IDAPA 35.01.01.550 — SALES FACTOR: SALE OF INTANGIBLE PROPERTY (RULE 550)

Section 63-3027(13)(d)(ii)
01.
Assignment of Receipts. The assignment of receipts to a state or states in the instance of a sale or
exchange of intangible property depends upon the nature of the intangible property sold. For purposes of this Rule
(550), a sale or exchange of intangible property includes a license of that property where the transaction is treated for
tax purposes as a sale of all substantial rights in the property and the receipts from transaction are not contingent on
the productivity, use or disposition of the property. For the rules that apply where the consideration for the transfer of
rights is contingent on the productivity, use or disposition of the property, see Subsection 549.01.
(4-6-23)
a.
Contract Right or Government License that Authorizes Business Activity in Specific Geographic
Area. In the case of a sale or exchange of intangible property where the property sold or exchanged is a contract right,
government license or similar intangible property that authorizes the holder to conduct a business activity in a
specific geographic area, the receipts from the sale are assigned to a state if and to the extent that the intangible
property is used or is authorized to be used within the state. If the intangible property is used or may be used only in
Idaho the taxpayer shall assign the receipts from the sale to this state. If the intangible property is used or is
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.01
Idaho State Tax Commission
Income Tax Administrative Rules
Section 551
Page 82
authorized to be used in this state and one or more other states, the taxpayer shall assign the receipts from the sale to
this state to the extent that the intangible property is used in or authorized for use in this state, through the means of a
reasonable approximation.
(4-6-23)
b.
Sale that Resembles a License (Receipts are Contingent on Productivity, Use or Disposition of the
Intangible Property). In the case of a sale or exchange of intangible property where the receipts from the sale or
exchange are contingent on the productivity, use or disposition of the property, the receipts from the sale are assigned
by applying the rules set forth in Rule 549 (pertaining to the license or lease of intangible property).
(4-6-23)
c.
Sale that Resembles a Sale of Goods and Services. In the case of a sale or exchange of intangible
property where the substance of the transaction resembles a sale of goods or services and where the receipts from the
sale or exchange do not derive from payments contingent on the productivity, use or disposition of the property, the
receipts from the sale are assigned by applying the rules set forth in Subsection 549.05 (relating to licenses of
intangible property that resemble sales of goods and services). Examples of these transactions include those that are
analogous to the license transactions cited as examples in Subsection 549.05.
(4-6-23)
02.
Examples. Available at Income Tax Rules Examples.
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