Section 1 Model Definition of “Receipts” Regulations
This project was approved by the Executive Committee at its meeting on July 31, 2014. The Uniformity Committee subsequently met to discuss the project and consider the scope as well as the make-up of a working group. The working group will draft model regulations to implement changes to the definition of “receipts” under Article IV, Section 1 (g) of the Multistate Tax Compact [UDITPA] that were adopted by the Commission in July 2014. The statutory language is as follows:
“(g) “Receipts” means all gross receipts of the taxpayer that are not allocated under paragraphs of this article, and that are received from transactions and activity in the regular course of the taxpayer’s trade or business; except that receipts of a taxpayer from hedging transactions and from the maturity, redemption, sale, exchange, loan or other disposition of cash or securities, shall be excluded.”
UDITPA Section 1 Work Group Meeting Reference Information
Drafting Resources:
Issues for Consideration:
Definitions
Should there be definitions for terms such as hedging transactions, maturity, redemption,
sale, exchange, loan, or “other disposition of cash or securities”?
- Definitions of “Hedging”, January 8, 2015
- Definition of Terms v.1, December 18, 2014
- Definition of Terms v.2, December 18, 2014
- CA Treasury Function Terms, December 3, 2014
Accounts receivable
- Should sales (or other defined dispositions) of accounts receivable be included within the definition of “receipts”?
“Regular Course of Business”
- How should receipts that are received with varying regularity across lines of business be treated?
- Is a rule required to clarify how receipts from intangible (or other?) assets not held in the regular course of business should be included/excluded from the definition of receipts?
Exclusions
- Should there be a definition of receipts that fit only the functional test (and therefore would be excluded from the definition of receipts under the model)?
Receipts of Brokers
- How should receipts of brokers (or sales of securities in the ordinary course of business)
be treated in general? - Should there be a specific rule for the treatment of such receipts in a combined return with other receipts of non-brokers?
- Are additional definitions required for the sale or other disposition of securities by brokers in the ordinary course of business?
- Are rules required to address the problem of churning and what should those rules be?
Nonapportionable Receipts
- What should the definition of receipts that are nonapportionable (that meet neither the functional
or transactional test) be? - Such receipts are excluded from the definition of receipts under the model.
Recommendations to Uniformity on other issues (not within the scope of this group),
such as regulations under Sections 17 or 18.
- Rule for including functional receipts when not doing so would distort (Sec. 18)
- Rule for churning when it comes to treatment of broker receipts (If to be addressed under Section 18 rather than Section 1).
- Factoring receivables for accrual taxpayers.
Background Information
- Agenda, August 20, 2015, August 27, 2015, September 3, 10, 17 & 24, 2015
- Redlined draft of Section 1, current as of December 3, 2015 (PDF) – for presentation to Uniformity Committee
- Fully integrated redlined draft (Section 1 and Section 17), current as of December 3, 2015 (PDF)
- Redlined draft of Section 1, current as of November 30, 2015 (PDF) – for presentation to Uniformity Committee
- Working Drafts of Section 1 – current as of October 12, 2015
- PDF: Clean and Redlined
- Suggested Hedging Language for UDITPA Section 1
- Commodities Future Trading Commission – “hedging” definitions”
- Definitions and Synonyms for consideration
- Draft highlighting terms “trade or business,” “unitary business,” “business”
- Draft highlighting the references to Sec. 1(g) and to other provisions within Sec. 17 involving the exclusion of receipts from the receipts factor
- Proposed edits to working drafts dated May 21, 2015, to ensure language is consistent with cases cited in Memo dated May 3, 2012
- Working Drafts of Section 1 – current as of October 6, 2015
- PDF: Clean and Redlined
- Word: Clean and Redlined
- Proposed rewrite of “receipts” definition, October 8, 2015
- Working Drafts of Section 1 – current as of September 22, 2015
PDF: Clean and Redlined - Hedging Transactions Chart [Excel document], September 17, 2015
Definition of “hedging”: Webster’s Third New International Dictionary 1968 edition
- The American Dictionary Second College Edition 1982
- Draft highlighting the term “receipts”, September 8, 2015
- Memo regarding the future course of work for the MTC UDITPA Section 1 workgroup, August 20, 2015
- Proposed Illinois regulation defining the term “hedging transaction,” August 20, 2015
- Section 1 Work Group Report for Annual Meeting, July 2015
- Working Drafts of Section 1 – current as of September 3, 2015
- PDF: Clean and Redlined
- Draft highlighting usage of phrases “trade or business” and “gross receipts”
- Working Drafts of Section 1 – current as of August 28, 2015
PDF: Clean and Redlined - Working Drafts of Section 1 – current as of July 14, 2015
PDF: Clean and Redlined - Proposed division of Reg. IV.1.c3: Interest
- Massachusetts definition of “securities”
- Additional notes for Discussion
- Comments re: existing MTC regulations under UDITPA Articles 15 and 18
- Memo to Uniformity Committee, March 6, 2015
- Working Drafts of Section 1 Clean and Redlined – current as of July 14, 2015
- Working Drafts of Section 1 Clean and Redlined – current as of July 7, 2015
- Working Drafts of Section 1 Clean and Redlined – current as of June 23, 2015
- Working Drafts of Section 1 Clean and Redlined – current as of June 10, 2015
- Working Drafts of Section 1 Clean and Redlined – current as of June 4, 2015
- Working Drafts of Section 1 Clean and Redlined – current as of May 28, 2015
- Working Drafts of Section 1 Clean and Redlined – current as of May 21, 2015
- Working Drafts of Section 1 Clean and Redlined – current as of May 5, 2015
- Proposed Initial Changes to Section 1 – Idaho
- Agenda – March 5, 2015
- Agenda – January 8, 2015, January 22, 2015, February 5, 2015 and February 19, 2015
- Memo – Review of Existing MTC Regulations, February 19, 2015
- MA Proposed Apportionment Regulations, February 19, 2015
- Multistate Tax Commission Allocation and Apportionment Regulations, February 19, 2015
- Memo from Shirley Sicilian to Cory Fong re: Multistate Tax Compact Art. IV Recommended Amendments, February 19, 2015
- Agenda, November 20, 2014, , December 4, 2014 and December 18, 2014
- Definition of Terms v.1, December 18, 2014
- Definition of Terms v.2, December 18, 2014
- UDITPA Section 1 Updated Issue List, December 11, 2014
- UDITPA Section 1 Updated Issue List, December 3, 2014
- Hearing Officer Discussion of Receipts (as requested at Nov. 20 meeting), December 3, 2014
- Idaho Amended response to MTC’s Issue List dated November 7, 2014, December 3, 2014
- Oregon – Tektronix, Inc. v. Dept. of Rev. 2012, December 3, 2014
- Arkansas sales factor cases, December 3, 2014
- Staff Memo, November 19, 2014
- Article IV Amendments – July 2014, November 20, 2014
- Issues List, November 20, 2014
- Idaho’s Response to Issues List, November 20, 2014
- Union Pacific decision 2001, November 20, 2014
- Union Pacific decision 2004, November 20, 2014
- Oregon Definition of Sales Factor, November 20, 2014
- Oregon Admin. Rules Regarding Sales Factor, November 20, 2014
- Agenda, November 6, 2014