Louisiana ~ Corporate Income, Franchise Taxes: Broadcasting Business Apportionment Amended

Applicable for all Louisiana corporate income tax periods beginning on or after January 1, 2012, and for all corporation franchise tax periods beginning on or after January 1, 2013, legislation amends the method of calculating taxable income derived from broadcasting film and radio programming which is attributable to activity in the state. Both the attribution of revenue from broadcasting and the allocation of taxable capital are amended as detailed below.

Specifically, gross apportionable income and revenue, including license fees, from broadcasting film or radio programming is attributed to the state based on the following:

— Except as otherwise provided, the amount of gross apportionable income and revenue including advertising income, attributed to this state from broadcasting film or radio programming shall be determined by multiplying the total gross apportionable income from broadcasting film or radio programming, including advertising revenue, by the audience factor.

— For purposes of attributing the gross apportionable income and revenue earned by a local television or radio station, 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 on 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.

— For purposes of attributing the gross apportionable income and revenue earned by a cable television system, satellite television system, or other system hereinafter referred to collectively in this paragraph 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.

— The amount of gross apportionable income and revenue attributed to this state from all other film and radio broadcasting shall be determined by multiplying the total gross apportionable income from such film and radio broadcasting by the ratio of income received from Louisiana customers to income received from customers everywhere; however, the gross apportionable income attributable to the state using this ratio shall not be less than 25% of the amount which would be attributable if calculated using an audience factor. For purposes of this part, gross apportionable income and revenue includes advertising income and income from cable or satellite systems and local television and radio stations. “Louisiana customers” includes 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 such taxpayer. 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.

Definitions

“Commercial domicile” means 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.

“Customer” means 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.

Act 381 (H.B. 632), Laws 2011, effective August 15, 2011, and applicable as mentioned

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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