N.M. Admin. Code § 3.2.229.8

Current through Register Vol. 35, No. 23, December 10, 2024

Section 3.2.229.8 - GENERAL EXAMPLES

A. The deduction provided by this section contains several restrictions, among them are these:

(1) receipts must be from activities performed on a nonprofit or cost basis;

(2) excluded are receipts from sharing equipment or facilities other than office equipment or offices; and

(3) excluded are receipts from transactions with entities other than affiliated corporations as defined in this section.

B. Example 1: D is a wholly owned subsidiary of C. C does the machine accounting for D for the actual cost of the accounting work plus ten percent. C may not deduct the receipts which it receives from D. The deduction is only for receipts from accounting services rendered on a nonprofit or cost basis.

C. Example 2: D, a wholly owned subsidiary of C, leases construction equipment to C on a cost basis. D cannot deduct the gross receipts which it received from this transaction. This transaction does not involve the performance of accounting, managerial or administrative services or the joint use or sharing of office machines and facilities upon a nonprofit or cost basis.

D. Example 3: B and C are subsidiaries of A. A owns 80% of the voting stock of B and 40% of the voting stock of C. B performs administrative and accounting services for A and C on a cost basis. B may deduct the receipts derived from performing the administrative and accounting services for A. B may not deduct the gross receipts which it receives from C because C is not an affiliated corporation as defined by this section.

E. This version of Section 3.2.229.8 NMAC is retroactively applicable to taxable events occurring on or after July 1, 1993.

N.M. Admin. Code § 3.2.229.8

12/5/69 ... 3/15/96; 3.2.229.8 NMAC - Rn, 3 NMAC 2.69.8 & A, 6/14/01