§606. Allocation of taxable capital
A. General allocation formula.
For the purpose of ascertaining the tax imposed in this Chapter, every corporation
subject to the tax is deemed to have employed in this state the proportion of its taxable
capital, computed on the basis of the ratio obtained by taking the arithmetical average of the
following ratios:
(1) The ratio that the net sales made to customers in the regular course of business
and other revenue attributable to Louisiana bears to the total net sales made to customers in
the regular course of business and other revenue. For the purposes of this Subsection net
sales and other revenues attributable to Louisiana shall be determined as follows:
(a) Sales attributable to this state shall be all sales where the goods, merchandise or
property is received in this state by the purchaser. In the case of delivery of goods by
common carrier or by other means of transportation, including transportation by the
purchaser, the place at which the goods are ultimately received after all transportation has
been completed shall be considered as the place at which the goods are received by the
purchaser. However, direct delivery into this state by the taxpayer to a person or firm
designated by a purchaser from within or without the state shall constitute delivery to the
purchaser in this state. Revenue derived from a sale of property not made in the regular
course of business shall not be considered. For purposes of sales of aircraft manufactured
or assembled in this state, the place at which the aircraft is ultimately received shall be the
place the aircraft is to be primarily stored when not in use.
(b) Revenues attributable to this state derived from air transportation shall include
all gross receipts derived from passenger journeys and cargo shipments originating in
Louisiana.
(c) Revenues attributable to this state derived from transportation of crude
petroleum, natural gas, petroleum products or other commodities for others through pipelines
shall include all gross revenue derived from operations entirely within this state plus a
portion of any revenue from operations partly within and partly without this state, based upon
the ratio of the number of units of transportation service performed in Louisiana in
connection with such revenue to the total of such units. A unit of transportation service shall
be the transporting of any designated quantity of crude petroleum, natural gas, petroleum
products or other commodities for any designated distance.
(d) Revenues attributable to this state derived from transportation other than aircraft
or pipeline shall include all such income that is derived entirely from sources within this
state, and a portion of revenue from transportation partly without and partly within this state,
to be prorated subject to rules, and regulations of the collector, which shall give due
consideration to the proportion of service performed in Louisiana.
(e) Revenue, including license fees, from broadcasting film or radio programming,
whether through the public airwaves, by cable, direct or indirect satellite transmission, or any
other means of communication, either through a network, including owned and affiliated
stations, or through an affiliated, unaffiliated, or independent television or radio broadcasting
station, shall be attributed to the state as follows:
(i) Except as otherwise provided in this Subsection, the revenue, including
advertising revenue attributed to the state from broadcasting film or radio programming,
shall be determined by multiplying total revenue from broadcasting film or radio
programming, including advertising revenue, by the audience factor.
(ii) For purposes of revenue attributed to the state from a local television or radio
station broadcasting film or radio programming, the audience factor shall be determined by
the ratio of the taxpayer's Louisiana viewing or listening audience to their total viewing or
listening audience. The audience factor shall be determined based on the books and records
of the taxpayer or published rating statistics. However, the method used to determine the
audience factor must be used consistently from year to year and must fairly represent the
taxpayer's activity in Louisiana.
(iii) For purposes of revenue attributed to the state from a cable television system,
satellite television system, or other system broadcasting film or radio programming,
hereinafter referred to collectively in this Subparagraph as "cable or satellite system" under
which ultimate viewers or listeners must pay the cable or satellite system for the right to
receive the broadcast, the audience factor shall be the ratio that the subscribers for that cable
or satellite system located in Louisiana bears to the total subscribers of that cable or satellite
system if the payment entitles the ultimate viewers or listeners to continuous reception of
programming during a subscription period.
(aa) If the number of subscribers cannot be accurately determined from the taxpayer's
books and records, the audience factor shall be determined based on the applicable year's
subscription statistics located in published surveys. However, the source selected to
determine the audience factor must be consistently used from year to year and must fairly
represent the taxpayer's activity in Louisiana.
(bb) If the payment entitles the ultimate viewers or listeners to only discrete episodes
or instances of film or radio programming, the audience factor shall be the ratio that the
subscribers for such discrete programming located in Louisiana bears to the total subscribers
for such discrete programming. If the number of subscribers for such discrete episodes or
instances cannot be accurately determined from the books and records maintained by the
taxpayer, the audience factor shall be determined on the basis of statistics located in
published surveys. However, the source selected to determine the audience factor must be
consistently used from year to year for that purpose and must fairly represent the taxpayer's
activity in Louisiana.
(iv)(aa) The amount of revenue attributed to this state from all other film and radio
broadcasting shall be determined by multiplying the total revenue from such film and radio
broadcasting by the ratio of revenue received from Louisiana customers to revenue received
from customers everywhere; however, such revenue attributable to the state using this ratio
shall not be less than twenty-five percent of the amount which would be attributable if
calculated using an audience factor as defined in Item (ii) of this Subparagraph.
(bb) For purposes of this Subparagraph, revenue includes advertising revenue and
revenue from cable or satellite systems and local television and radio stations. Louisiana
customers are cable or satellite systems, local television and radio stations, and advertisers
with a commercial domicile in the state and a contract or agreement directly with the
taxpayer under which revenue is derived by the taxpayer. Notwithstanding the provisions
of Subitem (bb) of Item (v) of this Subparagraph, if the taxpayer's customer is a television
or radio station operating in Louisiana, then the commercial domicile of the customer is
deemed to be Louisiana. This provision shall have no impact on the tax filing position of the
customer.
(v) Definitions. For the purposes of this Subsection, the following terms have the
following meanings unless the context clearly indicates otherwise:
(aa) "Broadcast" means transmission by an electronic or other signal conducted by
radio waves or microwaves or by wires, lines, coaxial cables, wave guides, fiber optics,
satellite transmissions, directly or indirectly to viewers and listeners, or by any other means
of communications.
(bb) "Commercial domicile" shall mean the state where management decisions are
implemented, which is presumed to be the state where the taxpayer conducts its principal
business and thereby benefits from public facilities provided by that state. The location of
board of directors' meetings is not presumed to create a commercial domicile at that location.
(cc) "Customer" shall mean a business or party, such as an advertiser or licensee, that
has a contract or agreement directly with the taxpayer under which revenue is derived by
such taxpayer.
(dd) "Film" or "film programming" means all performances, events, or productions
intended to be broadcast for visual perception, including but not limited to news, sporting
events, plays, stories, or other literary, commercial, educational, or artistic works. Each
episode of a series of films shall constitute a separate "film" even if the series relates to the
same principal subject.
(ee) "Radio" or "radio programming" means all performances, events, or productions
intended to be broadcast for auditory perception, including but not limited to news, sporting
events, plays, stories, or other literary, commercial, educational, or artistic works. Each
episode of a series of radio programming shall constitute a separate "radio programming"
even if the series relates to the same principal subject.
(ff) "Subscriber" means the individual residence or other outlet that is the ultimate
recipient of the transmission.
(f) Revenues from services other than those described above shall be attributed
within and without Louisiana on the basis of the location at which the services are rendered.
(g) Rents and royalties from immovable or corporeal movable property shall be
attributed to the state where such property is located at the time the revenue is derived.
(h) Interest on customers' notes and accounts shall be attributed to the state in which
such customers are located.
(i) Other interest and dividends shall be attributed to the state in which the securities
or credits producing such revenue have their situs, which shall be at the business situs of
such securities or credits, if they have been so used in connection with the taxpayer's business
as to acquire a business situs, or, in the absence of such a business situs shall be at the
commercial domicile of the corporation.
(j) Royalties or similar revenue from the use of patents, trademarks, copyrights,
secret processes, and other similar intangible rights shall be attributed to the state or states
in which such rights are used.
(k) Revenues from a parent or subsidiary corporation shall be allocated as provided
in Subsection B of this Section.
(l) All other revenues shall be attributed within and without this state on the basis
of such ratio or ratios, prescribed by the secretary, as may be reasonably applicable to the
type of revenues and business involved.
(2) The ratio that the value of all of the taxpayer's property and assets situated or
used in Louisiana bears to the value of all of its property and assets wherever situated or
used. In determining value, depreciation and depletion reserves must be deducted from the
book values of the properties in question. The various classes of property and assets shown
below shall be allocated within and without Louisiana on the bases indicated:
(a) Cash shall be allocated to the state in which located.
(b) Cash in banks and temporary cash investments shall be allocated to the state in
which they have their business situs, or in the absence of a business situs, to the state in
which is located the commercial domicile of the taxpayer.
(c) Trade accounts and trade notes receivable shall be allocated by reference to the
transactions from which the receivables arose, on the basis of the location at which delivery
was made in the case of sale of merchandise or the location at which the services were
performed in case of charges for services rendered.
(d) Investments in and advances to a parent or subsidiary shall be allocated as
provided in Sub-section B of this Section.
(e) Notes and accounts other than those notes and accounts described under items
(b) through (d) above shall be allocated to the state in which they have their business situs,
or in the absence of a business situs, to the state in which is located the commercial domicile
of the taxpayer.
(f) Stocks and bonds not included in (b) or (d) above shall be allocated to the state
in which they have their business situs or in the absence of a business situs to the state in
which is located the commercial domicile of the taxpayer.
(g) Immovable and corporeal movable property shall be allocated within and without
Louisiana on the basis of actual location. Corporeal movable property of a class which is not
normally located within a particular state the entire taxable year shall be allocated within and
without Louisiana by use of a ratio or ratios which shall give due consideration to the usage
within and without this state. Mineral leases and royalty interests shall be allocated to the
state in which the property covered by the lease or royalty interest is located.
(h) All other assets shall be allocated within or without Louisiana on the basis,
prescribed by the collector, as may reasonably be applicable to the assets and the type of
business involved.
(3)(a) For taxable periods beginning on or after January 1, 1997, and before January
1, 2007, for corporations engaged in the business of manufacturing, an additional ratio
consisting of net sales made to customers in the regular course of business attributable to
Louisiana to the total net sales made to customers in the regular course of business. For the
purposes of this Paragraph, the taxable capital allocated to Louisiana shall be the arithmetical
average of the three ratios provided in Paragraphs (1) and (2) and Subparagraph (a) of this
Subsection.
(b) For taxable periods beginning on or after January 1, 2007, for corporations
engaged in the business of manufacturing, the sole ratio shall be computed by means of a
single ratio consisting of the ratio provided for in Paragraph (A)(1) of this Section.
(c) The term "business of manufacturing" shall only include taxpayers whose net
sales are derived primarily from the manufacture, production, and sale of tangible personal
property; however, the term "business of manufacturing" shall not include:
(i) Any taxpayer whose income is primarily derived from the production or sale of
unrefined oil and gas.
(ii) Any taxpayer whose income is primarily derived from the manufacture,
distribution, distillation, importation, or sale of alcoholic beverages.
(iii) Any taxpayer defined as an integrated oil company per the United States Internal
Revenue Code - 26 USC 291(b)(4), or integrated oil companies that refine, produce, and
have marketing operations, whose income in Louisiana is principally derived from
production and sale of unrefined oil and gas, and who also engage in significant marketing
of refined petroleum products in Louisiana. Provided, any taxpayer, whose activities during
the taxable year do not include any "gross receipts from retail sales of oil and/or natural gas",
or any "refinery activities of oil and/or natural gas", will not be considered as an integrated
oil company for Louisiana tax purposes, notwithstanding such taxpayer may be a "related
party" or a "member of the federal consolidated group" under the United States Internal
Revenue Code.
B. Allocation of intercompany items. For the purpose of allocation, investments in,
advances to, or revenues from a parent or subsidiary corporation shall be allocated to
Louisiana on the basis of the percentage of capital employed in Louisiana for corporation
franchise tax purposes by the parent or subsidiary corporation. A subsidiary corporation is
any corporation the majority of the capital stock of which is actually, wholly or substantially
owned by another corporation and whose management, business policies and operations are,
howsoever, actually, wholly or substantially controlled by another corporation; which latter
corporation shall be termed the parent corporation.
C. Minimum allocation; assessed value of real and personal property. The portion
of taxable capital allocated for franchise taxation under this Chapter shall in no case be less
than the total assessed value of real and personal property in this state of each such domestic
or foreign corporation for the calendar year preceding that in which the tax is due.
D. Property located in United States customs-bonded warehouses or foreign trade
zones. For purposes of this Section, corporeal movable property (tangible personal property)
imported into the United States and located in Louisiana in United States customs-bonded
warehouses or foreign trade zones established under the Foreign Trade Zones Act (19
U.S.C.A. 81a et seq.), as amended, shall be considered located outside of Louisiana.
E. Adjustments to value of property and assets. Whenever the value of an asset is
adjusted or excluded in computing surplus under the provisions of R.S. 47:605, the value
shall also be correspondingly adjusted or excluded for the purpose of R.S. 47:606(A)(2).
F. Mergers. When a corporation merges with another corporation and the merging
corporation dissolves or ceases to exist, the allocation of taxable capital for determining the
amount of tax due for the tax period ending after the tax period in which the merger occurred
shall be computed as follows:
(1) To compute the ratio of sales and other revenues attributable to Louisiana as
prescribed under Paragraph (1) of Subsection A of this Section, the merging corporation's
net sales and other revenues from the beginning of the surviving corporation's taxable period
to the date of the merger must be included with the surviving corporation's net sales and
other revenues.
(2) To compute the ratio of the value of property and assets attributable to Louisiana
as prescribed under Paragraph (2) of Subsection A of this Section, the merging corporation's
property and assets must be included with the surviving corporation's property and assets.
If the merger is effective at 12:00 midnight on the last day of the merged corporation's
accounting period, which period coincides with the last day of the surviving corporation's
accounting period, the surviving corporation shall include the assets of the merged
corporation with its assets in computing the ratios of property and assets.
Amended by Acts 1954, No. 294, §1; Acts 1964, No. 237, §1; Acts 1989, No. 387,
§1, eff. June 30, 1989; Acts 1989, No. 394, §1, eff. June 30, 1989; Acts 1992, No. 156, §1,
eff. for taxable periods beginning on or after Jan. 1, 1993; Acts 1996, No. 19, §1, eff. for
taxable years beginning on or after Jan. 1, 1997; Acts 1998, No. 5, §1, eff. June 4, 1998,
applicable to taxable periods beginning after Dec. 31, 1999; Acts 2002, No. 65, §2, eff. for
taxable periods beginning after Dec. 31, 2002; Acts 2004, 1st Ex. Sess., No. 2, §1, eff. Jan.
1, 2006; Acts 2005, No. 401, §1, eff. for all taxable periods beginning after Dec. 31, 2005;
Acts 2011, No. 381, §1, applicable to corporation tax on and after Jan. 1, 2012, and
corporation franchise tax on and after Jan. 1, 2013; Acts 2015, No. 112, §1, eff. June 19,
2015.