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