830 CMR: DEPARTMENT OF REVENUE
830 CMR 63.00: TAXATION OF CORPORATIONS
830 CMR 63.00 is amended by adding the following section:
830 CMR 63.38.8: Apportionment of Income of Pipeline Companies

(1) Purpose, Outline, Effective Date

(a) Purpose. The purpose of 830 CMR 63.38.8 is to explain the allocation and apportionment of income received by pipeline companies that is derived from the transportation of mineral products, pursuant to the Commissioner's authority under M.G.L. c. 63, § 38(j).

(b) Outline. 830 CMR 63.38.8, is organized as follows:

(1) Purpose, Outline, Effective Date
(2) Definitions
(3) Apportionment Percentage

(c) Effective Date. The provisions of 830 CMR 63.38.8 shall be effective for taxable years beginning on or after the date of promulgation.

(2) Definitions. For the purposes of 830 CMR 63.38.8 the following terms have the following meanings unless the context requires otherwise:

Commissioner, the Commissioner of Revenue or the Commissioner's duly authorized representative.

Corporate Trust, any partnership, association or trust, the beneficial interest of which is represented by transferable shares, and which is described in M.G.L. c. 62, § 8(a).

Corporation, a domestic corporation as defined in M.G.L. c. 63, § 30.1, a foreign corporation as defined in M.G.L. c. 63, § 30.2, or a utility corporation as defined in M.G.L. c. 63, § 52A(1).

Pipeline Company, any taxpayer engaged in the business of moving, conveying or transporting through a system or conduit of pipes any mineral products, such as oil, gasoline, or natural or casinghead gas, within the commonwealth and whose income is allocated or apportioned under or by reference to M.G.L. c. 63, § 38 or M.G.L. c. 63, § 52A. For purposes of this definition, the term "system or conduit of pipes" includes transmission lines and connecting field and storage lines.

Partnership and Partner, an entity treated as a partnership and a member of such entity who is treated as a partner, both as defined in Internal Revenue Code § 7701, as amended and in effect for the taxable year.

Payroll Factor, the payroll factor as defined in M.G.L. c. 63, § 38(e). See 830 CMR 63.38.1(8).

Property Factor, the property factor as defined in M.G.L. c. 63, § 38(d). See 830 CMR 63.38.1(7).

S Corporation, an entity as defined in M.G.L. c. 62, § 17A. See 830 CMR 62.17A.1.

Sales Factor, the sales factor is a fraction the numerator of which is the total number of traffic units in Massachusetts during the taxable year and the denominator of which is the total number of traffic units everywhere during the taxable year.

Taxable Net Income, the part of the net income of a taxpayer derived from the taxpayer's business activities carried on in Massachusetts and which is adjusted as required by the applicable provisions of M.G.L. c. 63, §§ 38(a), 52A(1)(b), or M.G.L. c. 62, §§ 5A, 8, or 17A, or by regulation, in order to determine the base amount of income to be multiplied by the apportionment percentage.

Taxpayer, any natural or legal person, including, but not limited to, an individual, corporation, corporate trust, partnership or S corporation as defined in 830 CMR 63.38.8(2) and who is entitled to or required to allocate or apportion income under or by reference to M.G.L. c. 63, § 38 or M.G.L. c. 63, § 52A.

Traffic Unit, the movement of one unit of product such as one barrel of oil, one barrel of gasoline or one thousand cubic feet of natural or casinghead gas, for a distance of one mile.

(3) Apportionment Percentage. The taxable net income of a pipeline company that is subject to tax under M.G.L. c. 62, §§ 8(a) or 17A, or M.G.L. c. 63, §§ 32, 32D, or 39, and is derived from the transportation of mineral products and taxable both within and outside of Massachusetts must be apportioned to Massachusetts by multiplying the taxable net income by a fraction, the numerator of which is the property factor plus the payroll factor plus twice times the sales factor, and the denominator of which is four. The taxable net income of a pipeline company that is subject to tax under M.G.L. c. 62, §§ 5A or 17, or M.G.L. c. 63, § 52A, and is derived from the transportation of mineral products and is taxable both within and outside of Massachusetts must be apportioned to Massachusetts by multiplying the taxable net income by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is three. For all pipeline companies, the property factor and the payroll factor are computed in accordance with the provisions of 830 CMR 63.38.1 and the sales factor is computed in accordance with the provisions of this regulation, 830 CMR 63.38.8. Any income received by a pipeline company that is not derived from the transportation of mineral products must be apportioned according to the provisions of M.G.L. c. 63, § 38(c) or M.G.L. c. 63, § 52A(3) and 830 CMR 63.38.1.

REGULATORY AUTHORITY
G.L. c. 14, § 6(l); G.L. c. 62C, § 3; G.L. c. 63, § 38(j)

Date of Promulgation: December 30, 2005