Florida Senate - 2009                             CS for SB 2546
       
       
       
       By the Committee on Finance and Tax; and Senator Altman
       
       
       
       
       593-04073-09                                          20092546c1
    1                        A bill to be entitled                      
    2         An act relating to corporate income tax; creating the
    3         “Florida Fair Business Competition Act”; amending s.
    4         196.012, F.S.; conforming cross-references; amending
    5         ss. 213.053 and 213.054, F.S.; conforming provisions
    6         to the repeal of provisions allowing certain
    7         deductions by certain financial institutions; amending
    8         s. 220.02, F.S.; revising legislative intent with
    9         respect to the classifications of organizations for
   10         purposes of the corporate income tax; amending s.
   11         220.03, F.S.; redefining the terms “corporation” and
   12         “nonbusiness income”; providing requirements for the
   13         classification of corporations that are partners in
   14         partnerships; defining the term “tiered partnership
   15         arrangement”; amending s. 220.13, F.S.; defining the
   16         term “adjusted federal income” with respect to certain
   17         expenses related to a business asset; defining the
   18         term “taxable income” for purposes of certain
   19         corporate entities; providing certain restrictions
   20         with respect to the deductibility of intangible
   21         expenses, interest expenses, and management fees;
   22         providing requirements for filing tax returns;
   23         providing for making certain calculations and
   24         providing for certain deductions; amending s. 220.131,
   25         F.S.; providing a limitation on the net operating loss
   26         that may be claimed by a member of an affiliated
   27         group; providing for the expiration of eligibility for
   28         a specified election with respect to certain tax
   29         filings; requiring that certain gross receipts be
   30         excluded from sales between affiliated corporations
   31         for purposes of determining taxable income; amending
   32         s. 220.15, F.S.; revising requirements governing the
   33         apportionment of adjusted federal income; clarifying
   34         circumstances under which a sale of services occurs in
   35         the state; amending s. 220.1501, F.S.; conforming
   36         cross-references; creating s. 220.1505, F.S.;
   37         providing requirements for the apportionment of income
   38         of a financial institution whose business activity is
   39         taxable within and without the state; providing
   40         definitions; providing apportionment factors with
   41         respect to receipts, property, and payroll; amending
   42         s. 220.151, F.S.; providing for the apportionment of
   43         the tax base for taxpayers furnishing certain
   44         transportation services; defining the term “revenue
   45         miles in this state”; amending s. 220.152, F.S.;
   46         conforming provisions to changes made by the act;
   47         repealing s. 213.054, F.S., relating to certain tax
   48         exemptions or deductions; repealing ss. 220.62(3) and
   49         (5), and 220.63(5), F.S., relating to the franchise
   50         tax imposed on banks and savings associations;
   51         amending s. 220.64, F.S.; conforming provisions to
   52         changes made by the act; amending s. 220.51, F.S.;
   53         authorizing the Department of Revenue to adopt rules;
   54         providing legislative intent with respect to
   55         corporations filing corporate income tax returns;
   56         clarifying legislative intent with respect to the
   57         retroactive application of certain amendments made by
   58         chapter 2002-218, Laws of Florida; providing for
   59         application; providing an effective date.
   60  
   61  Be It Enacted by the Legislature of the State of Florida:
   62  
   63         Section 1. This act may be cited as the “Florida Fair
   64  Business Competition Act.”
   65         Section 2. Paragraph (a) of subsection (15) and paragraph
   66  (a) of subsection (16) of section 196.012, Florida Statutes, are
   67  amended to read:
   68         196.012 Definitions.—For the purpose of this chapter, the
   69  following terms are defined as follows, except where the context
   70  clearly indicates otherwise:
   71         (15) “New business” means:
   72         (a)1. A business establishing 10 or more jobs to employ 10
   73  or more full-time employees in this state, which manufactures,
   74  processes, compounds, fabricates, or produces for sale items of
   75  tangible personal property at a fixed location and which
   76  comprises an industrial or manufacturing plant;
   77         2. A business establishing 25 or more jobs to employ 25 or
   78  more full-time employees in this state, the sales factor of
   79  which, as defined by s. 220.15(4) s. 220.15(5), for the facility
   80  with respect to which it requests an economic development ad
   81  valorem tax exemption is less than 0.50 for each year the
   82  exemption is claimed; or
   83         3. An office space in this state owned and used by a
   84  corporation newly domiciled in this state; provided such office
   85  space houses 50 or more full-time employees of such corporation;
   86  provided that such business or office first begins operation on
   87  a site clearly separate from any other commercial or industrial
   88  operation owned by the same business.
   89         (16) “Expansion of an existing business” means:
   90         (a)1. A business establishing 10 or more jobs to employ 10
   91  or more full-time employees in this state, which manufactures,
   92  processes, compounds, fabricates, or produces for sale items of
   93  tangible personal property at a fixed location and which
   94  comprises an industrial or manufacturing plant; or
   95         2. A business establishing 25 or more jobs to employ 25 or
   96  more full-time employees in this state, the sales factor of
   97  which, as defined by s. 220.15(4) s. 220.15(5), for the facility
   98  with respect to which it requests an economic development ad
   99  valorem tax exemption is less than 0.50 for each year the
  100  exemption is claimed; provided that such business increases
  101  operations on a site colocated with a commercial or industrial
  102  operation owned by the same business, resulting in a net
  103  increase in employment of not less than 10 percent or an
  104  increase in productive output of not less than 10 percent.
  105         Section 3. Paragraph (b) of subsection (5) of section
  106  213.053, Florida Statutes, is amended to read:
  107         213.053 Confidentiality and information sharing.—
  108         (5) Nothing contained in this section shall prevent the
  109  department from:
  110         (b) Disclosing to the Chief Financial Officer the names and
  111  addresses of those taxpayers who have claimed an exemption
  112  pursuant to former s. 199.185(1)(i) or a deduction pursuant to
  113  former s. 220.63(5).
  114         Section 4. Section 213.054, Florida Statutes, is amended to
  115  read:
  116         213.054 Persons claiming tax exemptions or deductions;
  117  annual report.—The Department of Revenue shall be responsible
  118  for monitoring the utilization of tax deductions authorized
  119  pursuant to chapter 81-179, Laws of Florida. On or before
  120  September 1 of each year, the department shall report to the
  121  Chief Financial Officer the names and addresses of all persons
  122  who have claimed a deduction pursuant to former s. 220.63(5).
  123         Section 5. Subsection (1) of section 220.02, Florida
  124  Statutes, is amended to read:
  125         220.02 Legislative intent.—
  126         (1) It is the intent of the Legislature in enacting this
  127  code to impose a tax upon all corporations, organizations,
  128  associations, and other artificial entities which derive from
  129  this state or from any other jurisdiction permanent and inherent
  130  attributes not inherent in or available to natural persons, such
  131  as perpetual life, transferable ownership represented by shares
  132  or certificates, and limited liability for all owners. It is
  133  intended that any limited liability company that is classified
  134  as a partnership for federal income tax purposes and formed
  135  under chapter 608 or qualified to do business in this state as a
  136  foreign limited liability company not be subject to the tax
  137  imposed by this code. It is the intent of the Legislature to
  138  subject such corporations and other entities to taxation
  139  hereunder for the privilege of conducting business, deriving
  140  income, or existing within this state. This code is not intended
  141  to tax, and shall not be construed so as to tax, any natural
  142  person who engages in a trade, business, or profession in this
  143  state under his or her own or any fictitious name, whether
  144  individually as a proprietorship, or in partnership with others
  145  when classified as a partnership for federal income tax
  146  purposes, or as a member or a manager of a limited liability
  147  company classified as a partnership for federal income tax
  148  purposes; any estate of a decedent or incompetent; or any
  149  testamentary trust. However, a corporation or other taxable
  150  entity which is or which becomes partners with one or more
  151  natural persons shall not, merely by reason of being a partner,
  152  exclude from its net income subject to tax its respective share
  153  of partnership net income. It is the intent of the Legislature
  154  to follow the classification of organizations under the Internal
  155  Revenue Code to the greatest extent possible when not in
  156  conflict with the express provisions of this code. This
  157  statement of intent shall be given preeminent consideration in
  158  any construction or interpretation of this code in order to
  159  avoid any conflict between this code and the mandate in s. 5,
  160  Art. VII of the State Constitution that no income tax be levied
  161  upon natural persons who are residents and citizens of this
  162  state.
  163         Section 6. Paragraphs (e) and (r) of subsection (1) of
  164  section 220.03, Florida Statutes, are amended, and subsection
  165  (6) is added to that section, to read:
  166         220.03 Definitions.—
  167         (1) SPECIFIC TERMS.—When used in this code, and when not
  168  otherwise distinctly expressed or manifestly incompatible with
  169  the intent thereof, the following terms shall have the following
  170  meanings:
  171         (e) “Corporation” includes all domestic corporations;
  172  foreign corporations qualified to do business in this state or
  173  actually doing business in this state; joint-stock companies;
  174  limited liability companies, partnerships, and other entities of
  175  any type which are taxable as corporations for federal income
  176  tax purposes under chapter 608; common-law declarations of
  177  trust, under chapter 609; corporations not for profit, under
  178  chapter 617; agricultural cooperative marketing associations,
  179  under chapter 618; professional service corporations, under
  180  chapter 621; foreign unincorporated associations, under chapter
  181  622; private school corporations, under chapter 623; foreign
  182  corporations not for profit which are carrying on their
  183  activities in this state; and all other organizations,
  184  associations, legal entities, and artificial persons which are
  185  created by or pursuant to the statutes of this state, the United
  186  States, or any other state, territory, possession, or
  187  jurisdiction. The term “corporation” does not include
  188  proprietorships, even if using a fictitious name; partnerships
  189  of any type, as such, except as otherwise described in this
  190  paragraph; limited liability companies that are taxable as
  191  partnerships for federal income tax purposes; state or public
  192  fairs or expositions, under chapter 616; estates of decedents or
  193  incompetents; testamentary trusts; or private trusts.
  194         (r) “Nonbusiness income” means an amount that cannot be
  195  included in apportionable income rents and royalties from real
  196  or tangible personal property, capital gains, interest,
  197  dividends, and patent and copyright royalties, to the extent
  198  that they do not arise from transactions and activities in the
  199  regular course of the taxpayer’s trade or business. The term
  200  “nonbusiness income” does not include income from tangible and
  201  intangible property if the acquisition, management, and
  202  disposition of the property constitute integral parts of the
  203  taxpayer’s regular trade or business operations, or any amounts
  204  which could be included in apportionable income without
  205  violating the due process clause of the United States
  206  Constitution. For purposes of this definition, the term “income”
  207  means gross receipts less all items of loss, expense, or
  208  deduction, whether directly or indirectly attributable thereto,
  209  which were used to reduce adjusted federal income in the current
  210  taxable year or in a previous taxable year. For purposes of this
  211  definition, “income” means gross receipts less all expenses
  212  directly or indirectly attributable thereto. Functionally
  213  related dividends are presumed to be business income.
  214         (6)PARTNERSHIPS.—A corporation that is a general or
  215  limited partner in a partnership, as such, that conducts
  216  business in this state, that earns or receives income in this
  217  state, or that exists in this state is subject to taxation under
  218  this chapter when the partnership activities, if conducted
  219  directly by the corporation, would subject the corporation to
  220  taxation under this chapter. In the case of a tiered partnership
  221  arrangement, the activities of any partnership occupying a lower
  222  tier of a tiered partnership arrangement are imputed,
  223  proportionally, to all partners holding interests in the
  224  partnership occupying higher tiers. A “tiered partnership
  225  arrangement” is one in which some or all of the interests in one
  226  partnership, or lower-tier partnership, are held by a second
  227  partnership, or upper-tier partnership. A tiered partnership
  228  arrangement may have two or more tiers. For purposes of this
  229  subsection, the term “partnership” includes a limited liability
  230  company that has made a federal election to be taxed as a
  231  partnership or as a disregarded entity.
  232         Section 7. Paragraph (a) of subsection (1) of section
  233  220.13, Florida Statutes, is amended, paragraph (m) is added to
  234  subsection (2) of that section, and subsection (3) is added to
  235  that section, read:
  236         220.13 “Adjusted federal income” defined.—
  237         (1) The term “adjusted federal income” means an amount
  238  equal to the taxpayer’s taxable income as defined in subsection
  239  (2), or such taxable income of more than one taxpayer as
  240  provided in s. 220.131, for the taxable year, adjusted as
  241  follows:
  242         (a) Additions.—There shall be added to such taxable income:
  243         1. The amount of any tax upon or measured by income,
  244  excluding taxes based on gross receipts or revenues, paid or
  245  accrued as a liability to the District of Columbia or any state
  246  of the United States which is deductible from gross income in
  247  the computation of taxable income for the taxable year.
  248         2. The amount of interest which is excluded from taxable
  249  income under s. 103(a) of the Internal Revenue Code or any other
  250  federal law, less the associated expenses disallowed in the
  251  computation of taxable income under s. 265 of the Internal
  252  Revenue Code or any other law, excluding 60 percent of any
  253  amounts included in alternative minimum taxable income, as
  254  defined in s. 55(b)(2) of the Internal Revenue Code, if the
  255  taxpayer pays tax under s. 220.11(3).
  256         3. In the case of a regulated investment company or real
  257  estate investment trust, an amount equal to the excess of the
  258  net long-term capital gain for the taxable year over the amount
  259  of the capital gain dividends attributable to the taxable year.
  260         4. That portion of the wages or salaries paid or incurred
  261  for the taxable year which is equal to the amount of the credit
  262  allowable for the taxable year under s. 220.181. This
  263  subparagraph shall expire on the date specified in s. 290.016
  264  for the expiration of the Florida Enterprise Zone Act.
  265         5. That portion of the ad valorem school taxes paid or
  266  incurred for the taxable year which is equal to the amount of
  267  the credit allowable for the taxable year under s. 220.182. This
  268  subparagraph shall expire on the date specified in s. 290.016
  269  for the expiration of the Florida Enterprise Zone Act.
  270         6. The amount of emergency excise tax paid or accrued as a
  271  liability to this state under chapter 221 which tax is
  272  deductible from gross income in the computation of taxable
  273  income for the taxable year.
  274         7. That portion of assessments to fund a guaranty
  275  association incurred for the taxable year which is equal to the
  276  amount of the credit allowable for the taxable year.
  277         8. In the case of a nonprofit corporation which holds a
  278  pari-mutuel permit and which is exempt from federal income tax
  279  as a farmers’ cooperative, an amount equal to the excess of the
  280  gross income attributable to the pari-mutuel operations over the
  281  attributable expenses for the taxable year.
  282         9. The amount taken as a credit for the taxable year under
  283  s. 220.1895.
  284         10. Up to nine percent of the eligible basis of any
  285  designated project which is equal to the credit allowable for
  286  the taxable year under s. 220.185.
  287         11. The amount taken as a credit for the taxable year under
  288  s. 220.187.
  289         12. The amount taken as a credit for the taxable year under
  290  s. 220.192.
  291         13. The amount taken as a credit for the taxable year under
  292  s. 220.193.
  293         14. Any amount in excess of $25,000 allowable as a
  294  deduction for federal income tax purposes under s. 179 of the
  295  Internal Revenue Code of 1986, as amended, for the taxable year.
  296         15. Any amount allowable as a deduction for federal income
  297  tax purposes under s. 167 or s. 168 of the Internal Revenue Code
  298  of 1986, as amended, for the taxable year to the extent that
  299  such amount includes bonus depreciation allowable as deduction
  300  under s. 168(k).
  301         16.All expenses directly or indirectly related to a
  302  business asset which were treated as nonbusiness income that
  303  were deducted in the year of sale and the 2 previous years. Such
  304  recapture of expenses shall be made in the year the income is
  305  determined to be nonbusiness income and shall recapture those
  306  expenses deducted in the current and in the previous 2 years.
  307         (2) For purposes of this section, a taxpayer’s taxable
  308  income for the taxable year means taxable income as defined in
  309  s. 63 of the Internal Revenue Code and properly reportable for
  310  federal income tax purposes for the taxable year, but subject to
  311  the limitations set forth in paragraph (1)(b) with respect to
  312  the deductions provided by ss. 172 (relating to net operating
  313  losses), 170(d)(2) (relating to excess charitable
  314  contributions), 404(a)(1)(D) (relating to excess pension trust
  315  contributions), 404(a)(3)(A) and (B) (to the extent relating to
  316  excess stock bonus and profit-sharing trust contributions), and
  317  1212 (relating to capital losses) of the Internal Revenue Code,
  318  except that, subject to the same limitations, the term:
  319         (m)“Taxable income,” in the case of any partnership,
  320  organization, association, legal entity, or artificial person
  321  taxable as a corporation for federal income tax purposes, means
  322  taxable income determined as if such partnership, organization,
  323  association, legal entity, or artificial person were required to
  324  file or had filed a federal corporate income tax return under
  325  the Internal Revenue Code.
  326         (3)The restrictions in this subsection apply with respect
  327  to the deductibility of certain intangible expenses, interest
  328  expenses, and management fees involving a related entity.
  329         (a)As used in this subsection, the term:
  330         1.“Related entity” means any artificial entity that would
  331  be a member of the taxpayer’s affiliated group under s. 1504 of
  332  the Internal Revenue Code during all or any portion of the
  333  taxable year, except using an ownership percentage of 50 percent
  334  rather than 80 percent. A related entity includes any entity,
  335  other than a natural person, which would be included in the
  336  affiliated group based upon a 50 percent ownership percentage if
  337  it were organized as a corporation.
  338         2.“Intangible expenses” means the following described
  339  amounts to the extent these amounts are allowed as deductions in
  340  determining federal taxable income under the Internal Revenue
  341  Code before the application of any net operating loss deduction
  342  and special deductions for the taxable year:
  343         a.Expenses, losses, and costs directly or indirectly for,
  344  related to, or in association with the acquisition, use,
  345  maintenance, management, ownership, sale, exchange, or any other
  346  disposition of intangible property.
  347         b. Royalty, patent, technical, trademark, and copyright
  348  fees;
  349         c.Licensing fees; or
  350         d.Other substantially similar expenses and costs,
  351  including, but not limited to, interest and losses from
  352  factoring transactions.
  353         3.“Intangible property” means patents, patent
  354  applications, trade names, trademarks, service marks,
  355  copyrights, trade secrets, and substantially similar types of
  356  intangible assets.
  357         4.“Interest expenses” means amounts that are allowed as
  358  deductions under s. 163 of the Internal Revenue Code in
  359  determining federal taxable income before the application of any
  360  net operating loss deductions and special deductions for the
  361  taxable year.
  362         5.“Management fees” means expenses and costs paid for
  363  services, including, but not limited to, management overhead,
  364  management supervision, accounts receivable and payable,
  365  employee benefit plans, insurance, legal, payroll, data
  366  processing, purchasing, tax, financial and securities, billing,
  367  accounting, reporting and compliance services, or similar
  368  services, only to the extent that the amounts are allowed as a
  369  deduction or cost in determining taxable net income under the
  370  Internal Revenue Code before the application of any net
  371  operating loss deduction and special deductions for the taxable
  372  year.
  373         6.“Recipient” means a related entity that is paid an item
  374  of income that corresponds to an intangible expense, interest
  375  expense, or management fee.
  376         (b)Except as provided in paragraph (c), in determining its
  377  adjusted federal income under this section and s. 220.131, a
  378  corporation subject to tax shall add to its taxable income
  379  intangible expenses, interest expenses, and management fees that
  380  are paid, accrued, or incurred directly or indirectly with one
  381  or more related entities. For income received from a pass
  382  through entity or a disregarded entity, the corporation is
  383  deemed to have received its share of both the income and
  384  expenses of the pass-through entity or disregarded entity for
  385  purposes of this subsection.
  386         (c)Except as provided in paragraph (d), the addition of
  387  intangible expenses, interest expenses, and management fees
  388  otherwise required in a taxable year under this subsection for a
  389  specific related entity transaction is not required if:
  390         1.The taxpayer and the recipient are both included in the
  391  same Florida consolidated tax return filed under s. 220.131 for
  392  the taxable year;
  393         2.The taxpayer and the executive director or his or her
  394  designee agree in writing to alternative computations or
  395  adjustments. The executive director or his or her designee may
  396  approve such agreement only if the taxpayer has clearly
  397  established to the satisfaction of the executive director or his
  398  or her designee that the disallowance of the deduction is
  399  unreasonable and that the proposed alternative method of
  400  determining the measure of the tax accurately reflects the
  401  activity, business, income, and capital of the taxpayers within
  402  this state. The agreement must be signed by the executive
  403  director or his or her designee and may not exceed 4 years;
  404         3.The taxpayer makes a disclosure on its return and
  405  establishes by clear and convincing evidence that:
  406         a.The recipient was subject to an income tax or franchise
  407  tax measured in whole or part by net income in its state or
  408  country of commercial domicile. If the recipient is a foreign
  409  corporation, the foreign nation must have in force a
  410  comprehensive income tax treaty with the United States;
  411         b.The tax base for such tax included the intangible
  412  expense, management fee, or interest expense paid, accrued, or
  413  incurred by the taxpayer;
  414         c.The aggregate effective tax rate applied is no less than
  415  5.5 percent;
  416         d.The transaction did not have Florida tax avoidance as a
  417  principle purpose;
  418         e.The recipient regularly engages in the same business
  419  with third parties; and
  420         f.The transaction was made at a commercially reasonable
  421  rate and at arm’s length terms similar to those with third
  422  parties; or
  423         4.The taxpayer makes a disclosure on its return and
  424  establishes by clear and convincing evidence that:
  425         a.The related entity, during the same taxable year,
  426  directly or indirectly paid, received, or incurred the amount of
  427  the obligation to or from a person or entity that is not a
  428  related entity;
  429         b.The transaction was done for a valid business purpose;
  430         c.The payments are limited to a reimbursement of the
  431  amounts paid to a person or entity that is not a related party;
  432  and
  433         d.The unrelated entity regularly engages in the same
  434  business with third parties on a substantial basis.
  435         (d)The exceptions described in subparagraphs (c)3. and 4.
  436  do not apply:
  437         1.To interest paid by a taxpayer in connection with a debt
  438  incurred to acquire the taxpayer’s or a related entity’s assets
  439  or stock in a transaction referenced in s. 368 of the Internal
  440  Revenue Code. For purposes of this paragraph, acquisition
  441  interest paid by a taxpayer to a person or entity that is not a
  442  related entity shall be treated as if made to a related entity;
  443         2.To intangible property acquired directly or indirectly
  444  from the taxpayer or from a related entity;
  445         3.If the related entity is primarily engaged in managing,
  446  acquiring, or maintaining intangible property or related party
  447  financing and a primary purpose of the transaction was the
  448  avoidance of Florida tax; or
  449         4.In those instances where the taxpayer files with the
  450  related entity or the related entity files with another related
  451  entity an income tax return or report where such return or
  452  report is due because of the imposition of a tax on or measured
  453  by income, and where such income tax return or report results in
  454  the elimination of the tax effects from transactions directly or
  455  indirectly between the taxpayer and the related member.
  456         (e)To the extent that a taxpayer is required to make an
  457  adjustment under paragraphs (b) and (c) for a specific related
  458  entity transaction, the corresponding related entity shall make
  459  a corresponding subtraction to its taxable income, if subject to
  460  tax in Florida.
  461         (f)The amount of a taxpayer’s net operating loss carryover
  462  from tax years ending prior to December 31, 2009, to a tax year
  463  ending on or after December 31, 2009, shall be adjusted to
  464  account for the add back of intangible expenses, interest
  465  expenses, and management fees under this subsection. Under no
  466  circumstances may this recalculation increase the amount of a
  467  net operating loss carryover or deduction.
  468         (g)This subsection does not require a taxpayer to add to
  469  its Florida net income more than once any amount of interest
  470  expenses, intangible expenses, and management fees that the
  471  taxpayer pays, accrues, or incurs to a related entity.
  472         (h)This subsection does not allow any item to be deducted
  473  more than once, does not allow a deduction for any item that is
  474  excluded from income, and does not allow any item to be included
  475  in the Florida taxable income of more than one taxpayer.
  476         (i)This subsection does not limit or negate the executive
  477  director’s authority to make adjustments under s. 220.131(2), s.
  478  220.44, or s. 220.152.
  479         (j)Each taxpayer shall provide the following information
  480  to the department along with its tax return regarding each
  481  related entity transaction:
  482         a.The name of the recipient;
  483         b.The state or country of domicile of the recipient;
  484         c.The amount paid to the recipient; and
  485         d.A complete description of the payment made to the
  486  recipient.
  487         (k)Failure to add back an amount paid directly or
  488  indirectly to a related party or failure to provide complete
  489  information with the tax return is evidence of negligence within
  490  the meaning of s. 220.803(1).
  491         Section 8. Subsections (3), (4), and (5) of section
  492  220.131, Florida Statutes, are amended, and subsections (6) and
  493  (7) are added to that section, to read:
  494         220.131 Adjusted federal income; affiliated groups.—
  495         (3) The filing of a consolidated return for any taxable
  496  year shall require the filing of consolidated returns for all
  497  subsequent taxable years so long as the filing taxpayers remain
  498  members of the affiliated group or, in the case of a group
  499  having component members not subject to tax under this code, so
  500  long as a consolidated return is filed by such group for federal
  501  income tax purposes, unless the director consents to the filing
  502  of separate returns.
  503         (4) The computation of consolidated taxable income for the
  504  members of an affiliated group of corporations subject to tax
  505  hereunder shall be made in the same manner and under the same
  506  procedures, including all intercompany adjustments and
  507  eliminations, as are required for consolidating the incomes of
  508  affiliated corporations for the taxable year for federal income
  509  tax purposes in accordance with s. 1502 of the Internal Revenue
  510  Code, and the amount shown as consolidated taxable income shall
  511  be the amount subject to tax under this code. Notwithstanding
  512  the foregoing, a net operating loss that was incurred by a
  513  taxpayer before filing as a member of a consolidated group of
  514  corporations pursuant to this section is limited to that
  515  member’s taxable income included in the consolidated taxable
  516  income for the year in which a net operating loss carryover is
  517  sought to be used. If all members of the affiliated group filed
  518  separate Florida corporate income tax returns for all years from
  519  which a net operating loss carryover is available, this
  520  limitation does not apply.
  521         (5) Each taxpayer shall apportion adjusted federal income
  522  under s. 220.15 or s. 220.1505 as a member of an affiliated
  523  group which files a consolidated return under this section on
  524  the basis of apportionment factors described in s. 220.15 or s.
  525  220.1505. For the purposes of this subsection, each special
  526  industry member included in an affiliated group filing a
  527  consolidated return hereunder, which member would otherwise be
  528  permitted to use a special method of apportionment under s.
  529  220.151, shall construct the numerator of its sales, property,
  530  and payroll factors, respectively, by multiplying the
  531  denominator of each such factor by the premiums or revenue miles
  532  factor ratio otherwise applicable pursuant to s. 220.151 in the
  533  manner prescribed by the department by rule.
  534         (6)For taxable years ending on or after July 1, 2009,
  535  those members of an affiliated group of corporations that filed
  536  Florida consolidated corporate income tax returns pursuant to
  537  the election provided in s. 220.131(1), Florida Statutes (1985),
  538  which allowed such members to make an election within 90 days
  539  after December 20, 1984, or upon filing the member’s first
  540  return after December 20, 1984, whichever occurred later, are no
  541  longer eligible to file and shall cease filing a Florida
  542  consolidated corporate income tax return pursuant to that
  543  election.
  544         (7)The sales factor, as determined by s. 220.15(4), shall
  545  not include gross receipts from sales between affiliated
  546  corporations that file a consolidated return under this section.
  547  Such amounts shall be excluded from the sales factor even though
  548  income from such sales is included in the computation of taxable
  549  income described in subsection (4) and s. 1502 of the Internal
  550  Revenue Code and the regulations thereunder.
  551         Section 9. Section 220.15, Florida Statutes, is amended to
  552  read:
  553         220.15 Apportionment of adjusted federal income.—
  554         (1) Except as provided in ss. 220.1505, 220.151, and
  555  220.152, adjusted federal income as defined in s. 220.13 shall
  556  be apportioned to this state by taxpayers doing business within
  557  and without this state by multiplying it by an apportionment
  558  fraction composed of a sales factor representing 50 percent of
  559  the fraction, a property factor representing 25 percent of the
  560  fraction, and a payroll factor representing 25 percent of the
  561  fraction. If any factor described in subsection (2), subsection
  562  (4), or subsection (5) has a denominator that is zero or is
  563  determined by the department to be insignificant, the relative
  564  weights of the other factors in the denominator of the
  565  apportionment fraction shall be as follows:
  566         (a) If the denominators for any two factors are zero or are
  567  insignificant, the weighted percentage for the remaining factor
  568  shall be 100 percent.
  569         (b) If the denominator for the sales factor is zero or is
  570  insignificant, the weighted percentage for the property and
  571  payroll factors shall change from 25 percent to 50 percent,
  572  respectively.
  573         (c) If the denominator for either the property or payroll
  574  factor is zero or is insignificant, the weighted percentage for
  575  the other shall be 33 1/3 percent, and the weighted percentage
  576  for the sales factor shall be 66 2/3 percent.
  577         (2) The property factor is a fraction the numerator of
  578  which is the average value of the taxpayer’s real and tangible
  579  personal property owned or rented and used in this state during
  580  the taxable year or period and the denominator of which is the
  581  average value of such property owned or rented and used
  582  everywhere.
  583         (a) Real and tangible personal property owned by the
  584  taxpayer shall be valued at original cost. Real and tangible
  585  personal property rented by the taxpayer shall be valued at 8
  586  times the net annual rental rate paid by the taxpayer less any
  587  annual rental rate received from subrentals.
  588         (b) The average value of real and tangible personal
  589  property shall be determined by averaging the value at the
  590  beginning and the end of the taxable year or period, unless the
  591  department determines that an averaging of monthly values during
  592  the taxable year or period is reasonably required to reflect
  593  properly the average value of the taxpayer’s real and tangible
  594  personal property.
  595         (c) The property factor fraction shall not include any real
  596  or tangible personal property located in this state with respect
  597  to which it is certified to the Department of Revenue that such
  598  property is dedicated exclusively to research and development
  599  activities performed pursuant to sponsored research contracts
  600  conducted in conjunction with and through a university that is a
  601  member of the State University System or a nonpublic university
  602  that is chartered in Florida and conducts graduate programs at
  603  the professional or doctoral level. The Board of Governors of
  604  the State University System must certify the contracts for
  605  members of the State University System, and the president of the
  606  university must certify the contracts for a nonpublic
  607  university. As used in this paragraph, “sponsored research
  608  contract” means an agreement executed by parties that include at
  609  least the university and the taxpayer. Funding for sponsored
  610  research contracts may be provided from public or private
  611  sources.
  612         (3)The property factor used by a financial organization
  613  shall also include intangible personal property, except
  614  goodwill, which is owned and used in the business, valued at its
  615  tax basis for federal income tax purposes. Intangible personal
  616  property shall be in this state if it consists of any of the
  617  following:
  618         (a)Coin or currency located in this state;
  619         (b)Assets in the nature of loans, including balances due
  620  from depository institutions, repurchase agreements, federal
  621  funds sold, and bankers acceptances, which assets are located in
  622  this state; installment obligations on loans for which the
  623  customer initially applied at an office located in this state;
  624  or loans secured by mortgages, deeds of trust, or other liens
  625  upon real or tangible personal property located in this state;
  626         (c)A portion of a participation loan if the office that
  627  enters into the participation is located in this state;
  628         (d)Credit card receivables from customers who reside or
  629  who are commercially domiciled in this state;
  630         (e)Investments in securities that generate business income
  631  if the taxpayer’s commercial domicile is in the state, unless
  632  such securities have acquired a discrete business situs
  633  elsewhere;
  634         (f)Securities used to maintain reserves against deposits
  635  to meet federal or state deposit requirements, based on the
  636  ratio that total deposits in this state bear to total deposits
  637  everywhere;
  638         (g)Securities held by a state treasurer or other public
  639  official or pledged to secure public funds or trust funds
  640  deposited with the taxpayer if the office at which the secured
  641  deposits are maintained is in this state;
  642         (h)Leases of tangible personal property to another if the
  643  taxpayer’s commercial domicile is in the state, unless the
  644  taxpayer establishes that the location of the leased tangible
  645  personal property is in another state or states for the entire
  646  taxable year and the taxpayer is taxable in such other state or
  647  states;
  648         (i)Installment sale agreements originally executed by a
  649  taxpayer or its agent to sell real or tangible personal property
  650  located in this state; or
  651         (j)Any other intangible personal property located in this
  652  state which is used to generate business income.
  653         (3)(4) The payroll factor is a fraction the numerator of
  654  which is the total amount paid in this state during the taxable
  655  year or period by the taxpayer for compensation and the
  656  denominator of which is the total compensation paid everywhere
  657  during the taxable year or period.
  658         (a) As used in this subsection, the term “compensation”
  659  means wages, salaries, commissions, and any other form of
  660  remuneration paid to employees for personal services.
  661         (b) Compensation is paid in this state if:
  662         1. The employee’s service is performed entirely within the
  663  state; or
  664         2. The employee’s service is performed both within and
  665  without the state, but the service performed without the state
  666  is incidental to the employee’s service within the state; or
  667         3. Some of the employee’s service is performed in the
  668  state, and
  669         a. The base of operations or, if there is no base of
  670  operations, the place from which the service is directed or
  671  controlled is in the state, or
  672         b. The base of operations or the place from which the
  673  service is directed or controlled is not in any state in which
  674  some part of the service is performed and the employee’s
  675  residence is in this state.
  676         (c) The payroll factor fraction shall not include any
  677  compensation paid to any employee located in this state when it
  678  is certified to the Department of Revenue that such compensation
  679  was paid to employees dedicated exclusively to research and
  680  development activities performed pursuant to sponsored research
  681  contracts conducted in conjunction with and through a university
  682  that is a member of the State University System or a nonpublic
  683  university that is chartered in Florida and conducts graduate
  684  programs at the professional or doctoral level. The Board of
  685  Governors of the State University System must certify the
  686  contracts for members of the State University System, and the
  687  president of the university must certify the contracts for a
  688  nonpublic university. As used in this paragraph, “sponsored
  689  research contract” means an agreement executed by parties that
  690  include at least the university and the taxpayer. Funding for
  691  sponsored research contracts may be provided from public or
  692  private sources.
  693         (4)(5) The sales factor is a fraction the numerator of
  694  which is the total sales of the taxpayer in this state during
  695  the taxable year or period and the denominator of which is the
  696  total sales of the taxpayer everywhere during the taxable year
  697  or period.
  698         (a) As used in this subsection, the term “sales” means all
  699  gross receipts of the taxpayer except interest, dividends,
  700  rents, royalties, and gross receipts from the sale, exchange,
  701  maturity, redemption, or other disposition of securities.
  702  However:
  703         1. Rental income is included in the term if a significant
  704  portion of the taxpayer’s business consists of leasing or
  705  renting real or tangible personal property; and
  706         2. Royalty income is included in the term if a significant
  707  portion of the taxpayer’s business consists of dealing in or
  708  with the production, exploration, or development of minerals.
  709  Income from the sale, assignment, or licensing of intangible
  710  property is also included in the term.
  711         (b)1. Sales of tangible personal property occur in this
  712  state if the property is delivered or shipped to a purchaser
  713  within this state, regardless of the f.o.b. point, other
  714  conditions of the sale, or ultimate destination of the property,
  715  unless shipment is made via a common or contract carrier.
  716  However, for industries in SIC Industry Number 2037, if the
  717  ultimate destination of the product is to a location outside
  718  this state, regardless of the method of shipment or f.o.b.
  719  point, the sale shall not be deemed to occur in this state.
  720         2. When citrus fruit is delivered by a cooperative for a
  721  grower-member, by a grower-member to a cooperative, or by a
  722  grower-participant to a Florida processor, the sales factor for
  723  the growers for such citrus fruit delivered to such processor
  724  shall be the same as the sales factor for the most recent
  725  taxable year of that processor. That sales factor, expressed
  726  only as a percentage and not in terms of the dollar volume of
  727  sales, so as to protect the confidentiality of the sales of the
  728  processor, shall be furnished on the request of such a grower
  729  promptly after it has been determined for that taxable year.
  730         3. Reimbursement of expenses under an agency contract
  731  between a cooperative, a grower-member of a cooperative, or a
  732  grower and a processor is not a sale within this state.
  733         (c)Sales of services are in this state if the buyers
  734  receive the benefit of the services in this state. A buyer
  735  receives the benefit of services in this state if any one of the
  736  following applies:
  737         1.The service relates to real property located in this
  738  state;
  739         2.The service relates to tangible personal property
  740  located in this state at the time the service is received;
  741         3.The service relates to tangible personal property
  742  delivered directly or indirectly to customers in this state;
  743         4.The service is provided to an individual physically
  744  present in this state at the time the service is received; or
  745         5.The services is provided to a buyer engaged in a trade
  746  or business in this state and relates to that trade or business.
  747         (d)If the purchaser of a service receives the benefit of a
  748  service in more than one state, the gross receipts from the
  749  performance of the service are included in the numerator of the
  750  sales factor according to the portion of the service received in
  751  this state.
  752         (e)If the taxpayer is not subject to income tax in the
  753  state in which the benefit of the service is received, the
  754  benefit of the service is received in this state to the extent
  755  that the taxpayer’s employees or representatives performed
  756  services from a location in this state. Fifty percent of the
  757  taxpayer’s receipts that are considered received in this state
  758  under this paragraph shall be included in the numerator of the
  759  sales factor.
  760         (f)Sales that are not attributable or assignable to any
  761  taxing jurisdiction and sales that are attributable or
  762  assignable to jurisdictions where the taxpayer is not subject to
  763  an income tax, or where the jurisdiction does not impose an
  764  income tax, are eliminated from both the numerator and
  765  denominator of the sales factor.
  766         (c)Sales of a financial organization, including, but not
  767  limited to, banking and savings institutions, investment
  768  companies, real estate investment trusts, and brokerage
  769  companies, occur in this state if derived from:
  770         1.Fees, commissions, or other compensation for financial
  771  services rendered within this state;
  772         2.Gross profits from trading in stocks, bonds, or other
  773  securities managed within this state;
  774         3.Interest received within this state, other than interest
  775  from loans secured by mortgages, deeds of trust, or other liens
  776  upon real or tangible personal property located without this
  777  state, and dividends received within this state;
  778         4.Interest charged to customers at places of business
  779  maintained within this state for carrying debit balances of
  780  margin accounts, without deduction of any costs incurred in
  781  carrying such accounts;
  782         5.Interest, fees, commissions, or other charges or gains
  783  from loans secured by mortgages, deeds of trust, or other liens
  784  upon real or tangible personal property located in this state or
  785  from installment sale agreements originally executed by a
  786  taxpayer or the taxpayer’s agent to sell real or tangible
  787  personal property located in this state;
  788         6.Rents from real or tangible personal property located in
  789  this state; or
  790         7.Any other gross income, including other interest,
  791  resulting from the operation as a financial organization within
  792  this state.
  793  
  794  In computing the amounts under this paragraph, any amount
  795  received by a member of an affiliated group (determined under s.
  796  1504(a) of the Internal Revenue Code, but without reference to
  797  whether any such corporation is an “includable corporation”
  798  under s. 1504(b) of the Internal Revenue Code) from another
  799  member of such group shall be included only to the extent such
  800  amount exceeds expenses of the recipient directly related
  801  thereto.
  802         (6)The term “financial organization,” as used in this
  803  section, includes any bank, trust company, savings bank,
  804  industrial bank, land bank, safe-deposit company, private
  805  banker, savings and loan association, credit union, cooperative
  806  bank, small loan company, sales finance company, or investment
  807  company.
  808         (5)(7) The term “everywhere,” as used in the computation of
  809  apportionment factor denominators under this section, means “in
  810  all states of the United States, the District of Columbia, the
  811  Commonwealth of Puerto Rico, any territory or possession of the
  812  United States, and any foreign country, or any political
  813  subdivision of the foregoing.”
  814         (6)(8) No research and development activities certified as
  815  being conducted within this state in conjunction with and
  816  through a university that is a member of the State University
  817  System or a nonpublic university that is chartered in Florida
  818  and conducts graduate programs at the professional or doctoral
  819  level shall cause any corporation to become subject to the taxes
  820  imposed by this chapter if the corporation would otherwise not
  821  be subject to the tax levied under this chapter. The property
  822  and payroll eliminated from the apportionment formula pursuant
  823  to the provisions of paragraphs (2)(c) and (3)(c) (4)(c) shall
  824  be eliminated only for the duration of the contractual period
  825  specified in the contracts for the conduct of the sponsored
  826  research. The reduction in tax due as a result of the property
  827  and payroll eliminated from the apportionment formula pursuant
  828  to the provisions of paragraphs (2)(c) and (3)(c) (4)(c) shall
  829  not exceed the amount paid to the university for the conduct of
  830  the sponsored research. No sponsored research contracts in
  831  existence prior to July 1, 1998, shall be eligible to
  832  participate in the provisions of paragraphs (2)(c) and (3)(c)
  833  (4)(c).
  834         Section 10. Section 220.1501, Florida Statutes, is amended
  835  to read:
  836         220.1501 Rulemaking authority to implement s. 220.15(2)(c),
  837  (3)(c) (4)(c), and (8).—The Department of Revenue has authority
  838  to adopt rules pursuant to the Administrative Procedure Act to
  839  implement s. 220.15(2)(c), (3)(c) (4)(c), and (8), as created by
  840  chapter 98-325, Laws of Florida.
  841         Section 11. Section 220.1505, Florida Statutes, is created
  842  to read:
  843         220.1505Apportionment; financial institutions.—
  844         (1)APPORTIONMENT AND ALLOCATION.—
  845         (a)Except as otherwise specifically provided by law, a
  846  financial institution whose business activity is taxable both
  847  within and without this state shall allocate and apportion its
  848  adjusted federal income as provided in this section. A financial
  849  institution organized under the laws of a foreign country, the
  850  Commonwealth of Puerto Rico, or a territory or possession of the
  851  United States whose effectively connected income, as defined
  852  under the Internal Revenue Code, is taxable both within this
  853  state and within another state, other than the state in which it
  854  is organized, shall apportion its adjusted federal income as
  855  provided in this section.
  856         (b)Adjusted federal income shall be apportioned to this
  857  state by multiplying it by an apportionment fraction composed of
  858  a receipts factor representing 50 percent of the fraction, a
  859  property factor representing 25 percent of the fraction, and a
  860  payroll factor representing 25 percent of the fraction. If any
  861  factor described in subsection (3), subsection (4), or
  862  subsection (5) has a denominator that is zero or is determined
  863  by the department to be insignificant, the relative weights of
  864  the other factors in the denominator of the apportionment
  865  fraction shall be as follows:
  866         1.If the denominators for any two factors are zero or are
  867  insignificant, the weighted percentage for the remaining factor
  868  shall be 100 percent.
  869         2.If the denominator for the receipts factor is zero or
  870  insignificant, the weighted percentage for the property and
  871  payroll factors shall change from 25 percent to 50 percent,
  872  respectively.
  873         3.If the denominator for either the property or payroll
  874  factor is zero or insignificant, the weighted percentage for the
  875  other shall be 33 1/3 percent and the weighted percentage for
  876  the receipts factor shall be 66 2/3 percent.
  877         (c)Each factor shall be computed according to the method
  878  of accounting used by the taxpayer for the taxable year.
  879         (2)DEFINITIONS.—As used in this section, the term:
  880         (a)“Billing address” means the location indicated in the
  881  books and records of the taxpayer on the first day of the
  882  taxable year, or on such later date in the taxable year when the
  883  customer relationship began, as the address where any notice,
  884  statement, or bill relating to a customer’s account is mailed.
  885         (b)“Borrower or credit card holder located in this state”
  886  means:
  887         1.A borrower, other than a credit card holder, which is
  888  engaged in a trade or business and which maintains its
  889  commercial domicile in this state; or
  890         2.A borrower that is not engaged in a trade or business or
  891  a credit card holder whose billing address is in this state.
  892         (c)“Commercial domicile” means:
  893         1.The headquarters of the trade or business which is the
  894  place from which the trade or business is principally managed
  895  and directed; or
  896         2.If a taxpayer is organized under the laws of a foreign
  897  country, the Commonwealth of Puerto Rico, or any territory or
  898  possession of the United States, such taxpayer’s commercial
  899  domicile shall be deemed for the purposes of this section to be
  900  the state of the United States or the District of Columbia from
  901  which such taxpayer’s trade or business in the United States is
  902  principally managed and directed. It shall be presumed, subject
  903  to rebuttal, that the location from which the taxpayer’s trade
  904  or business is principally managed and directed is the state of
  905  the United States or the District of Columbia to which the
  906  greatest number of employees are regularly connected or out of
  907  which they are working, irrespective of where the services of
  908  such employees are performed, as of the last day of the taxable
  909  year.
  910         (d)“Compensation” means wages, salaries, commissions, and
  911  any other form of remuneration paid to employees for personal
  912  services that are included in such employee’s gross income under
  913  the Internal Revenue Code. In the case of employees not subject
  914  to the Internal Revenue Code, such as those employed in foreign
  915  countries, the determination of whether such payments would
  916  constitute gross income to such employees under the Internal
  917  Revenue Code shall be made as though such employees were subject
  918  to the Internal Revenue Code.
  919         (e)“Credit card” means credit, travel, or entertainment
  920  card.
  921         (f)“Credit card issuer’s reimbursement fee” means the fee
  922  a taxpayer receives from a merchant’s bank because one of the
  923  persons to whom the taxpayer has issued a credit card has
  924  charged merchandise or services to the credit card.
  925         (g)“Employee” means, with respect to a particular
  926  taxpayer, any individual who, under the usual common law rules
  927  applicable in determining the employer-employee relationship,
  928  has the status of an employee of that taxpayer.
  929         (h)“Financial institution” means:
  930         1.Any corporation or other business entity registered
  931  under state law as a bank holding company or registered under
  932  the Federal Bank Holding Company Act of 1956, as amended, or
  933  registered as a savings and loan holding company under the
  934  Federal National Housing Act, as amended.
  935         2.A national bank organized and existing as a national
  936  bank association pursuant to the provisions of the National Bank
  937  Act, 12 U.S.C. ss. 21 et seq.
  938         3.A savings association or federal savings bank as defined
  939  in the Federal Deposit Insurance Act, 12 U.S.C. s. 1813(b)(1).
  940         4.Any bank or thrift institution incorporated or organized
  941  under the laws of any state.
  942         5.Any corporation organized under the provisions of 12
  943  U.S.C. ss. 611-631.
  944         6.Any agency or branch of a foreign depository as defined
  945  in 12 U.S.C. s. 3101.
  946         7.A state credit union the loan assets of which exceed $50
  947  million as of the first day of its taxable year.
  948         8.A production credit association organized under the
  949  Federal Farm Credit Act of 1933, all of whose stock held by the
  950  Federal Production Credit Corporation has been retired.
  951         9.Any investment company.
  952         10.Any corporation whose voting stock is more than 50
  953  percent owned, directly or indirectly, by any person or business
  954  entity described in subparagraphs 1.-9.
  955         11.A corporation or other business entity that derives
  956  more than 50 percent of its total gross income for financial
  957  accounting purposes from finance leases. For purposes of this
  958  subsection, a “finance lease” means any lease transaction that
  959  is the functional equivalent of an extension of credit and that
  960  transfers substantially all of the benefits and risks incident
  961  to the ownership of property. The phrase includes any “direct
  962  financing lease” or “leverage lease” that meets the criteria of
  963  Financial Accounting Standards Board Statement No. 13,
  964  “Accounting for Leases” or any other lease that is accounted for
  965  as a financing lease by a lessor under generally accepted
  966  accounting principles. For this classification to apply:
  967         a.The average of the gross income in the current tax year
  968  and immediately preceding 2 tax years must satisfy the more than
  969  50 percent requirement; and
  970         b.Gross income from incidental or occasional transactions
  971  shall be disregarded; or
  972         12.Any other person or business entity that derives more
  973  than 50 percent of its gross income from activities that a
  974  person described in subparagraphs 2.-9. and 11. is authorized to
  975  transact. For the purpose of this subparagraph, the computation
  976  of gross income shall not include income from nonrecurring,
  977  extraordinary items. The department may exclude any person from
  978  the application of this subparagraph upon such person proving,
  979  by clear and convincing evidence, that the income-producing
  980  activity of such person is not in substantial competition with
  981  those persons described in subparagraphs 2.-9. and 11.
  982         (i)“Gross rents” means the actual sum of money or other
  983  consideration payable for the use or possession of property.
  984  “Gross rents” includes, but is not limited to:
  985         1.Any amount payable for the use or possession of real
  986  property or tangible property whether designated as a fixed sum
  987  of money or as a percentage of receipts, profits, or otherwise;
  988         2.Any amount payable as additional rent or in lieu of
  989  rent, such as interest, taxes, insurance, repairs, or any other
  990  amount required to be paid by the terms of a lease or other
  991  arrangement; and
  992         3.A proportionate part of the cost of any improvement to
  993  real property made by or on behalf of the taxpayer which reverts
  994  to the owner or lessor upon termination of a lease or other
  995  arrangement. The amount to be included in gross rents is the
  996  amount of amortization or depreciation allowed in computing the
  997  taxable income base for the taxable year. However, if a building
  998  is erected on leased land by or on behalf of the taxpayer, the
  999  value of the land is determined by multiplying the gross rent by
 1000  eight and the value of the building is determined in the same
 1001  manner as if owned by the taxpayer.
 1002         4.The following are not included in the term “gross
 1003  rents”:
 1004         a.Reasonable amounts payable as separate charges for water
 1005  and electric service furnished by the lessor;
 1006         b.Reasonable amounts payable as service charges for
 1007  janitorial services furnished by the lessor;
 1008         c.Reasonable amounts payable for storage, if such amounts
 1009  are payable for space not designated and not under the control
 1010  of the taxpayer; and
 1011         d.That portion of any rental payment which is applicable
 1012  to the space subleased from the taxpayer and not used by it.
 1013         (j)“Loan” means any extension of credit resulting from
 1014  direct negotiations between the taxpayer and its customer, or
 1015  the purchase, in whole or in part, of such extension of credit
 1016  from another. Loans include participations, syndications, and
 1017  leases treated as loans for federal income tax purposes. Loans
 1018  shall not include: properties treated as loans under s. 595 of
 1019  the Internal Revenue Code; futures or forward contracts;
 1020  options; notional principal contracts such as swaps; credit card
 1021  receivables, including purchased credit card relationships;
 1022  noninterest bearing balances due from depository institutions;
 1023  cash items in the process of collection; federal funds sold;
 1024  securities purchased under agreements to resell; assets held in
 1025  a trading account; securities; interests in a REMIC, or other
 1026  mortgage-backed or asset-backed security; and other similar
 1027  items.
 1028         (k)“Loan secured by real property” means that 50 percent
 1029  or more of the aggregate value of the collateral used to secure
 1030  a loan or other obligation, when valued at fair market value as
 1031  of the time the original loan or obligation was incurred, was
 1032  real property.
 1033         (l)“Merchant discount” means the fee, or negotiated
 1034  discount, charged to a merchant by the taxpayer for the
 1035  privilege of participating in a program whereby a credit card is
 1036  accepted in payment for merchandise or services sold to the card
 1037  holder.
 1038         (m)“Participation” means an extension of credit in which
 1039  an undivided ownership interest is held on a pro rata basis in a
 1040  single loan or pool of loans and related collateral. In a loan
 1041  participation, the credit originator initially makes the loan
 1042  and then subsequently resells all or a portion of it to other
 1043  lenders. The participation may or may not be known to the
 1044  borrower.
 1045         (n)“Person” means an individual, estate, trust,
 1046  partnership, corporation, and any other business entity.
 1047         (o)“Principal base of operations” with respect to
 1048  transportation property means the place of more or less
 1049  permanent nature from which the property is regularly directed
 1050  or controlled. With respect to an employee, the “principal base
 1051  of operations” means the place of more or less permanent nature
 1052  from which the employee regularly:
 1053         1.Starts his or her work and to which he or she
 1054  customarily returns in order to receive instructions from his or
 1055  her employer;
 1056         2.Communicates with his or her customers or other persons;
 1057  or
 1058         3.Performs any other functions necessary to the exercise
 1059  of his or her trade or profession at some other point or points.
 1060         (p) “Real property owned” and “tangible personal property
 1061  owned” mean real and tangible personal property, respectively:
 1062         1.On which the taxpayer may claim depreciation for federal
 1063  income tax purposes; or
 1064         2.To which the taxpayer holds legal title and on which no
 1065  other person may claim depreciation for federal income tax
 1066  purposes, or could claim depreciation if subject to federal
 1067  income tax. Real and tangible personal property do not include
 1068  coin, currency, or property acquired in lieu of or pursuant to a
 1069  foreclosure.
 1070         (q)“Regular place of business” means an office at which
 1071  the taxpayer carries on its business in a regular and systematic
 1072  manner and which is continuously maintained, occupied, and used
 1073  by employees of the taxpayer.
 1074         (r)“State” means a state of the United States, the
 1075  District of Columbia, the Commonwealth of Puerto Rico, any
 1076  territory or possession of the United States, or any foreign
 1077  country.
 1078         (s)“Syndication” means an extension of credit in which two
 1079  or more persons fund and each person is at risk only up to a
 1080  specified percentage of the total extension of credit or up to a
 1081  specified dollar amount.
 1082         (t)“Taxable” means:
 1083         1.That a taxpayer is subject in another state to a net
 1084  income tax, a franchise tax measured by net income, a franchise
 1085  tax for the privilege of doing business, a corporate stock tax
 1086  including a bank shares tax, a single business tax, an earned
 1087  surplus tax, or any tax that is imposed upon or measured by net
 1088  income; or
 1089         2.That another state has jurisdiction to subject the
 1090  taxpayer to any of such taxes regardless of whether, in fact,
 1091  the state does or does not.
 1092         (u)“Transportation property” means vehicles and vessels
 1093  capable of moving under their own power, such as aircraft,
 1094  trains, water vessels, and motor vehicles, as well as any
 1095  equipment or containers attached to such property, such as
 1096  rolling stock, barges, trailers, or the like.
 1097         (3)RECEIPTS FACTOR.—
 1098         (a)General.—The receipts factor is a fraction, the
 1099  numerator of which is the receipts of the taxpayer in this state
 1100  during the taxable year and the denominator of which is the
 1101  receipts of the taxpayer within and without this state during
 1102  the taxable year. The method of calculating receipts for
 1103  purposes of the denominator is the same as the method used in
 1104  determining receipts for purposes of the numerator. The receipts
 1105  factor shall include only those receipts described in this
 1106  subsection which constitute and are included in the computation
 1107  of adjusted federal income for the taxable year.
 1108         (b)Receipts from the lease of real property.—The numerator
 1109  of the receipts factor includes receipts from the lease or
 1110  rental of real property owned by the taxpayer if the property is
 1111  located within this state or receipts from the sublease of real
 1112  property if the property is located within this state.
 1113         (c)Receipts from the lease of tangible personal property.—
 1114         1.Except as described in subparagraph 2., the numerator of
 1115  the receipts factor includes receipts from the lease or rental
 1116  of tangible personal property owned by the taxpayer if the
 1117  property is located within this state when it is first placed in
 1118  service by the lessee.
 1119         2.Receipts from the lease or rental of transportation
 1120  property owned by the taxpayer are included in the numerator of
 1121  the receipts factor to the extent that the property is used in
 1122  this state. The extent an aircraft is deemed to be used in this
 1123  state and the amount of receipts that are included in the
 1124  numerator of this state’s receipts factor is determined by
 1125  multiplying all the receipts from the lease or rental of the
 1126  aircraft by a fraction, the numerator of which is the number of
 1127  landings of the aircraft in this state and the denominator of
 1128  which is the total number of landings of the aircraft. If the
 1129  extent of the use of any transportation property within this
 1130  state cannot be determined, the property shall be deemed to be
 1131  used wholly in the state in which the property has its principal
 1132  base of operations. A motor vehicle shall be deemed to be used
 1133  wholly in the state in which it is registered.
 1134         (d)Interest from loans secured by real property.—
 1135         1.The numerator of the receipts factor includes interest
 1136  and fees or penalties in the nature of interest from loans
 1137  secured by real property if the property is located within this
 1138  state. If the property is located both within this state and one
 1139  or more other states, the receipts described in this subsection
 1140  are included in the numerator of the receipts factor if more
 1141  than 50 percent of the fair market value of the real property is
 1142  located within this state. If more than 50 percent of the fair
 1143  market value of the real property is not located within any one
 1144  state, the receipts described in this subsection shall be
 1145  included in the numerator of the receipts factor if the borrower
 1146  is located in this state.
 1147         2.The determination of whether the real property securing
 1148  a loan is located within this state shall be made as of the time
 1149  the original agreement was made and any and all subsequent
 1150  substitutions of collateral shall be disregarded.
 1151         (e)Interest from loans not secured by real property.—The
 1152  numerator of the receipts factor includes interest and fees or
 1153  penalties in the nature of interest from loans not secured by
 1154  real property if the borrower is located in this state.
 1155         (f)Net gains from the sale of loans.—The numerator of the
 1156  receipts factor includes net gains from the sale of loans. Net
 1157  gains from the sale of loans includes income recorded under the
 1158  coupon stripping rules of s. 1286 of the Internal Revenue Code.
 1159         1.The amount of net gains, but not less than zero, from
 1160  the sale of loans secured by real property included in the
 1161  numerator is determined by multiplying such net gains by a
 1162  fraction the numerator of which is the amount included in the
 1163  numerator of the receipts factor pursuant to paragraph (d) and
 1164  the denominator of which is the total amount of interest and
 1165  fees or penalties in the nature of interest from loans secured
 1166  by real property.
 1167         2.The amount of net gains, but not less than zero, from
 1168  the sale of loans not secured by real property included in the
 1169  numerator is determined by multiplying such net gains by a
 1170  fraction the numerator of which is the amount included in the
 1171  numerator of the receipts factor pursuant to paragraph (e) and
 1172  the denominator of which is the total amount of interest and
 1173  fees or penalties in the nature of interest from loans not
 1174  secured by real property.
 1175         (g)Receipts from credit card receivables.—The numerator of
 1176  the receipts factor includes interest and fees or penalties in
 1177  the nature of interest from credit card receivables and receipts
 1178  from fees charged to card holders, such as annual fees, if the
 1179  billing address of the card holder is in this state.
 1180         (h)Net gains from the sale of credit card receivables.—The
 1181  numerator of the receipts factor includes net gains, but not
 1182  less than zero, from the sale of credit card receivables
 1183  multiplied by a fraction, the numerator of which is the amount
 1184  included in the numerator of the receipts factor pursuant to
 1185  paragraph (g) and the denominator of which is the taxpayer’s
 1186  total amount of interest and fees or penalties in the nature of
 1187  interest from credit card receivables and fees charged to card
 1188  holders.
 1189         (i)Credit card issuer’s reimbursement fees.—The numerator
 1190  of the receipts factor includes all credit card issuer’s
 1191  reimbursement fees multiplied by a fraction, the numerator of
 1192  which is the amount included in the numerator of the receipts
 1193  factor pursuant to paragraph (g) and the denominator of which is
 1194  the taxpayer’s total amount of interest and fees or penalties in
 1195  the nature of interest from credit card receivables and fees
 1196  charged to card holders.
 1197         (j)Receipts from merchant discount.—The numerator of the
 1198  receipts factor includes receipts from merchant discount if the
 1199  commercial domicile of the merchant is in this state. Such
 1200  receipts shall be computed net of any cardholder charge backs,
 1201  but shall not be reduced by any interchange transaction fees or
 1202  by any issuer’s reimbursement fees paid to another for charges
 1203  made by its card holders.
 1204         (k)Loan servicing fees.—
 1205         1.a.The numerator of the receipts factor includes loan
 1206  servicing fees derived from loans secured by real property
 1207  multiplied by a fraction the numerator of which is the amount
 1208  included in the numerator of the receipts factor pursuant to
 1209  paragraph (d) and the denominator of which is the total amount
 1210  of interest and fees or penalties in the nature of interest from
 1211  loans secured by real property.
 1212         b.The numerator of the receipts factor includes loan
 1213  servicing fees derived from loans not secured by real property
 1214  multiplied by a fraction the numerator of which is the amount
 1215  included in the numerator of the receipts factor pursuant to
 1216  paragraph (e) and the denominator of which is the total amount
 1217  of interest and fees or penalties in the nature of interest from
 1218  loans not secured by real property.
 1219         2.In circumstances in which the taxpayer receives loan
 1220  servicing fees for servicing the secured or the unsecured loans
 1221  of another, the numerator of the receipts factor shall include
 1222  such fees if the borrower is located in this state.
 1223         (l)Receipts from services.—The numerator of the receipts
 1224  factor includes receipts from services not otherwise apportioned
 1225  under this subsection if the service is performed in this state.
 1226  If the service is performed both within and without this state,
 1227  the numerator of the receipts factor includes receipts from
 1228  services not otherwise apportioned under this section, if a
 1229  greater proportion of the income-producing activity is performed
 1230  in this state based on cost of performance.
 1231         (m)Receipts from investment assets and activities and
 1232  trading assets and activities.—
 1233         1.Interest, dividends, net gains, but not less than zero,
 1234  and other income from investment assets and activities and from
 1235  trading assets and activities shall be included in the receipts
 1236  factor. Investment assets and activities and trading assets and
 1237  activities include, but are not limited to: investment
 1238  securities; trading account assets; federal funds; securities
 1239  purchased and sold under agreements to resell or repurchase;
 1240  options; futures contracts; forward contracts; notional
 1241  principal contracts such as swaps; equities; and foreign
 1242  currency transactions. With respect to the investment and
 1243  trading assets and activities described in sub-subparagraphs a.
 1244  and b., the receipts factor shall include the amounts described
 1245  in such sub-subparagraphs.
 1246         a.The receipts factor shall include the amount by which
 1247  interest from federal funds sold and securities purchased under
 1248  resale agreements exceeds interest expense on federal funds
 1249  purchased and securities sold under repurchase agreements.
 1250         b.The receipts factor shall include the amount by which
 1251  interest, dividends, gains, and other income from trading assets
 1252  and activities, including, but not limited to, assets and
 1253  activities in the matched book, in the arbitrage book, and
 1254  foreign currency transactions, exceed amounts paid in lieu of
 1255  interest, amounts paid in lieu of dividends, and losses from
 1256  such assets and activities.
 1257         2.The numerator of the receipts factor includes interest,
 1258  dividends, net gains, but not less than zero, and other income
 1259  from investment assets and activities and from trading assets
 1260  and activities described in subparagraph 1. which are
 1261  attributable to this state.
 1262         a.The amount of interest, dividends, net gains, but not
 1263  less than zero, and other income from investment assets and
 1264  activities in the investment account to be attributed to this
 1265  state and included in the numerator is determined by multiplying
 1266  all such income from such assets and activities by a fraction,
 1267  the numerator of which is the average value of such assets that
 1268  are properly assigned to a regular place of business of the
 1269  taxpayer within this state and the denominator of which is the
 1270  average value of all such assets.
 1271         b.The amount of interest from federal funds sold and
 1272  purchased and from securities purchased under resale agreements
 1273  and securities sold under repurchase agreements attributable to
 1274  this state and included in the numerator is determined by
 1275  multiplying the amount described in sub-subparagraph 1.a. from
 1276  such funds and such securities by a fraction, the numerator of
 1277  which is the average value of federal funds sold and securities
 1278  purchased under agreements to resell which are properly assigned
 1279  to a regular place of business of the taxpayer within this state
 1280  and the denominator of which is the average value of all such
 1281  funds and such securities.
 1282         c.The amount of interest, dividends, gains, and other
 1283  income from trading assets and activities, including, but not
 1284  limited to, assets and activities in the matched book, in the
 1285  arbitrage book, and foreign currency transactions, but excluding
 1286  amounts described in sub-subparagraphs a. or b., attributable to
 1287  this state and included in the numerator is determined by
 1288  multiplying the amount described in sub-subparagraph 1.b. by a
 1289  fraction, the numerator of which is the average value of such
 1290  trading assets that are properly assigned to a regular place of
 1291  business of the taxpayer within this state and the denominator
 1292  of which is the average value of all such assets.
 1293         d.For purposes of this paragraph, average value shall be
 1294  determined using the rules for determining the average value of
 1295  tangible personal property set forth in paragraphs (4)(c) and
 1296  (d).
 1297         3.In lieu of using the method set forth in subparagraph
 1298  2., the taxpayer may elect, or the department may require in
 1299  order to fairly represent the business activity of the taxpayer
 1300  in this state, the use of the method set forth in this
 1301  subparagraph.
 1302         a.The amount of interest, dividends, net gains, but not
 1303  less than zero, and other income from investment assets and
 1304  activities in the investment account to be attributed to this
 1305  state and included in the numerator is determined by multiplying
 1306  all such income from such assets and activities by a fraction,
 1307  the numerator of which is the gross income from such assets and
 1308  activities that are properly assigned to a regular place of
 1309  business of the taxpayer within this state and the denominator
 1310  of which is the gross income from all such assets and
 1311  activities.
 1312         b.The amount of interest from federal funds sold and
 1313  purchased and from securities purchased under resale agreements
 1314  and securities sold under repurchase agreements attributable to
 1315  this state and included in the numerator is determined by
 1316  multiplying the amount described in sub-subparagraph 1.a. from
 1317  such funds and such securities by a fraction, the numerator of
 1318  which is the gross income from such funds and such securities
 1319  that are properly assigned to a regular place of business of the
 1320  taxpayer within this state and the denominator of which is the
 1321  gross income from all such funds and such securities.
 1322         c.The amount of interest, dividends, gains, and other
 1323  income from trading assets and activities, including, but not
 1324  limited to, assets and activities in the matched book, in the
 1325  arbitrage book, and foreign currency transactions, but excluding
 1326  amounts described in sub-subparagraph a. or sub-subparagraph b.,
 1327  attributable to this state and included in the numerator is
 1328  determined by multiplying the amount described in sub
 1329  subparagraph 1.b. by a fraction, the numerator of which is the
 1330  gross income from such trading assets and activities that are
 1331  properly assigned to a regular place of business of the taxpayer
 1332  within this state and the denominator of which is the gross
 1333  income from all such assets and activities.
 1334         4.If the taxpayer elects or is required by the department
 1335  to use the method set forth in subparagraph 3., it shall use
 1336  this method on all subsequent returns unless the taxpayer
 1337  receives prior permission from the department to use, or the
 1338  department requires, a different method.
 1339         5.The taxpayer has the burden of proving that an
 1340  investment asset or activity or trading asset or activity was
 1341  properly assigned to a regular place of business outside this
 1342  state by demonstrating that the day-to-day decisions regarding
 1343  the asset or activity occurred at a regular place of business
 1344  outside this state. If the day-to-day decisions regarding an
 1345  investment asset or activity or trading asset or activity occur
 1346  at more than one regular place of business and one such regular
 1347  place of business is in this state and one such regular place of
 1348  business is outside this state, such asset or activity shall be
 1349  considered to be located at the regular place of business of the
 1350  taxpayer where the investment or trading policies or guidelines
 1351  with respect to the asset or activity are established. Unless
 1352  the taxpayer demonstrates to the contrary, such policies and
 1353  guidelines shall be presumed to be established at the commercial
 1354  domicile of the taxpayer.
 1355         (n)Attribution of certain receipts to commercial
 1356  domicile.—All receipts that would be assigned under this section
 1357  to a state in which the taxpayer is not taxable shall be
 1358  included in the numerator of the receipts factor, if the
 1359  taxpayer’s commercial domicile is in this state.
 1360         (4)PROPERTY FACTOR.—
 1361         (a)General.—The property factor is a fraction, the
 1362  numerator of which is the average value of real property and
 1363  tangible personal property rented to the taxpayer which is
 1364  located or used within this state during the taxable year, the
 1365  average value of the taxpayer’s real and tangible personal
 1366  property that is owned and located or used within this state
 1367  during the taxable year, and the average value of the taxpayer’s
 1368  loans and credit card receivables that are located within this
 1369  state during the taxable year, and the denominator of which is
 1370  the average value of all such property that is located or used
 1371  within and without this state during the taxable year.
 1372         (b)Property included.—The property factor shall include
 1373  only property the income or expenses of which are included, or
 1374  would have been included if not fully depreciated or expensed,
 1375  or depreciated or expensed to a nominal amount, in the
 1376  computation of the adjusted federal income for the taxable year.
 1377         (c)Value of property owned by the taxpayer.—
 1378         1.The value of real property and tangible personal
 1379  property owned by the taxpayer is the original cost or other
 1380  basis of such property for federal income tax purposes without
 1381  regard to depletion, depreciation, or amortization.
 1382         2.Loans are valued at their outstanding principal balance,
 1383  without regard to any reserve for bad debts. If a loan is
 1384  charged off in whole or in part for federal income tax purposes,
 1385  the portion of the loan charged off is not outstanding. A
 1386  specifically allocated reserve established pursuant to
 1387  regulatory or financial accounting guidelines which is treated
 1388  as charged off for federal income tax purposes shall be treated
 1389  as charged off for purposes of this section.
 1390         3.Credit card receivables are valued at their outstanding
 1391  principal balance, without regard to any reserve for bad debts.
 1392  If a credit card receivable is charged off in whole or in part
 1393  for federal income tax purposes, the portion of the receivable
 1394  charged off is not outstanding.
 1395         (d)Average value of property owned by the taxpayer.—The
 1396  average value of property owned by the taxpayer is computed on
 1397  an annual basis by adding the value of the property on the first
 1398  day of the taxable year and the value on the last day of the
 1399  taxable year and dividing the sum by two. If averaging on this
 1400  basis does not properly reflect average value, the department
 1401  may require averaging on a more frequent basis. The taxpayer may
 1402  elect to average on a more frequent basis. When averaging on a
 1403  more frequent basis is required by the department or is elected
 1404  by the taxpayer, the same method of valuation must be used
 1405  consistently by the taxpayer with respect to property within and
 1406  without this state and on all subsequent returns unless the
 1407  taxpayer receives prior permission from the department or the
 1408  department requires a different method of determining average
 1409  value.
 1410         (e)Average value of real property and tangible personal
 1411  property rented to the taxpayer.—
 1412         1.The average value of real property and tangible personal
 1413  property that the taxpayer has rented from another and that is
 1414  not treated as property owned by the taxpayer for federal income
 1415  tax purposes shall be determined annually by multiplying the
 1416  gross rents payable during the taxable year by eight.
 1417         2.If the use of the general method described in this
 1418  subsection results in inaccurate valuations of rented property,
 1419  any other method that properly reflects the value may be adopted
 1420  by the department or by the taxpayer when approved in writing by
 1421  the department. Once approved, such other method of valuation
 1422  must be used on all subsequent returns unless the taxpayer
 1423  receives prior approval from the department or the department
 1424  requires a different method of valuation.
 1425         (f)Location of real property and tangible personal
 1426  property owned by or rented to the taxpayer.—
 1427         1.Except as described in subparagraph 2., real property
 1428  and tangible personal property owned by or rented to the
 1429  taxpayer is considered to be located within this state if it is
 1430  physically located, situated, or used within this state.
 1431         2.Transportation property is included in the numerator of
 1432  the property factor to the extent that the property is used in
 1433  this state. The extent an aircraft is deemed to be used in this
 1434  state and the amount of value that is included in the numerator
 1435  of this state’s property factor is determined by multiplying the
 1436  average value of the aircraft by a fraction, the numerator of
 1437  which is the number of landings of the aircraft in this state
 1438  and the denominator of which is the total number of landings of
 1439  the aircraft everywhere. If the extent of the use of any
 1440  transportation property within this state cannot be determined,
 1441  the property shall be deemed to be used wholly in the state in
 1442  which the property has its principal base of operations. A motor
 1443  vehicle shall be deemed to be used wholly in the state in which
 1444  it is registered.
 1445         (g)Location of loans.—
 1446         1.a.A loan is considered to be located within this state
 1447  if it is properly assigned to a regular place of business of the
 1448  taxpayer within this state.
 1449         b.A loan is properly assigned to the regular place of
 1450  business with which it has a preponderance of substantive
 1451  contacts. A loan assigned by the taxpayer to a regular place of
 1452  business without the state shall be presumed to have been
 1453  properly assigned if:
 1454         (I)The taxpayer has assigned, in the regular course of its
 1455  business, such loan on its records to a regular place of
 1456  business consistent with federal or state regulatory
 1457  requirements;
 1458         (II)Such assignment on its records is based upon
 1459  substantive contacts of the loan to such regular place of
 1460  business; and
 1461         (III)The taxpayer uses said records reflecting assignment
 1462  of loans for the filing of all state and local tax returns for
 1463  which an assignment of loans to a regular place of business is
 1464  required.
 1465         c.The presumption of proper assignment of a loan provided
 1466  in sub-subparagraph b. may be rebutted upon a showing by the
 1467  department, supported by a preponderance of the evidence, that
 1468  the preponderance of substantive contacts regarding such loan
 1469  did not occur at the regular place of business to which it was
 1470  assigned on the taxpayer’s records. When such presumption has
 1471  been rebutted, the loan shall be located within this state if:
 1472         (I)The taxpayer had a regular place of business within
 1473  this state at the time the loan was made; and
 1474         (II)The taxpayer fails to show, by a preponderance of the
 1475  evidence, that the preponderance of substantive contacts
 1476  regarding such loan did not occur within this state.
 1477         2.In the case of a loan that is assigned by the taxpayer
 1478  to a place without this state which is not a regular place of
 1479  business, it shall be presumed, subject to rebuttal by the
 1480  taxpayer on a showing supported by the preponderance of
 1481  evidence, that the preponderance of substantive contacts
 1482  regarding the loan occurred within this state if, at the time
 1483  the loan was made the taxpayer’s commercial domicile, as defined
 1484  by paragraph (2)(c), was within this state.
 1485         3.To determine the state in which the preponderance of
 1486  substantive contacts relating to a loan have occurred, the facts
 1487  and circumstances regarding the loan at issue shall be reviewed
 1488  on a case-by-case basis and consideration shall be given to such
 1489  activities as the solicitation, investigation, negotiation,
 1490  approval, and administration of the loan. The terms
 1491  “solicitation,” “investigation,” “negotiation,” “approval,” and
 1492  “administration” are defined as follows:
 1493         a.Solicitation is either active or passive. Active
 1494  solicitation occurs when an employee of the taxpayer initiates
 1495  the contact with the customer. Such activity is located at the
 1496  regular place of business that the taxpayer’s employee is
 1497  regularly connected with or working out of, regardless of where
 1498  the services of such employee were actually performed. Passive
 1499  solicitation occurs when the customer initiates the contact with
 1500  the taxpayer. If the customer’s initial contact was not at a
 1501  regular place of business of the taxpayer, the regular place of
 1502  business, if any, where the passive solicitation occurred is
 1503  determined by the facts in each case.
 1504         b.Investigation is the procedure whereby employees of the
 1505  taxpayer determine the credit worthiness of the customer, as
 1506  well as the degree of risk involved in making a particular
 1507  agreement. Such activity is located at the regular place of
 1508  business that the taxpayer’s employees are regularly connected
 1509  with or working out of, regardless of where the services of such
 1510  employees were actually performed.
 1511         c.Negotiation is the procedure whereby employees of the
 1512  taxpayer and its customer determine the terms of the agreement,
 1513  such as the amount, duration, interest rate, frequency of
 1514  repayment, currency denomination, and security required. Such
 1515  activity is located at the regular place of business that the
 1516  taxpayer’s employees are regularly connected with or working out
 1517  of, regardless of where the services of such employees were
 1518  actually performed.
 1519         d.Approval is the procedure whereby employees or the board
 1520  of directors of the taxpayer make the final determination
 1521  whether to enter into the agreement. Such activity is located at
 1522  the regular place of business that the taxpayer’s employees are
 1523  regularly connected with or working out of, regardless of where
 1524  the services of such employees were actually performed. If the
 1525  board of directors makes the final determination, such activity
 1526  is located at the commercial domicile of the taxpayer.
 1527         e.Administration is the process of managing the account.
 1528  This process includes bookkeeping, collecting the payments,
 1529  corresponding with the customer, reporting to management
 1530  regarding the status of the agreement, and proceeding against
 1531  the borrower or the security interest if the borrower is in
 1532  default. Such activity is located at the regular place of
 1533  business that oversees this activity.
 1534         (h)Location of credit card receivables.—For purposes of
 1535  determining the location of credit card receivables, credit card
 1536  receivables shall be treated as loans and are subject to the
 1537  provisions of paragraph (g).
 1538         (i)Period for which properly assigned loan remains
 1539  assigned.—A loan that has been properly assigned to a state
 1540  shall, absent any change of material fact, remain assigned to
 1541  the state for the length of the original term of the loan.
 1542  Thereafter, the loan may be properly assigned to another state
 1543  if the loan has a preponderance of substantive contact to a
 1544  regular place of business there.
 1545         (5)PAYROLL FACTOR.—
 1546         (a)General.—The payroll factor is a fraction, the
 1547  numerator of which is the total amount paid in this state during
 1548  the taxable year by the taxpayer for compensation and the
 1549  denominator of which is the total compensation paid both within
 1550  and without this state during the taxable year. The payroll
 1551  factor shall include only that compensation included in the
 1552  computation of adjusted federal income for the taxable year.
 1553         (b)Compensation relating to nonbusiness income and
 1554  independent contractors.—The compensation of any employee for
 1555  services or activities that are connected with the production of
 1556  nonbusiness income, or income that is not includable in adjusted
 1557  federal income, and payments made to any independent contractor
 1558  or any other person not properly classifiable as an employee
 1559  shall be excluded from both the numerator and denominator of the
 1560  factor.
 1561         (c)When compensation is paid in this state.—Compensation
 1562  is paid in this state if any one of the following tests, applied
 1563  consecutively, is met:
 1564         1.The employee’s services are performed entirely within
 1565  this state.
 1566         2.The employee’s services are performed both within and
 1567  without the state, but the service performed without the state
 1568  is incidental to the employee’s service within the state. The
 1569  term “incidental” means any service that is temporary or
 1570  transitory in nature or that is rendered in connection with an
 1571  isolated transaction.
 1572         3.If the employee’s services are performed both within and
 1573  without this state, the employee’s compensation shall be
 1574  attributed to this state:
 1575         a.If the employee’s principal base of operations is within
 1576  this state;
 1577         b.If there is no principal base of operations in any state
 1578  in which some part of the services are performed, but the place
 1579  from which the services are directed or controlled is in this
 1580  state; or
 1581         c.If the principal base of operations and the place from
 1582  which the services are directed or controlled are not in any
 1583  state in which some part of the service is performed but the
 1584  employee’s residence is in this state.
 1585         Section 12. Subsections (2) and (3) of section 220.151,
 1586  Florida Statutes, are amended to read:
 1587         220.151 Apportionment; methods for special industries.—
 1588         (2) The tax base for a taxpayer furnishing transportation
 1589  services other than by air, for the purpose of computing a tax
 1590  on those activities, shall be apportioned to this state by
 1591  multiplying such base by a fraction the numerator of which is
 1592  the revenue miles of the taxpayer in this state and the
 1593  denominator of which is the revenue miles of the taxpayer
 1594  everywhere. The term “revenue miles in this state” also includes
 1595  all miles traversed between points in this state, even though
 1596  the route of travel is not wholly over the land mass of the
 1597  state.
 1598         (a) For transportation other than by pipeline or by air, a
 1599  revenue mile is the transportation of one passenger or 1 net ton
 1600  of freight the distance of 1 mile for a consideration. When a
 1601  taxpayer is engaged in the transportation of both passengers and
 1602  freight, the fraction shall be determined by means of an average
 1603  of the passenger revenue mile fraction and the freight revenue
 1604  mile fraction, weighted to reflect the taxpayer’s relative
 1605  railway operating income from total passenger and total freight
 1606  service as reported to the United States Department of
 1607  Transportation Interstate Commerce Commission, in the case of
 1608  transportation by railroad, or weighted to reflect the
 1609  taxpayer’s relative gross receipts from passenger and freight
 1610  transportation, in case of transportation other than by
 1611  railroad.
 1612         (b) For transportation by pipeline, a revenue mile is the
 1613  transportation by pipeline of 1 barrel of oil, 1,000 cubic feet
 1614  of gas, or any specified quantity of any other substance the
 1615  distance of 1 mile for a consideration.
 1616         (c) The tax base for a taxpayer furnishing transportation
 1617  services by air, for purposes of computing a tax on those
 1618  activities, shall be apportioned to this state by multiplying
 1619  such base by a fraction the numerator of which is the number of
 1620  takeoffs and landings in this state and the denominator is the
 1621  number of takeoffs and landings everywhere. For purposes of
 1622  paragraph (a), in computing the revenue miles of any taxpayer
 1623  engaged in furnishing air or sea transportation services, the
 1624  “revenue miles in this state” shall include all miles traversed
 1625  within the area bounded on the west by the meridian of longitude
 1626  87°30′ west from Greenwich, bounded on the north by the northern
 1627  land border of this state or the parallel of latitude 31° north
 1628  from the equator, bounded on the east by the meridian of
 1629  longitude 80° west from Greenwich, and bounded on the south by
 1630  the parallel of latitude 23°30′ north from the equator as the
 1631  case may be. The “revenue miles in this state” shall also
 1632  include all miles traversed between points in this state, even
 1633  though the route of travel is not wholly over the land mass of
 1634  the state. The department may prescribe standard mileage tables
 1635  for the purpose of determining revenue miles in the state under
 1636  this paragraph, rather than requiring taxpayers to compute from
 1637  their records the actual number of miles traversed within such
 1638  boundaries or points from time to time.
 1639         (d)For taxpayers furnishing transportation services by
 1640  sea, revenue miles within this state shall be miles traversed
 1641  within the constitutional boundaries of Florida.
 1642         (e)For purposes of this subsection, revenue miles not
 1643  allocable or apportionable to any taxing jurisdiction, otherwise
 1644  known as “nowhere miles,” are eliminated from both the numerator
 1645  and denominator of the apportionment computation.
 1646         (f)(d) For purposes of this subsection, the term “taxpayer
 1647  furnishing transportation services” includes taxpayers engaged
 1648  exclusively in interstate commerce.
 1649         (3) For any taxable year beginning on or after January 1,
 1650  1999, a citrus processing company may, if required to apportion
 1651  its taxable net income pursuant to the three-factor
 1652  apportionment method set forth in s. 220.15(1), elect to have
 1653  such apportionment determined for that taxable year solely by
 1654  use of the sales factor, as set forth in s. 220.15(4) s.
 1655  220.15(5). The election shall be made by the filing of a return
 1656  for the taxable year utilizing this method.
 1657         Section 13. Section 220.152, Florida Statutes, is amended
 1658  to read:
 1659         220.152 Apportionment; other methods.—If the apportionment
 1660  methods of ss. 220.15, 220.1505, and 220.151 do not fairly
 1661  represent the extent of a taxpayer’s tax base attributable to
 1662  this state, the taxpayer may petition for, or the department may
 1663  require, in respect to all or any part of the taxpayer’s tax
 1664  base, if reasonable:
 1665         (1) Separate accounting;
 1666         (2) The exclusion of any one or more factors;
 1667         (3) The inclusion of one or more additional factors which
 1668  will fairly represent the taxpayer’s tax base attributable to
 1669  this state; or
 1670         (4) The employment of any other method which will produce
 1671  an equitable apportionment.
 1672         Section 14. Section 213.054, Florida Statutes, is repealed.
 1673         Section 15. Subsections (3) and (5) of section 220.62,
 1674  Florida Statutes, are repealed.
 1675         Section 16. Subsection (5) of section 220.63, Florida
 1676  Statutes, is repealed.
 1677         Section 17. Section 220.64, Florida Statutes, is amended to
 1678  read:
 1679         220.64 Other provisions applicable to franchise tax.—To the
 1680  extent that they are not manifestly incompatible with the
 1681  provisions of this part, parts I, III, IV, V, VI, VIII, IX, and
 1682  X of this code and ss. 220.12, 220.13, 220.15, 220.1505, and
 1683  220.16 apply to the franchise tax imposed by this part. Under
 1684  rules prescribed in s. 220.131, a consolidated return may be
 1685  filed by any affiliated group of corporations composed of one or
 1686  more banks or savings associations, its or their Florida parent
 1687  corporation, and any nonbank or nonsavings subsidiaries of such
 1688  parent corporation.
 1689         Section 18. Section 220.51, Florida Statutes, is amended to
 1690  read:
 1691         220.51 Promulgation of rules and regulations.—
 1692         (1) In accordance with the Administrative Procedure Act,
 1693  chapter 120, the department is authorized to make, promulgate,
 1694  and enforce such reasonable rules and regulations, and to
 1695  prescribe such forms relating to the administration and
 1696  enforcement of the provisions of this code, as it may deem
 1697  appropriate, including:
 1698         (a)(1) Rules for initial implementation of this code and
 1699  for taxpayers’ transitional taxable years commencing before and
 1700  ending after January 1, 1972;
 1701         (b)(2) Rules or regulations to clarify whether certain
 1702  groups, organizations, or associations formed under the laws of
 1703  this state or any other state, country, or jurisdiction shall be
 1704  deemed “taxpayers” for the purposes of this code, in accordance
 1705  with the legislative declarations of intent in s. 220.02; and
 1706         (c)(3) Regulations relating to consolidated reporting for
 1707  affiliated groups of corporations, in order to provide for an
 1708  equitable and just administration of this code with respect to
 1709  multicorporate taxpayers.
 1710         (2)The department may adopt rules pursuant to ss.
 1711  120.536(1) and 120.54 to administer this chapter, including
 1712  rules interpreting each definition used in this chapter and
 1713  rules for interpreting the reasonable attribution of intangible
 1714  property to income-producing activity.
 1715         Section 19. (1)It is the intent of the Legislature to
 1716  require all corporations filing Florida nexus group corporate
 1717  income tax returns to either file separate Florida income tax
 1718  returns or to make an election to file a consolidated Florida
 1719  income tax returns composed of the identical component members
 1720  to those that have consolidated their taxable incomes for
 1721  federal income tax purposes.
 1722         (2)It is further the intent of the Legislature to clarify
 1723  that the amendments to ss. 220.23 and 220.809, Florida Statutes,
 1724  made by sections 44 and 45 of chapter 2002-218, Laws of Florida,
 1725  were intended to apply to all notifications of adjustments
 1726  required to be reported on or after January 1, 2003, by s.
 1727  220.23, Florida Statutes, and that those amendments were
 1728  intended to apply retroactively to all tax years represented by
 1729  such notifications and returns, including tax years prior to
 1730  January 1, 2003. It is the intent of the Legislature that this
 1731  clarification applies retroactively to January 1, 2003, and
 1732  applies retroactively to all returns and notices required to be
 1733  filed under s. 220.23, Florida Statutes, on or after January 1,
 1734  2003.
 1735         (3)It is further the intent of the Legislature that the
 1736  amendments made by sections 5, 6, and 7 of this act to ss.
 1737  220.02(1), 220.03(1)(e) and (6), and 220.13(1)(a), Florida
 1738  Statutes, are remedial in nature and apply retroactively to tax
 1739  years beginning after December 31, 2000.
 1740         Section 20. This act shall take effect upon becoming a law,
 1741  and applies to tax years ending on or after December 31, 2009,
 1742  except as otherwise expressly provided in section 19 of this
 1743  act.