17 NCAC 05g .1301 — Software Transactions

(a) A license or sale of pre-written software for purposes other than commercial reproduction, or other exploitation of the intellectual property rights, transferred on a tangible medium shall be treated as the sale of tangible personal property, rather than as either the license or sale of intangible property or the performance of a service. In these cases, the receipts shall be in North Carolina as determined under the rules for the sale of tangible personal property set forth under G.S. 105-130.4 and the rules of this Subchapter. (b) In all other cases, the receipts from a license or sale of software shall be assigned to North Carolina as determined otherwise under this Subchapter. This determination shall be based on the facts, and: (1) the development and sale of custom software as set forth in Section .0900 of this Subchapter; (2) the license of a marketing intangible, as set forth in Rule .1102 of this Subchapter; (3) the license of a production intangible, as set forth in Rule .1103 of this Subchapter; (4) the license of intangible property where the substance of the transaction resembles a sale of goods or services, as set forth in Rule .1105 of this Subchapter; or (5) as a sale of intangible property, as set forth in Rule .1201 of this Subchapter. 17 NCAC 05g .1302 sales oR licenses oF digital goods and services The receipts from the sale or license of digital goods or services, including the sale of video, audio, and software products or similar transactions, shall be assigned by applying the same provisions set forth in Rules .0904 or .0905 of this Subchapter, as if the transaction was a service delivered to an individual or business customer, or delivered through or on behalf of an individual or business customer. For purposes of the analysis, the terms of the contractual relationship or the characterization of the sale or the license shall not be relevant.