N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 4-1.3

Current through Register Vol. 46, No. 45, November 2, 2024

Section 4-1.3 - Lump sum payments

(a) When a sale is comprised of both a digital product and a digital service, both of which are apportioned under Subpart 4-3 of this Part, the receipt cannot be divided into separate components for purposes of the application of the rules in such Subpart and is considered to be one receipt, regardless of whether the components are separately stated for billing purposes.

(b) Except as provided in subdivision (a) of this section, in the case of the sale of multiple assets or services in one transaction, the proceeds from the sale shall be reasonably divided among the types of assets or services sold by the corporation and the receipts or net gains from each type must be apportioned using the applicable rule in section 210-A and the applicable rules in this Subchapter. If the receipt or net gain cannot be reasonably divided, the corporation should use the rule that is the most reflective for the type of income generated. A corporation cannot use the rules for intermediary transactions provided for in sections 4-3.8 and 4-4.8 of this Subpart unless almost all of the activities carried on under the agreement are intermediary transactions. Full details regarding the sale and the division of the proceeds and gain must be submitted with the corporation's report.

(c) Examples.

Example 1: Corporation B sells all the assets of one of its divisions for a gain, which is properly reported as business income. The assets sold consisted of real property, tangible personal property, and goodwill. The portion of the gain attributable to the sale of tangible personal property shall be apportioned to New York State using the rules for net gains from the sale of tangible personal property in section 4-2.1 of this Part, the portion attributable to the sale of real property shall be apportioned to New York State using the rules for net gains from the sale of real property in section 4-2.2 of this Part, and the portion attributable to the sale of goodwill shall be apportioned to New York State using the rules for other services and other business receipts in Subpart 4-4 of this Part.

Example 2: Book Corp sells electronic books and physical books through its website. Customers purchase a bundle of both an electronic and physical book, the price of which includes a discounted price of the electronic and physical book, but the breakdown is not separately stated. For bundled purchases, the electronic book is available for immediate download by the customer and the physical book is shipped from Book Corp to the customer. Customer B, with a New York billing address, purchases a bundled purchase of an electronic and a physical book commingled into one receipt. As the receipt cannot be reasonably divided between the electronic book and the physical book, the entire receipt should be sourced as a sale of tangible personal property.

N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 4-1.3

Adopted New York State Register December 27, 2023/Volume XLV, Issue 52, eff. 12/27/2023