HAR § 18-235-35-01 — Sales factor; in general

(a) “Sales” means all gross receipts of the taxpayer not allocated under sections 235-24 to 235-28, HRS. Thus, for the purposes of the sales factor of the apportionment formula for each trade or business of the taxpayer, sales means all gross receipts derived by the taxpayer from transactions and activity in the regular course of that trade or business. The following are rules for determining sales in various situations: (1) In the case of a taxpayer engaged in manufacturing and selling or purchasing and reselling goods or products, sales includes all gross receipts from the sale of goods or products (or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the tax period) held by the taxpayer primarily for sale to customers in the regular course of its trade or business. Gross receipts for this purpose means gross sales less returns and allowances, and includes all interest income, service charges, carrying charges, or time-price differential charges incidental to those sales. Federal and state excise taxes (including sales taxes and general excise taxes under chapter 237, HRS) shall be included as part of the seller’s receipts if the taxes are passed on to the buyer or included as part of the selling price of the product. (2) In the case of cost plus fixed fee contracts, such as the operation of a government-owned plant for a fee, sales includes the entire reimbursed cost plus the fee. (3) In the case of a taxpayer engaged in providing services, sales includes the gross receipts from the performance of those services, including fees, commissions, and similar items. (4) In the case of a taxpayer engaged in renting real or tangible property, sales includes the gross receipts from the rental, lease, or licensing the use of the property. (5) In the case of a taxpayer engaged in the sale, assignment, or licensing of intangible personal property such as patents and copyrights, sales includes the gross receipts from those activities. HRS §235-33 HRS §235-34 HRS §235-35