HAR § 18-241-4-03 — Receipts factor

(a) The receipts factor is a fraction, the numerator of which is the receipts of the taxpayer in this State during the taxable year and the denominator of which is the receipts of the taxpayer within and without this State during the taxable year. The method of calculating receipts for purposes of the denominator is the same as the method used in determining receipts for purposes of the numerator. The receipts factor shall include only those receipts described herein which constitute business income and are included in the computation of the apportionable income base for the taxable year. (b) The numerator of the receipts factor includes receipts from the lease or rental of real property owned by the taxpayer if the property is located within this State or receipts from the sublease of real property if the property is located within this State. (c) The following rules relate to receipts from the lease of tangible personal property. (1) Except as described in paragraph (2), the numerator of the receipts factor includes receipts from the lease or rental of tangible personal property owned by the taxpayer if the property is located within this State when it is first placed in service by the lessee. (2) Receipts from the lease or rental of transportation property owned by the taxpayer are included in the numerator of the receipts factor to the extent that the property is used in this State. The extent an aircraft will be deemed to be used in this State and the amount of receipts that is to be included in the numerator of this State’s receipts factor is determined by multiplying all the receipts from the lease or rental of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this State and the denominator of which is the total number of landings of the aircraft. If the extent of the use of any transportation property within this State cannot be determined, then the property will be deemed to be used wholly in the state in which the property has its principal base of operations. A motor vehicle will be deemed to be used wholly in the state in which it is registered. (d) The following rules relate to interest from loans secured by real property. (1) The numerator of the receipts factor includes interest and fees or penalties in the nature of interest from loans secured by real property if the property is located within this State. HRS §241-4 TAXATION OF BANKS AND OTHER FINANCIAL CORPORATIONS §18-241-4-03 If the property is located both within this State and one or more other states, the receipts described in this subsection are included in the numerator of the receipts factor if more than fifty per cent of the fair market value of the real property is located within this State. If more than fifty per cent of the fair market value of the real property is not located within any one state, then the receipts described in this subsection shall be included in the numerator of the receipts factor if the borrower is located in this State. (2) The determination of whether the real property securing a loan is located within this State shall be made as of the time the original agreement was made and any and all subsequent substitutions of collateral shall be disregarded. (e) The numerator of the receipts factor includes interest and fees or penalties in the nature of interest from loans not secured by real property if the borrower is located in this State. (f) The numerator of the receipts factor includes net gains from the sale of loans. Net gains from the sale of loans include income recorded under the coupon stripping rules of section 1286 of the Internal Revenue Code. (1) The amount of net gains (but not less than zero) from the sale of loans secured by real property included in the numerator is determined by multiplying such net gains by a fraction the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (d) and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property. (2) The amount of net gains (but not less than zero) from the sale of loans not secured by real property included in the numerator is determined by multiplying such net gains by a fraction the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (e) and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property. (g) The numerator of the receipts factor includes interest and fees or penalties in the nature of interest from credit card receivables and receipts from fees charged to card holders, such as annual fees, if the billing address of the card holder is in this State. (h) The numerator of the receipts factor includes net gains (but not less than zero) from the sale of credit card receivables multiplied by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (g) and the denominator of which is the taxpayer’s total amount of interest and fees or penalties in the nature of interest from credit card receivables and fees charged to card holders. (i) The numerator of the receipts factor includes all credit card issuer’s reimbursement fees multiplied by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (g) and the denominator of which is the taxpayer’s total amount of interest and fees or penalties in the nature of interest from credit card receivables and fees charged to card holders. (j) The numerator of the receipts factor includes receipts from merchant discount if the commercial domicile of the merchant is in this State. Such receipts shall be computed net of any cardholder charge backs, but shall not be reduced by any interchange transaction fees or by any issuer’s reimbursement fees paid to another for charges made by its card holders. (k) The following rules relate to loan servicing fees. (1) (A) The numerator of the receipts factor includes loan servicing fees derived from loans secured by real property multiplied by a fraction the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (d) and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property. (B) The numerator of the receipts factor includes loan servicing fees derived from loans not secured by real property multiplied by a fraction the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (e) and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property. (2) In circumstances in which the taxpayer receives loan servicing fees for servicing either the secured or the unsecured loans of another, the numerator of the receipts factor shall include such fees if the borrower is located in this State. (l) The numerator of the receipts factor includes receipts from services not otherwise apportioned under this section if the service is performed in this State. If the service is performed both within and without this State, the numerator of the receipts factor includes receipts from services not otherwise apportioned under this section, if a greater proportion of the income-producing activity is performed in this State based on cost of performance. (m) The following rules relate to receipts from investment assets and activities and trading assets and activities.