for the expiration of the Florida Enterprise Zone Act.
  212         6. The amount of emergency excise tax paid or accrued as a
  213  liability to this state under chapter 221 which tax is
  214  deductible from gross income in the computation of taxable
  215  income for the taxable year.
  216         7. That portion of assessments to fund a guaranty
  217  association incurred for the taxable year which is equal to the
  218  amount of the credit allowable for the taxable year.
  219         8. In the case of a nonprofit corporation which holds a
  220  pari-mutuel permit and which is exempt from federal income tax
  221  as a farmers’ cooperative, an amount equal to the excess of the
  222  gross income attributable to the pari-mutuel operations over the
  223  attributable expenses for the taxable year.
  224         9. The amount taken as a credit for the taxable year under
  225  s. 220.1895.
  226         10. Up to nine percent of the eligible basis of any
  227  designated project which is equal to the credit allowable for
  228  the taxable year under s. 220.185.
  229         11. The amount taken as a credit for the taxable year under
  230  s. 220.187.
  231         12. The amount taken as a credit for the taxable year under
  232  s. 220.192.
  233         13. The amount taken as a credit for the taxable year under
  234  s. 220.193.
  235         14. Any amount in excess of $25,000 allowable as a
  236  deduction for federal income tax purposes under s. 179 of the
  237  Internal Revenue Code of 1986, as amended, for the taxable year.
  238         15. Any amount allowable as a deduction for federal income
  239  tax purposes under s. 167 or s. 168 of the Internal Revenue Code
  240  of 1986, as amended, for the taxable year to the extent that
  241  such amount includes bonus depreciation allowable as deduction
  242  under s. 168(k).
  243         16.All expenses directly or indirectly related to a
  244  business asset which were treated as nonbusiness income that
  245  were deducted in the year of sale and the 2 previous years. Such
  246  recapture of expenses shall be made in the year the income is
  247  determined to be nonbusiness income and shall recapture those
  248  expenses deducted in the current and in the previous 2 years.
  249         (2) For purposes of this section, a taxpayer’s taxable
  250  income for the taxable year means taxable income as defined in
  251  s. 63 of the Internal Revenue Code and properly reportable for
  252  federal income tax purposes for the taxable year, but subject to
  253  the limitations set forth in paragraph (1)(b) with respect to
  254  the deductions provided by ss. 172 (relating to net operating
  255  losses), 170(d)(2) (relating to excess charitable
  256  contributions), 404(a)(1)(D) (relating to excess pension trust
  257  contributions), 404(a)(3)(A) and (B) (to the extent relating to
  258  excess stock bonus and profit-sharing trust contributions), and
  259  1212 (relating to capital losses) of the Internal Revenue Code,
  260  except that, subject to the same limitations, the term:
  261         (m)“Taxable income,” in the case of any partnership,
  262  organization, association, legal entity, or artificial person
  263  taxable as a corporation for federal income tax purposes, means
  264  taxable income determined as if such partnership, organization,
  265  association, legal entity, or artificial person were required to
  266  file or had filed a federal corporate income tax return under
  267  the Internal Revenue Code.
  268         (3)The restrictions in this subsection apply with respect
  269  to the deductibility of certain intangible expenses, interest
  270  expenses, and management fees involving a related entity.
  271         (a)As used in this subsection, the term:
  272         1.“Related entity” means any artificial entity that would
  273  be a member of the taxpayer’s affiliated group under s. 1504 of
  274  the Internal Revenue Code during all or any portion of the
  275  taxable year, except using an ownership percentage of 50 percent
  276  rather than 80 percent. A related entity includes any entity,
  277  other than a natural person, which would be included in the
  278  affiliated group based upon a 50 percent ownership percentage if
  279  it were organized as a corporation.
  280         2.“Intangible expenses” means the following described
  281  amounts to the extent these amounts are allowed as deductions in
  282  determining federal taxable income under the Internal Revenue
  283  Code before the application of any net operating loss deduction
  284  and special deductions for the taxable year:
  285         a.Expenses, losses, and costs directly or indirectly for,
  286  related to, or in association with the acquisition, use,
  287  maintenance, management, ownership, sale, exchange, or any other
  288  disposition of intangible property.
  289         b. Royalty, patent, technical, trademark, and copyright
  290  fees;
  291         c.Licensing fees; or
  292         d.Other substantially similar expenses and costs,
  293  including, but not limited to, interest and losses from
  294  factoring transactions.
  295         3.“Intangible property” means patents, patent
  296  applications, trade names, trademarks, service marks,
  297  copyrights, trade secrets, and substantially similar types of
  298  intangible assets.
  299         4.“Interest expenses” means amounts that are allowed as
  300  deductions under s. 163 of the Internal Revenue Code in
  301  determining federal taxable income before the application of any
  302  net operating loss deductions and special deductions for the
  303  taxable year.
  304         5.“Management fees” means expenses and costs paid for
  305  services, including, but not limited to, management overhead,
  306  management supervision, accounts receivable and payable,
  307  employee benefit plans, insurance, legal, payroll, data
  308  processing, purchasing, tax, financial and securities, billing,
  309  accounting, reporting and compliance services, or similar
  310  services, only to the extent that the amounts are allowed as a
  311  deduction or cost in determining taxable net income under the
  312  Internal Revenue Code before the application of any net
  313  operating loss deduction and special deductions for the taxable
  314  year.
  315         6.“Recipient” means a related entity that is paid an item
  316  of income that corresponds to an intangible expense, interest
  317  expense, or management fee.
  318         (b)Except as provided in paragraph (c), in determining its
  319  adjusted federal income under this section and s. 220.131, a
  320  corporation subject to tax shall add to its taxable income
  321  intangible expenses, interest expenses, and management fees that
  322  are paid, accrued, or incurred directly or indirectly with one
  323  or more related entities. For income received from a pass
  324  through entity or a disregarded entity, the corporation is
  325  deemed to have received its share of both the income and
  326  expenses of the pass-through entity or disregarded entity for
  327  purposes of this subsection.
  328         (c)Except as provided in paragraph (d), the addition of
  329  intangible expenses, interest expenses, and management fees
  330  otherwise required in a taxable year under this subsection for a
  331  specific related entity transaction is not required if:
  332         1.The taxpayer and the recipient are both included in the
  333  same Florida consolidated tax return filed under s. 220.131 for
  334  the taxable year;
  335         2.The taxpayer and the executive director or his or her
  336  designee agree in writing to alternative computations or
  337  adjustments. The executive director or his or her designee may
  338  approve such agreement only if the taxpayer has clearly
  339  established to the satisfaction of the executive director or his
  340  or her designee that the disallowance of the deduction is
  341  unreasonable and that the proposed alternative method of
  342  determining the measure of the tax accurately reflects the
  343  activity, business, income, and capital of the taxpayers within
  344  this state. The agreement must be signed by the executive
  345  director or his or her designee and may not exceed 4 years;
  346         3.The taxpayer makes a disclosure on its return and
  347  establishes by clear and convincing evidence that:
  348         a.The recipient was subject to an income tax or franchise
  349  tax measured in whole or part by net income in its state or
  350  country of commercial domicile. If the recipient is a foreign
  351  corporation, the foreign nation must have in force a
  352  comprehensive income tax treaty with the United States;
  353         b.The tax base for such tax included the intangible
  354  expense, management fee, or interest expense paid, accrued, or
  355  incurred by the taxpayer;
  356         c.The aggregate effective tax rate applied is no less than
  357  5.5 percent;
  358         d.The transaction did not have Florida tax avoidance as a
  359  principle purpose;
  360         e.The recipient regularly engages in the same business
  361  with third parties; and
  362         f.The transaction was made at a commercially reasonable
  363  rate and at arm’s length terms similar to those with third
  364  parties; or
  365         4.The taxpayer makes a disclosure on its return and
  366  establishes by clear and convincing evidence that:
  367         a.The related entity, during the same taxable year,
  368  directly or indirectly paid, received, or incurred the amount of
  369  the obligation to or from a person or entity that is not a
  370  related entity;
  371         b.The transaction was done for a valid business purpose;
  372         c.The payments are limited to a reimbursement of the
  373  amounts paid to a person or entity that is not a related party;
  374  and
  375         d.The unrelated entity regularly engages in the same
  376  business with third parties on a substantial basis.
  377         (d)The exceptions described in subparagraphs (c)3. and 4.
  378  do not apply:
  379         1.To interest paid by a taxpayer in connection with a debt
  380  incurred to acquire the taxpayer’s or a related entity’s assets
  381  or stock in a transaction referenced in s. 368 of the Internal
  382  Revenue Code. For purposes of this paragraph, acquisition
  383  interest paid by a taxpayer to a person or entity that is not a
  384  related entity shall be treated as if made to a related entity;
  385         2.To intangible property acquired directly or indirectly
  386  from the taxpayer or from a related entity;
  387         3.If the related entity is primarily engaged in managing,
  388  acquiring, or maintaining intangible property or related party
  389  financing and a primary purpose of the transaction was the
  390  avoidance of Florida tax; or
  391         4.In those instances where the taxpayer files with the
  392  related entity or the related entity files with another related
  393  entity an income tax return or report where such return or
  394  report is due because of the imposition of a tax on or measured
  395  by income, and where such income tax return or report results in
  396  the elimination of the tax effects from transactions directly or
  397  indirectly between the taxpayer and the related member.
  398         (e)To the extent that a taxpayer is required to make an
  399  adjustment under paragraphs (b) and (c) for a specific related
  400  entity transaction, the corresponding related entity shall make
  401  a corresponding subtraction to its taxable income, if subject to
  402  tax in Florida.
  403         (f)The amount of a taxpayer’s net operating loss carryover
  404  from tax years ending prior to December 31, 2009, to a tax year
  405  ending on or after December 31, 2009, shall be adjusted to
  406  account for the add back of intangible expenses, interest
  407  expenses, and management fees under this subsection. Under no
  408  circumstances may this recalculation increase the amount of a
  409  net operating loss carryover or deduction.
  410         (g)This subsection does not require a taxpayer to add to
  411  its Florida net income more than once any amount of interest
  412  expenses, intangible expenses, and management fees that the
  413  taxpayer pays, accrues, or incurs to a related entity.
  414         (h)This subsection does not allow any item to be deducted
  415  more than once, does not allow a deduction for any item that is
  416  excluded from income, and does not allow any item to be included
  417  in the Florida taxable income of more than one taxpayer.
  418         (i)This subsection does not limit or negate the executive
  419  director’s authority to make adjustments under s. 220.131(2), s.
  420  220.44, or s. 220.152.
  421         (j)Each taxpayer shall provide the following information
  422  to the department along with its tax return regarding each
  423  related entity transaction:
  424         a.The name of the recipient;
  425         b.The state or country of domicile of the recipient;
  426         c.The amount paid to the recipient; and
  427         d.A complete description of the payment made to the
  428  recipient.
  429         (k)Failure to add back an amount paid directly or
  430  indirectly to a related party or failure to provide complete
  431  information with the tax return is evidence of negligence within
  432  the meaning of s. 220.803(1).
  433         Section 8. Subsections (3), (4), and (5) of section
  434  220.131, Florida Statutes, are amended, and subsections (6) and
  435  (7) are added to that section, to read:
  436         220.131 Adjusted federal income; affiliated groups.—
  437         (3) The filing of a consolidated return for any taxable
  438  year shall require the filing of consolidated returns for all
  439  subsequent taxable years so long as the filing taxpayers remain
  440  members of the affiliated group or, in the case of a group
  441  having component members not subject to tax under this code, so
  442  long as a consolidated return is filed by such group for federal
  443  income tax purposes, unless the director consents to the filing
  444  of separate returns.
  445         (4) The computation of consolidated taxable income for the
  446  members of an affiliated group of corporations subject to tax
  447  hereunder shall be made in the same manner and under the same
  448  procedures, including all intercompany adjustments and
  449  eliminations, as are required for consolidating the incomes of
  450  affiliated corporations for the taxable year for federal income
  451  tax purposes in accordance with s. 1502 of the Internal Revenue
  452  Code, and the amount shown as consolidated taxable income shall
  453  be the amount subject to tax under this code. Notwithstanding
  454  the foregoing, a net operating loss that was incurred by a
  455  taxpayer before filing as a member of a consolidated group of
  456  corporations pursuant to this section is limited to that
  457  member’s taxable income included in the consolidated taxable
  458  income for the year in which a net operating loss carryover is
  459  sought to be used. If all members of the affiliated group filed
  460  separate Florida corporate income tax returns for all years from
  461  which a net operating loss carryover is available, this
  462  limitation does not apply.
  463         (5) Each taxpayer shall apportion adjusted federal income
  464  under s. 220.15 or s. 220.1505 as a member of an affiliated
  465  group which files a consolidated return under this section on
  466  the basis of apportionment factors described in s. 220.15 or s.
  467  220.1505. For the purposes of this subsection, each special
  468  industry member included in an affiliated group filing a
  469  consolidated return hereunder, which member would otherwise be
  470  permitted to use a special method of apportionment under s.
  471  220.151, shall construct the numerator of its sales, property,
  472  and payroll factors, respectively, by multiplying the
  473  denominator of each such factor by the premiums or revenue miles
  474  factor ratio otherwise applicable pursuant to s. 220.151 in the
  475  manner prescribed by the department by rule.
  476         (6)For taxable years ending on or after July 1, 2009,
  477  those members of an affiliated group of corporations that filed
  478  Florida consolidated corporate income tax returns pursuant to
  479  the election provided in s. 220.131(1), Florida Statutes (1985),
  480  which allowed such members to make an election within 90 days
  481  after December 20, 1984, or upon filing the member’s first
  482  return after December 20, 1984, whichever occurred later, are no
  483  longer eligible to file and shall cease filing a Florida
  484  consolidated corporate income tax return pursuant to that
  485  election.
  486         (7)The sales factor, as determined by s. 220.15(4), shall
  487  not include gross receipts from sales between affiliated
  488  corporations that file a consolidated return under this section.
  489  Such amounts shall be excluded from the sales factor even though
  490  income from such sales is included in the computation of taxable
  491  income described in subsection (4) and s. 1502 of the Internal
  492  Revenue Code and the regulations thereunder.
  493         Section 9. Section 220.15, Florida Statutes, is amended to
  494  read:
  495         220.15 Apportionment of adjusted federal income.—
  496         (1) Except as provided in ss. 220.1505, 220.151, and
  497  220.152, adjusted federal income as defined in s. 220.13 shall
  498  be apportioned to this state by taxpayers doing business within
  499  and without this state by multiplying it by an apportionment
  500  fraction composed of a sales factor representing 50 percent of
  501  the fraction, a property factor representing 25 percent of the
  502  fraction, and a payroll factor representing 25 percent of the
  503  fraction. If any factor described in subsection (2), subsection
  504  (4), or subsection (5) has a denominator that is zero or is
  505  determined by the department to be insignificant, the relative
  506  weights of the other factors in the denominator of the
  507  apportionment fraction shall be as follows:
  508         (a) If the denominators for any two factors are zero or are
  509  insignificant, the weighted percentage for the remaining factor
  510  shall be 100 percent.
  511         (b) If the denominator for the sales factor is zero or is
  512  insignificant, the weighted percentage for the property and
  513  payroll factors shall change from 25 percent to 50 percent,
  514  respectively.
  515         (c) If the denominator for either the property or payroll
  516  factor is zero or is insignificant, the weighted percentage for
  517  the other shall be 33 1/3 percent, and the weighted percentage
  518  for the sales factor shall be 66 2/3 percent.
  519         (2) The property factor is a fraction the numerator of
  520  which is the average value of the taxpayer’s real and tangible
  521  personal property owned or rented and used in this state during
  522  the taxable year or period and the denominator of which is the
  523  average value of such property owned or rented and used
  524  everywhere.
  525         (a) Real and tangible personal property owned by the
  526  taxpayer shall be valued at original cost. Real and tangible
  527  personal property rented by the taxpayer shall be valued at 8
  528  times the net annual rental rate paid by the taxpayer less any
  529  annual rental rate received from subrentals.
  530         (b) The average value of real and tangible personal
  531  property shall be determined by averaging the value at the
  532  beginning and the end of the taxable year or period, unless the
  533  department determines that an averaging of monthly values during
  534  the taxable year or period is reasonably required to reflect
  535  properly the average value of the taxpayer’s real and tangible
  536  personal property.
  537         (c) The property factor fraction shall not include any real
  538  or tangible personal property located in this state with respect
  539  to which it is certified to the Department of Revenue that such
  540  property is dedicated exclusively to research and development
  541  activities performed pursuant to sponsored research contracts
  542  conducted in conjunction with and through a university that is a
  543  member of the State University System or a nonpublic university
  544  that is chartered in Florida and conducts graduate programs at
  545  the professional or doctoral level. The Board of Governors of
  546  the State University System must certify the contracts for
  547  members of the State University System, and the president of the
  548  university must certify the contracts for a nonpublic
  549  university. As used in this paragraph, “sponsored research
  550  contract” means an agreement executed by parties that include at
  551  least the university and the taxpayer. Funding for sponsored
  552  research contracts may be provided from public or private
  553  sources.
  554         (3)The property factor used by a financial organization
  555  shall also include intangible personal property, except
  556  goodwill, which is owned and used in the business, valued at its
  557  tax basis for federal income tax purposes. Intangible personal
  558  property shall be in this state if it consists of any of the
  559  following:
  560         (a)Coin or currency located in this state;
  561         (b)Assets in the nature of loans, including balances due
  562  from depository institutions, repurchase agreements, federal
  563  funds sold, and bankers acceptances, which assets are located in
  564  this state; installment obligations on loans for which the
  565  customer initially applied at an office located in this state;
  566  or loans secured by mortgages, deeds of trust, or other liens
  567  upon real or tangible personal property located in this state;
  568         (c)A portion of a participation loan if the office that
  569  enters into the participation is located in this state;
  570         (d)Credit card receivables from customers who reside or
  571  who are commercially domiciled in this state;
  572         (e)Investments in securities that generate business income
  573  if the taxpayer’s commercial domicile is in the state, unless
  574  such securities have acquired a discrete business situs
  575  elsewhere;
  576         (f)Securities used to maintain reserves against deposits
  577  to meet federal or state deposit requirements, based on the
  578  ratio that total deposits in this state bear to total deposits
  579  everywhere;
  580         (g)Securities held by a state treasurer or other public
  581  official or pledged to secure public funds or trust funds
  582  deposited with the taxpayer if the office at which the secured
  583  deposits are maintained is in this state;
  584         (h)Leases of tangible personal property to another if the
  585  taxpayer’s commercial domicile is in the state, unless the
  586  taxpayer establishes that the location of the leased tangible
  587  personal property is in another state or states for the entire
  588  taxable year and the taxpayer is taxable in such other state or
  589  states;
  590         (i)Installment sale agreements originally executed by a
  591  taxpayer or its agent to sell real or tangible personal property
  592  located in this state; or
  593         (j)Any other intangible personal property located in this
  594  state which is used to generate business income.
  595         (3)(4) The payroll factor is a fraction the numerator of
  596  which is the total amount paid in this state during the taxable
  597  year or period by the taxpayer for compensation and the
  598  denominator of which is the total compensation paid everywhere
  599  during the taxable year or period.
  600         (a) As used in this subsection, the term “compensation”
  601  means wages, salaries, commissions, and any other form of
  602  remuneration paid to employees for personal services.
  603         (b) Compensation is paid in this state if:
  604         1. The employee’s service is performed entirely within the
  605  state; or
  606         2. The employee’s service is performed both within and
  607  without the state, but the service performed without the state
  608  is incidental to the employee’s service within the state; or
  609         3. Some of the employee’s service is performed in the
  610  state, and
  611         a. The base of operations or, if there is no base of
  612  operations, the place from which the service is directed or
  613  controlled is in the state, or
  614         b. The base of operations or the place from which the
  615  service is directed or controlled is not in any state in which
  616  some part of the service is performed and the employee’s
  617  residence is in this state.
  618         (c) The payroll factor fraction shall not include any
  619  compensation paid to any employee located in this state when it
  620  is certified to the Department of Revenue that such compensation
  621  was paid to employees dedicated exclusively to research and
  622  development activities performed pursuant to sponsored research
  623  contracts conducted in conjunction with and through a university
  624  that is a member of the State University System or a nonpublic
  625  university that is chartered in Florida and conducts graduate
  626  programs at the professional or doctoral level. The Board of
  627  Governors of the State University System must certify the
  628  contracts for members of the State University System, and the
  629  president of the university must certify the contracts for a
  630  nonpublic university. As used in this paragraph, “sponsored
  631  research contract” means an agreement executed by parties that
  632  include at least the university and the taxpayer. Funding for
  633  sponsored research contracts may be provided from public or
  634  private sources.
  635         (4)(5) The sales factor is a fraction the numerator of
  636  which is the total sales of the taxpayer in this state during
  637  the taxable year or period and the denominator of which is the
  638  total sales of the taxpayer everywhere during the taxable year
  639  or period.
  640         (a) As used in this subsection, the term “sales” means all
  641  gross receipts of the taxpayer except interest, dividends,
  642  rents, royalties, and gross receipts from the sale, exchange,
  643  maturity, redemption, or other disposition of securities.
  644  However:
  645         1. Rental income is included in the term if a significant
  646  portion of the taxpayer’s business consists of leasing or
  647  renting real or tangible personal property; and
  648         2. Royalty income is included in the term if a significant
  649  portion of the taxpayer’s business consists of dealing in or
  650  with the production, exploration, or development of minerals.
  651  Income from the sale, assignment, or licensing of intangible
  652  property is also included in the term.
  653         (b)1. Sales of tangible personal property occur in this
  654  state if the property is delivered or shipped to a purchaser
  655  within this state, regardless of the f.o.b. point, other
  656  conditions of the sale, or ultimate destination of the property,
  657  unless shipment is made via a common or contract carrier.
  658  However, for industries in SIC Industry Number 2037, if the
  659  ultimate destination of the product is to a location outside
  660  this state, regardless of the method of shipment or f.o.b.
  661  point, the sale shall not be deemed to occur in this state.
  662         2. When citrus fruit is delivered by a cooperative for a
  663  grower-member, by a grower-member to a cooperative, or by a
  664  grower-participant to a Florida processor, the sales factor for
  665  the growers for such citrus fruit delivered to such processor
  666  shall be the same as the sales factor for the most recent
  667  taxable year of that processor. That sales factor, expressed
  668  only as a percentage and not in terms of the dollar volume of
  669  sales, so as to protect the confidentiality of the sales of the
  670  processor, shall be furnished on the request of such a grower
  671  promptly after it has been determined for that taxable year.
  672         3. Reimbursement of expenses under an agency contract
  673  between a cooperative, a grower-member of a cooperative, or a
  674  grower and a processor is not a sale within this state.
  675         (c)Sales of services are in this state if the buyers
  676  receive the benefit of the services in this state. A buyer
  677  receives the benefit of services in this state if any one of the
  678  following applies:
  679         1.The service relates to real property located in this
  680  state;
  681         2.The service relates to tangible personal property
  682  located in this state at the time the service is received;
  683         3.The service relates to tangible personal property
  684  delivered directly or indirectly to customers in this state;
  685         4.The service is provided to an individual physically
  686  present in this state at the time the service is received; or
  687         5.The services is provided to a buyer engaged in a trade
  688  or business in this state and relates to that trade or business.
  689         (d)If the purchaser of a service receives the benefit of a
  690  service in more than one state, the gross receipts from the
  691  performance of the service are included in the numerator of the
  692  sales factor according to the portion of the service received in
  693  this state.
  694         (e)If the taxpayer is not subject to income tax in the
  695  state in which the benefit of the service is received, the
  696  benefit of the service is received in this state to the extent
  697  that the taxpayer’s employees or representatives performed
  698  services from a location in this state. Fifty percent of the
  699  taxpayer’s receipts that are considered received in this state
  700  under this paragraph shall be included in the numerator of the
  701  sales factor.
  702         (f)Sales that are not attributable or assignable to any
  703  taxing jurisdiction and sales that are attributable or
  704  assignable to jurisdictions where the taxpayer is not subject to
  705  an income tax, or where the jurisdiction does not impose an
  706  income tax, are eliminated from both the numerator and
  707  denominator of the sales factor.
  708         (c)Sales of a financial organization, including, but not
  709  limited to, banking and savings institutions, investment
  710  companies, real estate investment trusts, and brokerage
  711  companies, occur in this state if derived from:
  712         1.Fees, commissions, or other compensation for financial
  713  services rendered within this state;
  714         2.Gross profits from trading in stocks, bonds, or other
  715  securities managed within this state;
  716         3.Interest received within this state, other than interest
  717  from loans secured by mortgages, deeds of trust, or other liens
  718  upon real or tangible personal property located without this
  719  state, and dividends received within this state;
  720         4.Interest charged to customers at places of business
  721  maintained within this state for carrying debit balances of
  722  margin accounts, without deduction of any costs incurred in
  723  carrying such accounts;
  724         5.Interest, fees, commissions, or other charges or gains
  725  from loans secured by mortgages, deeds of trust, or other liens
  726  upon real or tangible personal property located in this state or
  727  from installment sale agreements originally executed by a
  728  taxpayer or the taxpayer’s agent to sell real or tangible
  729  personal property located in this state;
  730         6.Rents from real or tangible personal property located in
  731  this state; or
  732         7.Any other gross income, including other interest,
  733  resulting from the operation as a financial organization within
  734  this state.
  735  
  736  In computing the amounts under this paragraph, any amount
  737  received by a member of an affiliated group (determined under s.
  738  1504(a) of the Internal Revenue Code, but without reference to
  739  whether any such corporation is an “includable corporation”
  740  under s. 1504(b) of the Internal Revenue Code) from another
  741  member of such group shall be included only to the extent such
  742  amount exceeds expenses of the recipient directly related
  743  thereto.
  744         (6)The term “financial organization,” as used in this
  745  section, includes any bank, trust company, savings bank,
  746  industrial bank, land bank, safe-deposit company, private
  747  banker, savings and loan association, credit union, cooperative
  748  bank, small loan company, sales finance company, or investment
  749  company.
  750         (5)(7) The term “everywhere,” as used in the computation of
  751  apportionment factor denominators under this section, means “in
  752  all states of the United States, the District of Columbia, the
  753  Commonwealth of Puerto Rico, any territory or possession of the
  754  United States, and any foreign country, or any political
  755  subdivision of the foregoing.”
  756         (6)(8) No research and development activities certified as
  757  being conducted within this state in conjunction with and
  758  through a university that is a member of the State University
  759  System or a nonpublic university that is chartered in Florida
  760  and conducts graduate programs at the professional or doctoral
  761  level shall cause any corporation to become subject to the taxes
  762  imposed by this chapter if the corporation would otherwise not
  763  be subject to the tax levied under this chapter. The property
  764  and payroll eliminated from the apportionment formula pursuant
  765  to the provisions of paragraphs (2)(c) and (3)(c) (4)(c) shall
  766  be eliminated only for the duration of the contractual period
  767  specified in the contracts for the conduct of the sponsored
  768  research. The reduction in tax due as a result of the property
  769  and payroll eliminated from the apportionment formula pursuant
  770  to the provisions of paragraphs (2)(c) and (3)(c) (4)(c) shall
  771  not exceed the amount paid to the university for the conduct of
  772  the sponsored research. No sponsored research contracts in
  773  existence prior to July 1, 1998, shall be eligible to
  774  participate in the provisions of paragraphs (2)(c) and (3)(c)
  775  (4)(c).
  776         Section 10. Section 220.1501, Florida Statutes, is amended
  777  to read:
  778         220.1501 Rulemaking authority to implement s. 220.15(2)(c),
  779  (3)(c) (4)(c), and (8).—The Department of Revenue has authority
  780  to adopt rules pursuant to the Administrative Procedure Act to
  781  implement s. 220.15(2)(c), (3)(c) (4)(c), and (8), as created by
  782  chapter 98-325, Laws of Florida.
  783         Section 11. Section 220.1505, Florida Statutes, is created
  784  to read:
  785         220.1505Apportionment; financial institutions.—
  786         (1)APPORTIONMENT AND ALLOCATION.—
  787         (a)Except as otherwise specifically provided by law, a
  788  financial institution whose business activity is taxable both
  789  within and without this state shall allocate and apportion its
  790  adjusted federal income as provided in this section. A financial
  791  institution organized under the laws of a foreign country, the
  792  Commonwealth of Puerto Rico, or a territory or possession of the
  793  United States whose effectively connected income, as defined
  794  under the Internal Revenue Code, is taxable both within this
  795  state and within another state, other than the state in which it
  796  is organized, shall apportion its adjusted federal income as
  797  provided in this section.
  798         (b)Adjusted federal income shall be apportioned to this
  799  state by multiplying it by an apportionment fraction composed of
  800  a receipts factor representing 50 percent of the fraction, a
  801  property factor representing 25 percent of the fraction, and a
  802  payroll factor representing 25 percent of the fraction. If any
  803  factor described in subsection (3), subsection (4), or
  804  subsection (5) has a denominator that is zero or is determined
  805  by the department to be insignificant, the relative weights of
  806  the other factors in the denominator of the apportionment
  807  fraction shall be as follows:
  808         1.If the denominators for any two factors are zero or are
  809  insignificant, the weighted percentage for the remaining factor
  810  shall be 100 percent.
  811         2.If the denominator for the receipts factor is zero or
  812  insignificant, the weighted percentage for the property and
  813  payroll factors shall change from 25 percent to 50 percent,
  814  respectively.
  815         3.If the denominator for either the property or payroll
  816  factor is zero or insignificant, the weighted percentage for the
  817  other shall be 33 1/3 percent and the weighted percentage for
  818  the receipts factor shall be 66 2/3 percent.
  819         (c)Each factor shall be computed according to the method
  820  of accounting used by the taxpayer for the taxable year.
  821         (2)DEFINITIONS.—As used in this section, the term:
  822         (a)“Billing address” means the location indicated in the
  823  books and records of the taxpayer on the first day of the
  824  taxable year, or on such later date in the taxable year when the
  825  customer relationship began, as the address where any notice,
  826  statement, or bill relating to a customer’s account is mailed.
  827         (b)“Borrower or credit card holder located in this state”
  828  means:
  829         1.A borrower, other than a credit card holder, which is
  830  engaged in a trade or business and which maintains its
  831  commercial domicile in this state; or
  832         2.A borrower that is not engaged in a trade or business or
  833  a credit card holder whose billing address is in this state.
  834         (c)“Commercial domicile” means:
  835         1.The headquarters of the trade or business which is the
  836  place from which the trade or business is principally managed
  837  and directed; or
  838         2.If a taxpayer is organized under the laws of a foreign
  839  country, the Commonwealth of Puerto Rico, or any territory or
  840  possession of the United States, such taxpayer’s commercial
  841  domicile shall be deemed for the purposes of this section to be
  842  the state of the United States or the District of Columbia from
  843  which such taxpayer’s trade or business in the United States is
  844  principally managed and directed. It shall be presumed, subject
  845  to rebuttal, that the location from which the taxpayer’s trade
  846  or business is principally managed and directed is the state of
  847  the United States or the District of Columbia to which the
  848  greatest number of employees are regularly connected or out of
  849  which they are working, irrespective of where the services of
  850  such employees are performed, as of the last day of the taxable
  851  year.
  852         (d)“Compensation” means wages, salaries, commissions, and
  853  any other form of remuneration paid to employees for personal
  854  services that are included in such employee’s gross income under
  855  the Internal Revenue Code. In the case of employees not subject
  856  to the Internal Revenue Code, such as those employed in foreign
  857  countries, the determination of whether such payments would
  858  constitute gross income to such employees under the Internal
  859  Revenue Code shall be made as though such employees were subject
  860  to the Internal Revenue Code.
  861         (e)“Credit card” means credit, travel, or entertainment
  862  card.
  863         (f)“Credit card issuer’s reimbursement fee” means the fee
  864  a taxpayer receives from a merchant’s bank because one of the
  865  persons to whom the taxpayer has issued a credit card has
  866  charged merchandise or services to the credit card.
  867         (g)“Employee” means, with respect to a particular
  868  taxpayer, any individual who, under the usual common law rules
  869  applicable in determining the employer-employee relationship,
  870  has the status of an employee of that taxpayer.
  871         (h)“Financial institution” means:
  872         1.Any corporation or other business entity registered
  873  under state law as a bank holding company or registered under
  874  the Federal Bank Holding Company Act of 1956, as amended, or
  875  registered as a savings and loan holding company under the
  876  Federal National Housing Act, as amended.
  877         2.A national bank organized and existing as a national
  878  bank association pursuant to the provisions of the National Bank
  879  Act, 12 U.S.C. ss. 21 et seq.
  880         3.A savings association or federal savings bank as defined
  881  in the Federal Deposit Insurance Act, 12 U.S.C. s. 1813(b)(1).
  882         4.Any bank or thrift institution incorporated or organized
  883  under the laws of any state.
  884         5.Any corporation organized under the provisions of 12
  885  U.S.C. ss. 611-631.
  886         6.Any agency or branch of a foreign depository as defined
  887  in 12 U.S.C. s. 3101.
  888         7.A state credit union the loan assets of which exceed $50
  889  million as of the first day of its taxable year.
  890         8.A production credit association organized under the
  891  Federal Farm Credit Act of 1933, all of whose stock held by the
  892  Federal Production Credit Corporation has been retired.
  893         9.Any investment company.
  894         10.Any corporation whose voting stock is more than 50
  895  percent owned, directly or indirectly, by any person or business
  896  entity described in subparagraphs 1.-9.
  897         11.A corporation or other business entity that derives
  898  more than 50 percent of its total gross income for financial
  899  accounting purposes from finance leases. For purposes of this
  900  subsection, a “finance lease” means any lease transaction that
  901  is the functional equivalent of an extension of credit and that
  902  transfers substantially all of the benefits and risks incident
  903  to the ownership of property. The phrase includes any “direct
  904  financing lease” or “leverage lease” that meets the criteria of
  905  Financial Accounting Standards Board Statement No. 13,
  906  “Accounting for Leases” or any other lease that is accounted for
  907  as a financing lease by a lessor under generally accepted
  908  accounting principles. For this classification to apply:
  909         a.The average of the gross income in the current tax year
  910  and immediately preceding 2 tax years must satisfy the more than
  911  50 percent requirement; and
  912         b.Gross income from incidental or occasional transactions
  913  shall be disregarded; or
  914         12.Any other person or business entity that derives more
  915  than 50 percent of its gross income from activities that a
  916  person described in subparagraphs 2.-9. and 11. is authorized to
  917  transact. For the purpose of this subparagraph, the computation
  918  of gross income shall not include income from nonrecurring,
  919  extraordinary items. The department may exclude any person from
  920  the application of this subparagraph upon such person proving,
  921  by clear and convincing evidence, that the income-producing
  922  activity of such person is not in substantial competition with
  923  those persons described in subparagraphs 2.-9. and 11.
  924         (i)“Gross rents” means the actual sum of money or other
  925  consideration payable for the use or possession of property.
  926  “Gross rents” includes, but is not limited to:
  927         1.Any amount payable for the use or possession of real
  928  property or tangible property whether designated as a fixed sum
  929  of money or as a percentage of receipts, profits, or otherwise;
  930         2.Any amount payable as additional rent or in lieu of
  931  rent, such as interest, taxes, insurance, repairs, or any other
  932  amount required to be paid by the terms of a lease or other
  933  arrangement; and
  934         3.A proportionate part of the cost of any improvement to
  935  real property made by or on behalf of the taxpayer which reverts
  936  to the owner or lessor upon termination of a lease or other
  937  arrangement. The amount to be included in gross rents is the
  938  amount of amortization or depreciation allowed in computing the
  939  taxable income base for the taxable year. However, if a building
  940  is erected on leased land by or on behalf of the taxpayer, the
  941  value of the land is determined by multiplying the gross rent by
  942  eight and the value of the building is determined in the same
  943  manner as if owned by the taxpayer.
  944         4.The following are not included in the term “gross
  945  rents”:
  946         a.Reasonable amounts payable as separate charges for water
  947  and electric service furnished by the lessor;
  948         b.Reasonable amounts payable as service charges for
  949  janitorial services furnished by the lessor;
  950         c.Reasonable amounts payable for storage, if such amounts
  951  are payable for space not designated and not under the control
  952  of the taxpayer; and
  953         d.That portion of any rental payment which is applicable
  954  to the space subleased from the taxpayer and not used by it.
  955         (j)“Loan” means any extension of credit resulting from
  956  direct negotiations between the taxpayer and its customer, or
  957  the purchase, in whole or in part, of such extension of credit
  958  from another. Loans include participations, syndications, and
  959  leases treated as loans for federal income tax purposes. Loans
  960  shall not include: properties treated as loans under s. 595 of
  961  the Internal Revenue Code; futures or forward contracts;
  962  options; notional principal contracts such as swaps; credit card
  963  receivables, including purchased credit card relationships;
  964  noninterest bearing balances due from depository institutions;
  965  cash items in the process of collection; federal funds sold;
  966  securities purchased under agreements to resell; assets held in
  967  a trading account; securities; interests in a REMIC, or other
  968  mortgage-backed or asset-backed security; and other similar
  969  items.
  970         (k)“Loan secured by real property” means that 50 percent
  971  or more of the aggregate value of the collateral used to secure
  972  a loan or other obligation, when valued at fair market value as
  973  of the time the original loan or obligation was incurred, was
  974  real property.
  975         (l)“Merchant discount” means the fee, or negotiated
  976  discount, charged to a merchant by the taxpayer for the
  977  privilege of participating in a program whereby a credit card is
  978  accepted in payment for merchandise or services sold to the card
  979  holder.
  980         (m)“Participation” means an extension of credit in which
  981  an undivided ownership interest is held on a pro rata basis in a
  982  single loan or pool of loans and related collateral. In a loan
  983  participation, the credit originator initially makes the loan
  984  and then subsequently resells all or a portion of it to other
  985  lenders. The participation may or may not be known to the
  986  borrower.
  987         (n)“Person” means an individual, estate, trust,
  988  partnership, corporation, and any other business entity.
  989         (o)“Principal base of operations” with respect to
  990  transportation property means the place of more or less
  991  permanent nature from which the property is regularly directed
  992  or controlled. With respect to an employee, the “principal base
  993  of operations” means the place of more or less permanent nature
  994  from which the employee regularly:
  995         1.Starts his or her work and to which he or she
  996  customarily returns in order to receive instructions from his or
  997  her employer;
  998         2.Communicates with his or her customers or other persons;
  999  or
 1000         3.Performs any other functions necessary to the exercise
 1001  of his or her trade or profession at some other point or points.
 1002         (p) “Real property owned” and “tangible personal property
 1003  owned” mean real and tangible personal property, respectively:
 1004         1.On which the taxpayer may claim depreciation for federal
 1005  income tax purposes; or
 1006         2.To which the taxpayer holds legal title and on which no
 1007  other person may claim depreciation for federal income tax
 1008  purposes, or could claim depreciation if subject to federal
 1009  income tax. Real and tangible personal property do not include
 1010  coin, currency, or property acquired in lieu of or pursuant to a
 1011  foreclosure.
 1012         (q)“Regular place of business” means an office at which
 1013  the taxpayer carries on its business in a regular and systematic
 1014  manner and which is continuously maintained, occupied, and used
 1015  by employees of the taxpayer.
 1016         (r)“State” means a state of the United States, the
 1017  District of Columbia, the Commonwealth of Puerto Rico, any
 1018  territory or possession of the United States, or any foreign
 1019  country.
 1020         (s)“Syndication” means an extension of credit in which two
 1021  or more persons fund and each person is at risk only up to a
 1022  specified percentage of the total extension of credit or up to a
 1023  specified dollar amount.
 1024         (t)“Taxable” means:
 1025         1.That a taxpayer is subject in another state to a net
 1026  income tax, a franchise tax measured by net income, a franchise
 1027  tax for the privilege of doing business, a corporate stock tax
 1028  including a bank shares tax, a single business tax, an earned
 1029  surplus tax, or any tax that is imposed upon or measured by net
 1030  income; or
 1031         2.That another state has jurisdiction to subject the
 1032  taxpayer to any of such taxes regardless of whether, in fact,
 1033  the state does or does not.
 1034         (u)“Transportation property” means vehicles and vessels
 1035  capable of moving under their own power, such as aircraft,
 1036  trains, water vessels, and motor vehicles, as well as any
 1037  equipment or containers attached to such property, such as
 1038  rolling stock, barges, trailers, or the like.
 1039         (3)RECEIPTS FACTOR.—
 1040         (a)General.—The receipts factor is a fraction, the
 1041  numerator of which is the receipts of the taxpayer in this state
 1042  during the taxable year and the denominator of which is the
 1043  receipts of the taxpayer within and without this state during
 1044  the taxable year. The method of calculating receipts for
 1045  purposes of the denominator is the same as the method used in
 1046  determining receipts for purposes of the numerator. The receipts
 1047  factor shall include only those receipts described in this
 1048  subsection which constitute and are included in the computation
 1049  of adjusted federal income for the taxable year.
 1050         (b)Receipts from the lease of real property.—The numerator
 1051  of the receipts factor includes receipts from the lease or
 1052  rental of real property owned by the taxpayer if the property is
 1053  located within this state or receipts from the sublease of real
 1054  property if the property is located within this state.
 1055         (c)Receipts from the lease of tangible personal property.
 1056         1.Except as described in subparagraph 2., the numerator of
 1057  the receipts factor includes receipts from the lease or rental
 1058  of tangible personal property owned by the taxpayer if the
 1059  property is located within this state when it is first placed in
 1060  service by the lessee.
 1061         2.Receipts from the lease or rental of transportation
 1062  property owned by the taxpayer are included in the numerator of
 1063  the receipts factor to the extent that the property is used in
 1064  this state. The extent an aircraft is deemed to be used in this
 1065  state and the amount of receipts that are included in the
 1066  numerator of this state’s receipts factor is determined by
 1067  multiplying all the receipts from the lease or rental of the
 1068  aircraft by a fraction, the numerator of which is the number of
 1069  landings of the aircraft in this state and the denominator of
 1070  which is the total number of landings of the aircraft. If the
 1071  extent of the use of any transportation property within this
 1072  state cannot be determined, the property shall be deemed to be
 1073  used wholly in the state in which the property has its principal
 1074  base of operations. A motor vehicle shall be deemed to be used
 1075  wholly in the state in which it is registered.
 1076         (d)Interest from loans secured by real property.
 1077         1.The numerator of the receipts factor includes interest
 1078  and fees or penalties in the nature of interest from loans
 1079  secured by real property if the property is located within this
 1080  state. If the property is located both within this state and one
 1081  or more other states, the receipts described in this subsection
 1082  are included in the numerator of the receipts factor if more
 1083  than 50 percent of the fair market value of the real property is
 1084  located within this state. If more than 50 percent of the fair
 1085  market value of the real property is not located within any one
 1086  state, the receipts described in this subsection shall be
 1087  included in the numerator of the receipts factor if the borrower
 1088  is located in this state.
 1089         2.The determination of whether the real property securing
 1090  a loan is located within this state shall be made as of the time
 1091  the original agreement was made and any and all subsequent
 1092  substitutions of collateral shall be disregarded.
 1093         (e)Interest from loans not secured by real property.—The
 1094  numerator of the receipts factor includes interest and fees or
 1095  penalties in the nature of interest from loans not secured by
 1096  real property if the borrower is located in this state.
 1097         (f)Net gains from the sale of loans.—The numerator of the
 1098  receipts factor includes net gains from the sale of loans. Net
 1099  gains from the sale of loans includes income recorded under the
 1100  coupon stripping rules of s. 1286 of the Internal Revenue Code.
 1101         1.The amount of net gains, but not less than zero, from
 1102  the sale of loans secured by real property included in the
 1103  numerator is determined by multiplying such net gains by a
 1104  fraction the numerator of which is the amount included in the
 1105  numerator of the receipts factor pursuant to paragraph (d) and
 1106  the denominator of which is the total amount of interest and
 1107  fees or penalties in the nature of interest from loans secured
 1108  by real property.
 1109         2.The amount of net gains, but not less than zero, from
 1110  the sale of loans not secured by real property included in the
 1111  numerator is determined by multiplying such net gains by a
 1112  fraction the numerator of which is the amount included in the
 1113  numerator of the receipts factor pursuant to paragraph (e) and
 1114  the denominator of which is the total amount of interest and
 1115  fees or penalties in the nature of interest from loans not
 1116  secured by real property.
 1117         (g)Receipts from credit card receivables.—The numerator of
 1118  the receipts factor includes interest and fees or penalties in
 1119  the nature of interest from credit card receivables and receipts
 1120  from fees charged to card holders, such as annual fees, if the
 1121  billing address of the card holder is in this state.
 1122         (h)Net gains from the sale of credit card receivables.—The
 1123  numerator of the receipts factor includes net gains, but not
 1124  less than zero, from the sale of credit card receivables
 1125  multiplied by a fraction, the numerator of which is the amount
 1126  included in the numerator of the receipts factor pursuant to
 1127  paragraph (g) and the denominator of which is the taxpayer’s
 1128  total amount of interest and fees or penalties in the nature of
 1129  interest from credit card receivables and fees charged to card
 1130  holders.
 1131         (i)Credit card issuer’s reimbursement fees.—The numerator
 1132  of the receipts factor includes all credit card issuer’s
 1133  reimbursement fees multiplied by a fraction, the numerator of
 1134  which is the amount included in the numerator of the receipts
 1135  factor pursuant to paragraph (g) and the denominator of which is
 1136  the taxpayer’s total amount of interest and fees or penalties in
 1137  the nature of interest from credit card receivables and fees
 1138  charged to card holders.
 1139         (j)Receipts from merchant discount.—The numerator of the
 1140  receipts factor includes receipts from merchant discount if the
 1141  commercial domicile of the merchant is in this state. Such
 1142  receipts shall be computed net of any cardholder charge backs,
 1143  but shall not be reduced by any interchange transaction fees or
 1144  by any issuer’s reimbursement fees paid to another for charges
 1145  made by its card holders.
 1146         (k)Loan servicing fees.
 1147         1.a.The numerator of the receipts factor includes loan
 1148  servicing fees derived from loans secured by real property
 1149  multiplied by a fraction the numerator of which is the amount
 1150  included in the numerator of the receipts factor pursuant to
 1151  paragraph (d) and the denominator of which is the total amount
 1152  of interest and fees or penalties in the nature of interest from
 1153  loans secured by real property.
 1154         b.The numerator of the receipts factor includes loan
 1155  servicing fees derived from loans not secured by real property
 1156  multiplied by a fraction the numerator of which is the amount
 1157  included in the numerator of the receipts factor pursuant to
 1158  paragraph (e) and the denominator of which is the total amount
 1159  of interest and fees or penalties in the nature of interest from
 1160  loans not secured by real property.
 1161         2.In circumstances in which the taxpayer receives loan
 1162  servicing fees for servicing the secured or the unsecured loans
 1163  of another, the numerator of the receipts factor shall include
 1164  such fees if the borrower is located in this state.
 1165         (l)Receipts from services.—The numerator of the receipts
 1166  factor includes receipts from services not otherwise apportioned
 1167  under this subsection if the service is performed in this state.
 1168  If the service is performed both within and without this state,
 1169  the numerator of the receipts factor includes receipts from
 1170  services not otherwise apportioned under this section, if a
 1171  greater proportion of the income-producing activity is performed
 1172  in this state based on cost of performance.
 1173         (m)Receipts from investment assets and activities and
 1174  trading assets and activities.
 1175         1.Interest, dividends, net gains, but not less than zero,
 1176  and other income from investment assets and activities and from
 1177  trading assets and activities shall be included in the receipts
 1178  factor. Investment assets and activities and trading assets and
 1179  activities include, but are not limited to: investment
 1180  securities; trading account assets; federal funds; securities
 1181  purchased and sold under agreements to resell or repurchase;
 1182  options; futures contracts; forward contracts; notional
 1183  principal contracts such as swaps; equities; and foreign
 1184  currency transactions. With respect to the investment and
 1185  trading assets and activities described in sub-subparagraphs a.
 1186  and b., the receipts factor shall include the amounts described
 1187  in such sub-subparagraphs.
 1188         a.The receipts factor shall include the amount by which
 1189  interest from federal funds sold and securities purchased under
 1190  resale agreements exceeds interest expense on federal funds
 1191  purchased and securities sold under repurchase agreements.
 1192         b.The receipts factor shall include the amount by which
 1193  interest, dividends, gains, and other income from trading assets
 1194  and activities, including, but not limited to, assets and
 1195  activities in the matched book, in the arbitrage book, and
 1196  foreign currency transactions, exceed amounts paid in lieu of
 1197  interest, amounts paid in lieu of dividends, and losses from
 1198  such assets and activities.
 1199         2.The numerator of the receipts factor includes interest,
 1200  dividends, net gains, but not less than zero, and other income
 1201  from investment assets and activities and from trading assets
 1202  and activities described in subparagraph 1. which are
 1203  attributable to this state.
 1204         a.The amount of interest, dividends, net gains, but not
 1205  less than zero, and other income from investment assets and
 1206  activities in the investment account to be attributed to this
 1207  state and included in the numerator is determined by multiplying
 1208  all such income from such assets and activities by a fraction,
 1209  the numerator of which is the average value of such assets that
 1210  are properly assigned to a regular place of business of the
 1211  taxpayer within this state and the denominator of which is the
 1212  average value of all such assets.
 1213         b.The amount of interest from federal funds sold and
 1214  purchased and from securities purchased under resale agreements
 1215  and securities sold under repurchase agreements attributable to
 1216  this state and included in the numerator is determined by
 1217  multiplying the amount described in sub-subparagraph 1.a. from
 1218  such funds and such securities by a fraction, the numerator of
 1219  which is the average value of federal funds sold and securities
 1220  purchased under agreements to resell which are properly assigned
 1221  to a regular place of business of the taxpayer within this state
 1222  and the denominator of which is the average value of all such
 1223  funds and such securities.
 1224         c.The amount of interest, dividends, gains, and other
 1225  income from trading assets and activities, including, but not
 1226  limited to, assets and activities in the matched book, in the
 1227  arbitrage book, and foreign currency transactions, but excluding
 1228  amounts described in sub-subparagraphs a. or b., attributable to
 1229  this state and included in the numerator is determined by
 1230  multiplying the amount described in sub-subparagraph 1.b. by a
 1231  fraction, the numerator of which is the average value of such
 1232  trading assets that are properly assigned to a regular place of
 1233  business of the taxpayer within this state and the denominator
 1234  of which is the average value of all such assets.
 1235         d.For purposes of this paragraph, average value shall be
 1236  determined using the rules for determining the average value of
 1237  tangible personal property set forth in paragraphs (4)(c) and
 1238  (d).
 1239         3.In lieu of using the method set forth in subparagraph
 1240  2., the taxpayer may elect, or the department may require in
 1241  order to fairly represent the business activity of the taxpayer
 1242  in this state, the use of the method set forth in this
 1243  subparagraph.
 1244         a.The amount of interest, dividends, net gains, but not
 1245  less than zero, and other income from investment assets and
 1246  activities in the investment account to be attributed to this
 1247  state and included in the numerator is determined by multiplying
 1248  all such income from such assets and activities by a fraction,
 1249  the numerator of which is the gross income from such assets and
 1250  activities that are properly assigned to a regular place of
 1251  business of the taxpayer within this state and the denominator
 1252  of which is the gross income from all such assets and
 1253  activities.
 1254         b.The amount of interest from federal funds sold and
 1255  purchased and from securities purchased under resale agreements
 1256  and securities sold under repurchase agreements attributable to
 1257  this state and included in the numerator is determined by
 1258  multiplying the amount described in sub-subparagraph 1.a. from
 1259  such funds and such securities by a fraction, the numerator of
 1260  which is the gross income from such funds and such securities
 1261  that are properly assigned to a regular place of business of the
 1262  taxpayer within this state and the denominator of which is the
 1263  gross income from all such funds and such securities.
 1264         c.The amount of interest, dividends, gains, and other
 1265  income from trading assets and activities, including, but not
 1266  limited to, assets and activities in the matched book, in the
 1267  arbitrage book, and foreign currency transactions, but excluding
 1268  amounts described in sub-subparagraph a. or sub-subparagraph b.,
 1269  attributable to this state and included in the numerator is
 1270  determined by multiplying the amount described in sub
 1271  subparagraph 1.b. by a fraction, the numerator of which is the
 1272  gross income from such trading assets and activities that are
 1273  properly assigned to a regular place of business of the taxpayer
 1274  within this state and the denominator of which is the gross
 1275  income from all such assets and activities.
 1276         4.If the taxpayer elects or is required by the department
 1277  to use the method set forth in subparagraph 3., it shall use
 1278  this method on all subsequent returns unless the taxpayer
 1279  receives prior permission from the department to use, or the
 1280  department requires, a different method.
 1281         5.The taxpayer has the burden of proving that an
 1282  investment asset or activity or trading asset or activity was
 1283  properly assigned to a regular place of business outside this
 1284  state by demonstrating that the day-to-day decisions regarding
 1285  the asset or activity occurred at a regular place of business
 1286  outside this state. If the day-to-day decisions regarding an
 1287  investment asset or activity or trading asset or activity occur
 1288  at more than one regular place of business and one such regular
 1289  place of business is in this state and one such regular place of
 1290  business is outside this state, such asset or activity shall be
 1291  considered to be located at the regular place of business of the
 1292  taxpayer where the investment or trading policies or guidelines
 1293  with respect to the asset or activity are established. Unless
 1294  the taxpayer demonstrates to the contrary, such policies and
 1295  guidelines shall be presumed to be established at the commercial
 1296  domicile of the taxpayer.
 1297         (n)Attribution of certain receipts to commercial
 1298  domicile.—All receipts that would be assigned under this section
 1299  to a state in which the taxpayer is not taxable shall be
 1300  included in the numerator of the receipts factor, if the
 1301  taxpayer’s commercial domicile is in this state.
 1302         (4)PROPERTY FACTOR.—
 1303         (a)General.—The property factor is a fraction, the
 1304  numerator of which is the average value of real property and
 1305  tangible personal property rented to the taxpayer which is
 1306  located or used within this state during the taxable year, the
 1307  average value of the taxpayer’s real and tangible personal
 1308  property that is owned and located or used within this state
 1309  during the taxable year, and the average value of the taxpayer’s
 1310  loans and credit card receivables that are located within this
 1311  state during the taxable year, and the denominator of which is
 1312  the average value of all such property that is located or used
 1313  within and without this state during the taxable year.
 1314         (b)Property included.—The property factor shall include
 1315  only property the income or expenses of which are included, or
 1316  would have been included if not fully depreciated or expensed,
 1317  or depreciated or expensed to a nominal amount, in the
 1318  computation of the adjusted federal income for the taxable year.
 1319         (c)Value of property owned by the taxpayer.
 1320         1.The value of real property and tangible personal
 1321  property owned by the taxpayer is the original cost or other
 1322  basis of such property for federal income tax purposes without
 1323  regard to depletion, depreciation, or amortization.
 1324         2.Loans are valued at their outstanding principal balance,
 1325  without regard to any reserve for bad debts. If a loan is
 1326  charged off in whole or in part for federal income tax purposes,
 1327  the portion of the loan charged off is not outstanding. A
 1328  specifically allocated reserve established pursuant to
 1329  regulatory or financial accounting guidelines which is treated
 1330  as charged off for federal income tax purposes shall be treated
 1331  as charged off for purposes of this section.
 1332         3.Credit card receivables are valued at their outstanding
 1333  principal balance, without regard to any reserve for bad debts.
 1334  If a credit card receivable is charged off in whole or in part
 1335  for federal income tax purposes, the portion of the receivable
 1336  charged off is not outstanding.
 1337         (d)Average value of property owned by the taxpayer.—The
 1338  average value of property owned by the taxpayer is computed on
 1339  an annual basis by adding the value of the property on the first
 1340  day of the taxable year and the value on the last day of the
 1341  taxable year and dividing the sum by two. If averaging on this
 1342  basis does not properly reflect average value, the department
 1343  may require averaging on a more frequent basis. The taxpayer may
 1344  elect to average on a more frequent basis. When averaging on a
 1345  more frequent basis is required by the department or is elected
 1346  by the taxpayer, the same method of valuation must be used
 1347  consistently by the taxpayer with respect to property within and
 1348  without this state and on all subsequent returns unless the
 1349  taxpayer receives prior permission from the department or the
 1350  department requires a different method of determining average
 1351  value.
 1352         (e)Average value of real property and tangible personal
 1353  property rented to the taxpayer.
 1354         1.The average value of real property and tangible personal
 1355  property that the taxpayer has rented from another and that is
 1356  not treated as property owned by the taxpayer for federal income
 1357  tax purposes shall be determined annually by multiplying the
 1358  gross rents payable during the taxable year by eight.
 1359         2.If the use of the general method described in this
 1360  subsection results in inaccurate valuations of rented property,
 1361  any other method that properly reflects the value may be adopted
 1362  by the department or by the taxpayer when approved in writing by
 1363  the department. Once approved, such other method of valuation
 1364  must be used on all subsequent returns unless the taxpayer
 1365  receives prior approval from the department or the department
 1366  requires a different method of valuation.
 1367         (f)Location of real property and tangible personal
 1368  property owned by or rented to the taxpayer.
 1369         1.Except as described in subparagraph 2., real property
 1370  and tangible personal property owned by or rented to the
 1371  taxpayer is considered to be located within this state if it is
 1372  physically located, situated, or used within this state.
 1373         2.Transportation property is included in the numerator of
 1374  the property factor to the extent that the property is used in
 1375  this state. The extent an aircraft is deemed to be used in this
 1376  state and the amount of value that is included in the numerator
 1377  of this state’s property factor is determined by multiplying the
 1378  average value of the aircraft by a fraction, the numerator of
 1379  which is the number of landings of the aircraft in this state
 1380  and the denominator of which is the total number of landings of
 1381  the aircraft everywhere. If the extent of the use of any
 1382  transportation property within this state cannot be determined,
 1383  the property shall be deemed to be used wholly in the state in
 1384  which the property has its principal base of operations. A motor
 1385  vehicle shall be deemed to be used wholly in the state in which
 1386  it is registered.
 1387         (g)Location of loans.
 1388         1.a.A loan is considered to be located within this state
 1389  if it is properly assigned to a regular place of business of the
 1390  taxpayer within this state.
 1391         b.A loan is properly assigned to the regular place of
 1392  business with which it has a preponderance of substantive
 1393  contacts. A loan assigned by the taxpayer to a regular place of
 1394  business without the state shall be presumed to have been
 1395  properly assigned if:
 1396         (I)The taxpayer has assigned, in the regular course of its
 1397  business, such loan on its records to a regular place of
 1398  business consistent with federal or state regulatory
 1399  requirements;
 1400         (II)Such assignment on its records is based upon
 1401  substantive contacts of the loan to such regular place of
 1402  business; and
 1403         (III)The taxpayer uses said records reflecting assignment
 1404  of loans for the filing of all state and local tax returns for
 1405  which an assignment of loans to a regular place of business is
 1406  required.
 1407         c.The presumption of proper assignment of a loan provided
 1408  in sub-subparagraph b. may be rebutted upon a showing by the
 1409  department, supported by a preponderance of the evidence, that
 1410  the preponderance of substantive contacts regarding such loan
 1411  did not occur at the regular place of business to which it was
 1412  assigned on the taxpayer’s records. When such presumption has
 1413  been rebutted, the loan shall be located within this state if:
 1414         (I)The taxpayer had a regular place of business within
 1415  this state at the time the loan was made; and
 1416         (II)The taxpayer fails to show, by a preponderance of the
 1417  evidence, that the preponderance of substantive contacts
 1418  regarding such loan did not occur within this state.
 1419         2.In the case of a loan that is assigned by the taxpayer
 1420  to a place without this state which is not a regular place of
 1421  business, it shall be presumed, subject to rebuttal by the
 1422  taxpayer on a showing supported by the preponderance of
 1423  evidence, that the preponderance of substantive contacts
 1424  regarding the loan occurred within this state if, at the time
 1425  the loan was made the taxpayer’s commercial domicile, as defined
 1426  by paragraph (2)(c), was within this state.
 1427         3.To determine the state in which the preponderance of
 1428  substantive contacts relating to a loan have occurred, the facts
 1429  and circumstances regarding the loan at issue shall be reviewed
 1430  on a case-by-case basis and consideration shall be given to such
 1431  activities as the solicitation, investigation, negotiation,
 1432  approval, and administration of the loan. The terms
 1433  “solicitation,” “investigation,” “negotiation,” “approval,” and
 1434  “administration” are defined as follows:
 1435         a.Solicitation is either active or passive. Active
 1436  solicitation occurs when an employee of the taxpayer initiates
 1437  the contact with the customer. Such activity is located at the
 1438  regular place of business that the taxpayer’s employee is
 1439  regularly connected with or working out of, regardless of where
 1440  the services of such employee were actually performed. Passive
 1441  solicitation occurs when the customer initiates the contact with
 1442  the taxpayer. If the customer’s initial contact was not at a
 1443  regular place of business of the taxpayer, the regular place of
 1444  business, if any, where the passive solicitation occurred is
 1445  determined by the facts in each case.
 1446         b.Investigation is the procedure whereby employees of the
 1447  taxpayer determine the credit worthiness of the customer, as
 1448  well as the degree of risk involved in making a particular
 1449  agreement. Such activity is located at the regular place of
 1450  business that the taxpayer’s employees are regularly connected
 1451  with or working out of, regardless of where the services of such
 1452  employees were actually performed.
 1453         c.Negotiation is the procedure whereby employees of the
 1454  taxpayer and its customer determine the terms of the agreement,
 1455  such as the amount, duration, interest rate, frequency of
 1456  repayment, currency denomination, and security required. Such
 1457  activity is located at the regular place of business that the
 1458  taxpayer’s employees are regularly connected with or working out
 1459  of, regardless of where the services of such employees were
 1460  actually performed.
 1461         d.Approval is the procedure whereby employees or the board
 1462  of directors of the taxpayer make the final determination
 1463  whether to enter into the agreement. Such activity is located at
 1464  the regular place of business that the taxpayer’s employees are
 1465  regularly connected with or working out of, regardless of where
 1466  the services of such employees were actually performed. If the
 1467  board of directors makes the final determination, such activity
 1468  is located at the commercial domicile of the taxpayer.
 1469         e.Administration is the process of managing the account.
 1470  This process includes bookkeeping, collecting the payments,
 1471  corresponding with the customer, reporting to management
 1472  regarding the status of the agreement, and proceeding against
 1473  the borrower or the security interest if the borrower is in
 1474  default. Such activity is located at the regular place of
 1475  business that oversees this activity.
 1476         (h)Location of credit card receivables.—For purposes of
 1477  determining the location of credit card receivables, credit card
 1478  receivables shall be treated as loans and are subject to the
 1479  provisions of paragraph (g).
 1480         (i)Period for which properly assigned loan remains
 1481  assigned.—A loan that has been properly assigned to a state
 1482  shall, absent any change of material fact, remain assigned to
 1483  the state for the length of the original term of the loan.
 1484  Thereafter, the loan may be properly assigned to another state
 1485  if the loan has a preponderance of substantive contact to a
 1486  regular place of business there.
 1487         (5)PAYROLL FACTOR.—
 1488         (a)General.—The payroll factor is a fraction, the
 1489  numerator of which is the total amount paid in this state during
 1490  the taxable year by the taxpayer for compensation and the
 1491  denominator of which is the total compensation paid both within
 1492  and without this state during the taxable year. The payroll
 1493  factor shall include only that compensation included in the
 1494  computation of adjusted federal income for the taxable year.
 1495         (b)Compensation relating to nonbusiness income and
 1496  independent contractors.—The compensation of any employee for
 1497  services or activities that are connected with the production of
 1498  nonbusiness income, or income that is not includable in adjusted
 1499  federal income, and payments made to any independent contractor
 1500  or any other person not properly classifiable as an employee
 1501  shall be excluded from both the numerator and denominator of the
 1502  factor.
 1503         (c)When compensation is paid in this state.—Compensation
 1504  is paid in this state if any one of the following tests, applied
 1505  consecutively, is met:
 1506         1.The employee’s services are performed entirely within
 1507  this state.
 1508         2.The employee’s services are performed both within and
 1509  without the state, but the service performed without the state
 1510  is incidental to the employee’s service within the state. The
 1511  term “incidental” means any service that is temporary or
 1512  transitory in nature or that is rendered in connection with an
 1513  isolated transaction.
 1514         3.If the employee’s services are performed both within and
 1515  without this state, the employee’s compensation shall be
 1516  attributed to this state:
 1517         a.If the employee’s principal base of operations is within
 1518  this state;
 1519         b.If there is no principal base of operations in any state
 1520  in which some part of the services are performed, but the place
 1521  from which the services are directed or controlled is in this
 1522  state; or
 1523         c.If the principal base of operations and the place from
 1524  which the services are directed or controlled are not in any
 1525  state in which some part of the service is performed but the
 1526  employee’s residence is in this state.
 1527         Section 12. Subsections (2) and (3) of section 220.151,
 1528  Florida Statutes, are amended to read:
 1529         220.151 Apportionment; methods for special industries.—
 1530         (2) The tax base for a taxpayer furnishing transportation
 1531  services other than by air, for the purpose of computing a tax
 1532  on those activities, shall be apportioned to this state by
 1533  multiplying such base by a fraction the numerator of which is
 1534  the revenue miles of the taxpayer in this state and the
 1535  denominator of which is the revenue miles of the taxpayer
 1536  everywhere. The term “revenue miles in this state” also includes
 1537  all miles traversed between points in this state, even though
 1538  the route of travel is not wholly over the land mass of the
 1539  state.
 1540         (a) For transportation other than by pipeline or by air, a
 1541  revenue mile is the transportation of one passenger or 1 net ton
 1542  of freight the distance of 1 mile for a consideration. When a
 1543  taxpayer is engaged in the transportation of both passengers and
 1544  freight, the fraction shall be determined by means of an average
 1545  of the passenger revenue mile fraction and the freight revenue
 1546  mile fraction, weighted to reflect the taxpayer’s relative
 1547  railway operating income from total passenger and total freight
 1548  service as reported to the United States Department of
 1549  Transportation Interstate Commerce Commission, in the case of
 1550  transportation by railroad, or weighted to reflect the
 1551  taxpayer’s relative gross receipts from passenger and freight
 1552  transportation, in case of transportation other than by
 1553  railroad.
 1554         (b) For transportation by pipeline, a revenue mile is the
 1555  transportation by pipeline of 1 barrel of oil, 1,000 cubic feet
 1556  of gas, or any specified quantity of any other substance the
 1557  distance of 1 mile for a consideration.
 1558         (c) The tax base for a taxpayer furnishing transportation
 1559  services by air, for purposes of computing a tax on those
 1560  activities, shall be apportioned to this state by multiplying
 1561  such base by a fraction the numerator of which is the number of
 1562  takeoffs and landings in this state and the denominator is the
 1563  number of takeoffs and landings everywhere. For purposes of
 1564  paragraph (a), in computing the revenue miles of any taxpayer
 1565  engaged in furnishing air or sea transportation services, the
 1566  “revenue miles in this state” shall include all miles traversed
 1567  within the area bounded on the west by the meridian of longitude
 1568  87°30′ west from Greenwich, bounded on the north by the northern
 1569  land border of this state or the parallel of latitude 31° north
 1570  from the equator, bounded on the east by the meridian of
 1571  longitude 80° west from Greenwich, and bounded on the south by
 1572  the parallel of latitude 23°30′ north from the equator as the
 1573  case may be. The “revenue miles in this state” shall also
 1574  include all miles traversed between points in this state, even
 1575  though the route of travel is not wholly over the land mass of
 1576  the state. The department may prescribe standard mileage tables
 1577  for the purpose of determining revenue miles in the state under
 1578  this paragraph, rather than requiring taxpayers to compute from
 1579  their records the actual number of miles traversed within such
 1580  boundaries or points from time to time.
 1581         (d)For taxpayers furnishing transportation services by
 1582  sea, revenue miles within this state shall be miles traversed
 1583  within the constitutional boundaries of Florida.
 1584         (e)For purposes of this subsection, revenue miles not
 1585  allocable or apportionable to any taxing jurisdiction, otherwise
 1586  known as “nowhere miles,” are eliminated from both the numerator
 1587  and denominator of the apportionment computation.
 1588         (f)(d) For purposes of this subsection, the term “taxpayer
 1589  furnishing transportation services” includes taxpayers engaged
 1590  exclusively in interstate commerce.
 1591         (3) For any taxable year beginning on or after January 1,
 1592  1999, a citrus processing company may, if required to apportion
 1593  its taxable net income pursuant to the three-factor
 1594  apportionment method set forth in s. 220.15(1), elect to have
 1595  such apportionment determined for that taxable year solely by
 1596  use of the sales factor, as set forth in s. 220.15(4) s.
 1597  220.15(5). The election shall be made by the filing of a return
 1598  for the taxable year utilizing this method.
 1599         Section 13. Section 220.152, Florida Statutes, is amended
 1600  to read:
 1601         220.152 Apportionment; other methods.—If the apportionment
 1602  methods of ss. 220.15, 220.1505, and 220.151 do not fairly
 1603  represent the extent of a taxpayer’s tax base attributable to
 1604  this state, the taxpayer may petition for, or the department may
 1605  require, in respect to all or any part of the taxpayer’s tax
 1606  base, if reasonable:
 1607         (1) Separate accounting;
 1608         (2) The exclusion of any one or more factors;
 1609         (3) The inclusion of one or more additional factors which
 1610  will fairly represent the taxpayer’s tax base attributable to
 1611  this state; or
 1612         (4) The employment of any other method which will produce
 1613  an equitable apportionment.
 1614         Section 14. Section 213.054, Florida Statutes, is repealed.
 1615         Section 15. Subsections (3) and (5) of section 220.62,
 1616  Florida Statutes, are repealed.
 1617         Section 16. Subsection (5) of section 220.63, Florida
 1618  Statutes, is repealed.
 1619         Section 17. Section 220.64, Florida Statutes, is amended to
 1620  read:
 1621         220.64 Other provisions applicable to franchise tax.—To the
 1622  extent that they are not manifestly incompatible with the
 1623  provisions of this part, parts I, III, IV, V, VI, VIII, IX, and
 1624  X of this code and ss. 220.12, 220.13, 220.15, 220.1505, and
 1625  220.16 apply to the franchise tax imposed by this part. Under
 1626  rules prescribed in s. 220.131, a consolidated return may be
 1627  filed by any affiliated group of corporations composed of one or
 1628  more banks or savings associations, its or their Florida parent
 1629  corporation, and any nonbank or nonsavings subsidiaries of such
 1630  parent corporation.
 1631         Section 18. Section 220.51, Florida Statutes, is amended to
 1632  read:
 1633         220.51 Promulgation of rules and regulations.—
 1634         (1) In accordance with the Administrative Procedure Act,
 1635  chapter 120, the department is authorized to make, promulgate,
 1636  and enforce such reasonable rules and regulations, and to
 1637  prescribe such forms relating to the administration and
 1638  enforcement of the provisions of this code, as it may deem
 1639  appropriate, including:
 1640         (a)(1) Rules for initial implementation of this code and
 1641  for taxpayers’ transitional taxable years commencing before and
 1642  ending after January 1, 1972;
 1643         (b)(2) Rules or regulations to clarify whether certain
 1644  groups, organizations, or associations formed under the laws of
 1645  this state or any other state, country, or jurisdiction shall be
 1646  deemed “taxpayers” for the purposes of this code, in accordance
 1647  with the legislative declarations of intent in s. 220.02; and
 1648         (c)(3) Regulations relating to consolidated reporting for
 1649  affiliated groups of corporations, in order to provide for an
 1650  equitable and just administration of this code with respect to
 1651  multicorporate taxpayers.
 1652         (2)The department may adopt rules pursuant to ss.
 1653  120.536(1) and 120.54 to administer this chapter, including
 1654  rules interpreting each definition used in this chapter and
 1655  rules for interpreting the reasonable attribution of intangible
 1656  property to income-producing activity.
 1657         Section 19. (1)It is the intent of the Legislature to
 1658  require all corporations filing Florida nexus group corporate
 1659  income tax returns to either file separate Florida income tax
 1660  returns or to make an election to file a consolidated Florida
 1661  income tax returns composed of the identical component members
 1662  to those that have consolidated their taxable incomes for
 1663  federal income tax purposes.
 1664         (2)It is further the intent of the Legislature to clarify
 1665  that the amendments to ss. 220.23 and 220.809, Florida Statutes,
 1666  made by sections 44 and 45 of chapter 2002-218, Laws of Florida,
 1667  were intended to apply to all notifications of adjustments
 1668  required to be reported on or after January 1, 2003, by s.
 1669  220.23, Florida Statutes, and that those amendments were
 1670  intended to apply retroactively to all tax years represented by
 1671  such notifications and returns, including tax years prior to
 1672  January 1, 2003. It is the intent of the Legislature that this
 1673  clarification applies retroactively to January 1, 2003, and
 1674  applies retroactively to all returns and notices required to be
 1675  filed under s. 220.23, Florida Statutes, on or after January 1,
 1676  2003.
 1677         (3)It is further the intent of the Legislature that the
 1678  amendments made by sections 5, 6, and 7 of this act to ss.
 1679  220.02(1), 220.03(1)(e) and (6), and 220.13(2)(a), Florida
 1680  Statutes, are remedial in nature and apply retroactively to tax
 1681  years beginning after December 31, 2000.
 1682         Section 20. This act shall take effect upon becoming a law,
 1683  and applies to tax years ending on or after December 31, 2009,
 1684  except as otherwise expressly provided in section 18 of this
 1685  act.
 1686  
 1687  ================= T I T L E  A M E N D M E N T ================
 1688         And the title is amended as follows:
 1689         Delete everything before the enacting clause
 1690  and insert:
 1691                        A bill to be entitled                      
 1692         An act relating to corporate income tax; creating the
 1693         “Florida Fair Business Competition Act”; amending s.
 1694         196.012, F.S.; conforming cross-references; amending
 1695         ss. 213.053 and 213.054, F.S.; conforming provisions
 1696         to the repeal of provisions allowing certain
 1697         deductions by certain financial institutions; amending
 1698         s. 220.02, F.S.; revising legislative intent with
 1699         respect to the classifications of organizations for
 1700         purposes of the corporate income tax; amending s.
 1701         220.03, F.S.; redefining the terms “corporation” and
 1702         “nonbusiness income”; providing requirements for the
 1703         classification of corporations that are partners in
 1704         partnerships; defining the term “tiered partnership
 1705         arrangement”; amending s. 220.13, F.S.; defining the
 1706         term “adjusted federal income” with respect to certain
 1707         expenses related to a business asset; defining the
 1708         term “taxable income” for purposes of certain
 1709         corporate entities; providing certain restrictions
 1710         with respect to the deductibility of intangible
 1711         expenses, interest expenses, and management fees;
 1712         providing requirements for filing tax returns;
 1713         providing for making certain calculations and
 1714         providing for certain deductions; amending s. 220.131,
 1715         F.S.; providing a limitation on the net operating loss
 1716         that may be claimed by a member of an affiliated
 1717         group; providing for the expiration of eligibility for
 1718         a specified election with respect to certain tax
 1719         filings; requiring that certain gross receipts be
 1720         excluded from sales between affiliated corporations
 1721         for purposes of determining taxable income; amending
 1722         s. 220.15, F.S.; revising requirements governing the
 1723         apportionment of adjusted federal income; clarifying
 1724         circumstances under which a sale of services occurs in
 1725         the state; amending s. 220.1501, F.S.; conforming
 1726         cross-references; creating s. 220.1505, F.S.;
 1727         providing requirements for the apportionment of income
 1728         of a financial institution whose business activity is
 1729         taxable within and without the state; providing
 1730         definitions; providing apportionment factors with
 1731         respect to receipts, property, and payroll; amending
 1732         s. 220.151, F.S.; providing for the apportionment of
 1733         the tax base for taxpayers furnishing certain
 1734         transportation services; defining the term “revenue
 1735         miles in this state”; amending s. 220.152, F.S.;
 1736         conforming provisions to changes made by the act;
 1737         repealing s. 213.054, F.S., relating to certain tax
 1738         exemptions or deductions; repealing ss. 220.62(3) and
 1739         (5), and 220.63(5), F.S., relating to the franchise
 1740         tax imposed on banks and savings associations;
 1741         amending s. 220.64, F.S.; conforming provisions to
 1742         changes made by the act; amending s. 220.51, F.S.;
 1743         authorizing the Department of Revenue to adopt rules;
 1744         providing legislative intent with respect to
 1745         corporations filing corporate income tax returns;
 1746         clarifying legislative intent with respect to the
 1747         retroactive application of certain amendments made by
 1748         chapter 2002-218, Laws of Florida; providing for
 1749         application; providing an effective date.