§287.94. Computation of net apportionable income from Louisiana sources

A. Total net apportionable income. Total net apportionable income or loss is computed by subtracting the following from gross apportionable income:

(1) All expenses, losses, and other deductions defined in R.S. 47:287.63 as allowable deductions which are directly attributable to gross apportionable income.

(2) A ratable portion of such allowable deductions which are not directly attributable to any item or class of gross income.

B. Apportionment to Louisiana. Net apportionable income or loss is computed by multiplying the total net apportionable income or loss by the Louisiana apportionment percent determined in accordance with the provisions of R.S. 47:287.95.

C. Separate accounting of apportionable income. In lieu of the apportionment as provided in this Section, a taxpayer may apply to the secretary for permission to compute the net apportionable income derived from sources in this state by means of the separate accounting method. The secretary shall grant such permission if the taxpayer shows that the apportionment method produces a manifestly unfair result, and that the unit of the taxpayer's business operating in this state could be successfully operated independently of the units in other states, and makes all of its sales in this state or derives all of its gross revenues from sources in this state, and any merchandise or products sold by the unit in this state are either:

(1) Produced by the taxpayer in Louisiana;

(2) Purchased by the taxpayer from nonaffiliated sources within or without this state;

(3) Purchased from an affiliated source at not more than the price at which similar merchandise or products in similar quantities could be purchased from nonaffiliated sources; or

(4) Transferred from another department of the taxpayer's business at not more than the actual cost to the taxpayer; or where it is otherwise shown to the satisfaction of the secretary that the apportionment method produces a manifestly unfair result and that the separate accounting method produces a fair and equitable determination of the amount of net income taxable in this state.

D. If such permission is granted by the secretary, the taxpayer shall compute the net apportionable income derived from sources in this state by means of a separate accounting method which shall comply with the regulations to be prescribed by the secretary. When a taxpayer has secured permission to employ the separate accounting method, a change to the method of apportionment shall not be made for any subsequent year without securing the permission of the secretary.

E. When the secretary finds that the use of the apportionment method by a taxpayer produces a manifestly unfair result and that the separate accounting method would more equitably determine the amount of net income derived from sources in Louisiana, the secretary may require that the separate accounting method be used in such case.

F. Whenever there is a dispute between the taxpayer and the secretary as to whether the separate accounting method or the apportionment method should be used, the burden shall be upon the party urging the use of the separate accounting method to show that the apportionment method produces a manifestly unfair result.

G. In any case where the secretary requires that a taxpayer change to the separate method of accounting, the secretary may, absent the negligence of the taxpayer and upon a showing of reasonable cause by the taxpayer, remit or waive payment of the whole or any part of any accrued interest which would be due from such taxpayer with respect to any additional taxes due as a result of the required change to the separate method of accounting. The secretary shall not waive any interest accruing thirty days after the first issuance to the taxpayer of a proposed assessment in connection with the change to the separate method of accounting.

H. When net apportionable income is computed by means of the separate accounting method, or at any time the Louisiana apportionment percent is zero, profits or losses from sales or exchanges of property not made in the regular course of business shall be apportioned to Louisiana on the ratio of gross income from Louisiana sources, other than such profits or losses, to gross income of the corporation, other than such profits or losses. When all of the gross income of the corporation is from such profits or losses, the portion of the profits or losses from sales or exchanges of property not made in the regular course of business attributable to Louisiana shall be determined as follows:

(1) Profits or losses on sales or exchanges of tangible property shall be attributed to Louisiana if the property was located in Louisiana at the time of sale or exchange.

(2) Profits or losses on sales or exchanges of an ownership interest in a corporation, partnership, limited liability company, or other business organization shall be attributed to Louisiana to the extent the assets of the organization, of which an ownership interest was sold, are located in Louisiana at the time of the sale or exchange.

(3) Profits or losses on sales or exchanges of a patent, trademark, copyright, secret process, or other similar intangible right shall be attributed to Louisiana to the extent of use of the right in Louisiana compared to use everywhere.

(4) Profits or losses on sales or exchanges of other intangible assets, including debt instruments, shall be attributed to the state in which the assets have their situs 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, to the commercial domicile of the taxpayer.

I. Repealed by Acts 2002, No. 16, §2, eff. June 7, 2002.

Acts 1986, 1st Ex. Sess., No. 16, §1, eff. Dec. 24, 1986; Acts 1993, No. 690, §1, eff. June 21, 1993, for all taxable periods beginning after Dec. 31, 1992; Acts 2002, No. 16, §2, eff. June 7, 2002; Acts 2005, No. 401, §1, eff. for all taxable periods beginning after Dec. 31, 2005.