(a) Property factor. A motor carrier’s property factor is a fraction, the numerator and denominator of which are determined according to the following rules.
1. The denominator of the property factor is the average value of all of the motor carrier's real and tangible personal property owned, rented, or leased, and used during the taxable year. All property values are determined according to the rules of M.G.L. c. 63, § 38, and 830 CMR 63.38.1.
2. The numerator of the property factor is the sum of the following two amounts:
a. the value of the real and tangible personal property of the motor carrier, other than mobile property, situated in Massachusetts; and
b. the value of the mobile property owned, rented, or leased and used by the motor carrier in Massachusetts.
3. The value of the mobile property owned, rented, or leased, and used by the motor carrier in Massachusetts is the total value of the motor carrier's mobile property, multiplied by the percentage of miles traveled by the motor carrier's mobile property in Massachusetts.
4. Example 1. During the taxable year, Kiepahn Trucking owned real and tangible personal property, other than mobile property, with an average value of $10,000,000. Of this property, a portion with an average value of $5,000,000 was located in Massachusetts. Kiepahn also owned mobile property worth $7,000,000. Thirty percent of Kiepahn's mileage was traveled in Massachusetts. The numerator of Kiepahn's property factor is $5,000,000 (the value of its real and tangible personal property other than mobile property located in Massachusetts) plus $2,100,000 (thirty percent of the value of its mobile property). The denominator of Kiepahn's property factor is $17,000,000 (the total value of Kiepahn's real and tangible personal property, including mobile property). Thus, Kiepahn's property factor equals --
$5,000,000 + $2,100,000
$17,000,000
or .4176.
(b) Payroll factor. A motor carrier’s payroll factor is a fraction, the numerator and denominator of which are determined according to the following rules.
1. The denominator of the payroll factor is the total compensation paid by the motor carrier during the taxable year.
2. The numerator of the payroll factor is the sum of the following two amounts:
a. the compensation paid in Massachusetts to personnel other than operating personnel; and
b. the compensation paid in Massachusetts to operating personnel.
3. The compensation paid in Massachusetts to operating personnel shall be computed by multiplying the motor carrier's total payroll for operating personnel by the percentage of miles traveled by the motor carrier's mobile property in Massachusetts.
4. Example 2. During the taxable year, Kiepahn Trucking, the motor carrier described in Example 1, had a total payroll for personnel other than operating personnel of $3,000,000, of which $1,000,000 was paid in Massachusetts. Kiepahn had a total payroll for operating personnel of $4,000,000. Thirty percent of Kiepahn's miles were traveled in Massachusetts. The numerator of Kiepahn's payroll factor is $1,000,000 (the Massachusetts payroll for persons other than operating personnel) plus $1,200,000 (thirty percent of Kiepahn's payroll for operating personnel). The denominator of Kiepahn's payroll factor is its total payroll of $7,000,000. Thus, Kiepahn's payroll factor equals:
$1,000,000 + $1,200,000,
$7,000,000
or .3143.