Multistate Audit Technique Manual

CALIFORNIA FRANCHISE TAX BOARD Internal Procedures Manual Page 1 of 65Multistate Audit Technique Manual _______________________________________________________________________________ 7700 SPECIAL FORMULAS AND INDUSTRIES WITH UNIQUE APPORTIONMENT PROBLEMS In cases where the standard apportionment provisions will not fairly represent the taxpayer's business activities within the state, R&TC §25137 permits a departure from the standard formula. Such a departure may be separate accounting, the exclusion of one or more of the factors, the inclusion of one or more additional factors, or the employment of any other method which will result in fair apportionment and allocation of the taxpayer's income to this state. Special procedures have been established in the regulations for certain industries and types of transactions where the FTB has determined that the standard apportionment formula will not produce appropriate results. The special formulas are contained in CCR §25137 through CCR §25137-11 and CCR §25101. There are additional industries and types of transactions that present unique apportionment problems, but for which specific solutions are not set forth in the Regulations. The department has developed apportionment procedures to deal with these situations. Since these procedures are not found in the law or regulations, it is important for auditors who are proposing to use these rules to clearly communicate to the taxpayers the ...