WAC 112

Denturists

"Sale," casual or isolated sale."

"Gross proceeds of sales."

"Value proceeding or accruing."

Value of products, how determined.

Value of products.Effective 7/1/70

MEASURE OF MANUFACTURING TAX ON ARTICLES PRODUCED PARTLY WITHOUT AND PARTLY WITHIN THE STATE Revised 2/2/09. See ETA 3020.2009

Measure of manufacturing tax on articles produced partly within and partly without the state.

Public Road Construction Materials – Measure of Tax

Sales Tax Exemption for Investment Casting Process

Sales Tax Exemption for Investment Casting Process

MANUFACTURING B&O TAX -- VALUE OF THE PRODUCT --GROSS PROCEEDS OF SALE -- RENTALS.Where gross proceeds from rentals are not indicative of the true value of the subject matter of the sale, the gross proceeds are not "comparable sales" for purposes of establishing the value of a product for Manufacturing B&O tax.

MANUFACTURING B&O TAX -- VALUE OF THE PRODUCT -- GROSS PROCEEDS OF SALE-- RENTALS.Where the gross proceeds from rental equipment are not indicative of the true value of the equipment being rented, gross rental proceeds should not be used to determine the value of a product for Manufacturing B&O tax. Accord: Det. No. 89-486A 10 WTD 305 (1990).

USE TAX -- VALUE OF SAMPLES -- COST METHOD - PROFIT.No amount should be added for profit when determining value under the cost basis.

USE TAX -- VALUE OF ARTICLES USED -- TRAINING TAPES AND MATERIALS -- RETAIL COST.Taxpayer purchasing training programs including video tapes, practice models and molds, and printed materials is subject to use tax on the full retail price paid for the programs.

VALUE OF PRODUCTS -- OIL -- EXCHANGE AGREEMENTS -- PLATT'S.Absent actual sales, prices listed by independent publications such as Platt's or OPIS will be relied on to determine the value of petroleum products under exchange agreement in the oil industry.

EXTRACTING TAX -- SELLING PRICE -- VALUE -- TIMBER -- ETB 302.The value of products extracted is determined by the gross proceeds of sales, not the price paid for similar logs.

USE TAX -- WINERY -- WINE SAMPLES -- DEFECTIVE BOTTLES -- MEASURE OF TAX.The measure of use tax on damaged or "off condition" bottles of wine used to pour samples at the tasting room of a winery is the retail selling price, if it can de determined, of such "off condition:" bottles as opposed to the retail selling price of undamaged bottles of the same wine.

VALUE OF PRODUCTS -- OIL -- EXCHANGE AGREEMENTS -- PLATT'S.Absent actual sales, prices listed by independent publications such as Platt's or OPIS will be relied on to determine the value of petroleum products under exchange agreements in the oil industry.

MANUFACTURING B&O TAX -- VALUE OF PRODUCT -- GROSS PROCEEDS OF SALE.Engineering drawings incorporated into the manufacture of circuit boards are materials or ingredients of the final product whose value is measured by the gross proceeds measured by the gross proceeds of sale of the circuit boards and not by the cost basis of the engineering itself.

MANUFACTURING B&O – VALUE OF CANNED SOFTWARE – LEASED – LICENSED -- OUT-OF-STATE.A company that produces canned software in Washington, which leases or licenses the software to out-of-state users is subject to manufacturing B&O tax measured by the gross proceeds of sales, the total realized in lease or license fees from its customers for the software.

MANUFACTURING AND USE TAXES -- COMMERCIAL OR INDUSTRIAL USE -- DEPT. OF DEFENSE CONTRACTOR -- VALUATION.Smelting pots manufactured for commercial and industrial use by an aluminum company were not entitled to the lower Department of Defense contractor valuation when the pots were used to manufacture only raw materials which were then transferred to another division for manufacture into products and only a very small percentage of those products were sold to the Department of Defense.

EXTRACTING TAX -- SELLING PRICE -- VALUE -- TIMBER -- ETB 302.The value of products extracted is determined by the gross proceeds of sales, not the price paid for similar logs.

USE TAX - MANUFACTURED PRODUCTS - COMMERCIAL OR INDUSTRIAL USE - MEASURE - "VALUE OF THE ARTICLES USED" - COSTS.When it is not possible to determine the "retail selling price, at the place of use, of similar products of like quality, quantity and character," under the provisions of Rule 178, the standard of determining value on a cost basis as set forth in Rule 112 may be used. The fact that salaries and other overhead may account for a substantial portion of such costs does not render the tax to be a tax on salaries or other intangibles.

BUSINESS AND OCCUPATION TAX - MANUFACTURING -COMMERCIAL OR INDUSTRIAL USE - MEASURE - "VALUE OF PRODUCT" - COSTS.When it is not possible to determine with any reasonable accuracy the "gross proceeds from other sales at comparable locations in this state of similar products of like quality and character," the Department may determine the "value of product" on a cost basis.The fact that salaries and other overhead may be a substantial portion of those costs does not render the tax to be a tax on salaries and other intangibles.

B&O TAX -- PACKING MATERIALS -- PALLETS -- VALUE OF PRODUCTS MANUFACTURED.A manufacturer’s separately-itemized charges for shipping pallets on which the manufacturer’s product is held for sale, where title to the pallets passes to the customer upon delivery, are part of the value of the products manufactured, and therefore are part of the measure of the manufacturing B&O tax.

USE TAX – DEFERRED SALES TAX --VALUE – GIFT – CELLULAR PHONES:Use tax on cellular phones given away to promote cellular service commissions is measured by the donor’s arm’s length purchase price of the phones.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE -- COMPARABLE SALES.When a manufacturer exchanges products with another manufacturer of similar products, the gross proceeds of sale is the value of the product actually received at the time, place, and in the quantity received, less any cash (differential) paid the exchange partner or plus any cash (differential) received by the seller.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE -- COMPARABLE SALES -- PLATTS -- SUPERFUND TAXES.When determining the value of products received the Department uses Platts (an industry price reporting service) that includes in its published prices the Superfund Tax.The Superfund Tax is not deductible from the stated value.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE -- INVENTORY VALUE.When there is no stated gross proceeds of sale, the measure of the tax is determined by reference to comparable sales.The measure of tax is not determined by the taxpayer's internally calculated inventory cost.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE -- COMPARABLE SALES.When there is no stated gross proceeds of sale and reference to comparable sales is necessary, comparable sales must be similar not only in volume and time, but also as to location.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE.When a manufacturer exchanges similar products with a competitor by delivering product to the competitor at one location and receiving similar products from the competitor at a different location and the agreement does not specify a selling price for the quantities exchanged, then there is no stated gross proceeds of sale.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- IMPUTING INCOME.The use of Platts Oilgram or OPIS to determine the measure of tax on an exchange of products does not impute income.Rather, the consideration received by the taxpayer is being measured.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE -- PLATTS AND OPIS.Industry publications reporting the prices at which similar products are sold, such as Platts Oilgram and OPIS, provide data to be used to determine comparable sales prices.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE.When there is no stated gross proceeds of sale, the measure of the tax is determined by reference to comparable sales.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE.When a manufacturer exchanges similar products with a competitor by delivering product to the competitor at one location and receiving similar products from the competitor at a different location and the agreement does not specify a selling price for the quantities exchanged, then there is no stated gross proceeds of sale.

B&O TAX -- MEASURE OF TAX ON EXCHANGE AGREEMENTS -- GROSS PROCEEDS OF SALE -- INVENTORY VALUE.Inventory value of products (costs) exchanged may not be used to measure the B&O tax on exchanges of said products, unless there is an absence of comparable sales.Further, the use of inventory value is unreliable when the starting point (interdivisional transfer prices) are determined by means that may be manipulated.

B&O TAX: VALUE OF PRODUCTS.All costs, including certain period costs, must be included in the calculation of “value or products.”

B&O TAX -- VALUE OF PRODUCTS.All costs, including certain period costs, must be included in the calculation of “value or products.”

USE TAX – VALUE OF ARTICLE USED – PURCHASE PRICE.The value of article used was found to be the purchase price plus the cost of improvements where an article was improved prior to the first intervening use.

USE TAX – PRINTED MATERIALS PRODUCED BY A COUNTY FOR ITS OWN USE -- MEASURE OF VALUE TAXED.The correct measure of tax includes every item of cost attributable to the production of the particular item.Such costs include labor, materials and both direct and indirect overhead.

RETAIL SALES AND USE TAX – EXEMPTION -- M&E – CONCRETE STORAGE PAD -- SHELTER.Where a concrete storage pad used for the “temporary storage” of tangible personal property is an industrial fixture it qualifies for the M&E exemption.A structure used to “shelter” tangible personal property is a “building” that is ineligible for the M&E exemption.

RETAIL SALES AND USE TAX – EXEMPTION – M&E – CONCRETE STORAGE PAD – COVERED BY CANOPY.When a concrete storage pad is covered by a canopy to keep materials dry so that their moisture contents remain within industry specifications, and so that the materials would notleach treatment materials onto the asphalt, the structure provided a shelter from precipitation.Because it was not merely a concrete pad used for temporary storage, it was properly considered a building and, therefore, not entitled to the M&E exemption.

RCW 82.04.220, RCW 82.04.080:SERVICE AND OTHER ACTIVITIES B&O TAX -- GROSS INCOME -- SUBSIDIES (CREDITS AGAINST ROYALTY PAYMENTS).Credits received by franchisee mini marts from their franchisor against royalty payments to promote the sales of selected products at prices set by the franchisor and the product manufacturers are part of the franchisee’s gross income, and subject to service and other activities B&O tax, when the credits are intended to cover the difference between the franchisee’s costs of the products and the below-cost sales prices of the products, plus a small profit

MANUFACTURING TAX -- MEASURE OF TAX -- VALUE.The value of an article manufactured for commercial use is the total cost attributed to the article, at the time the manufacturing is completed.

B&O TAX -- DEDUCTION -- GROSS PROCEEDS OF SALES -- POINTS OUTSIDE THE STATE -- TRANSPORTATION COSTS -- INCURRED BY SELLER.Deduction is allowed when transportation costs are actually incurred by seller through use of its own facilities and employees. There is no requirement that costs be paid to another entity.

B&O TAX - MANUFACTURING - VALUE OF PRODUCTS - OUT-OF-STATE LEASE - TAXPAYER LEAVES WASHINGTON.When a taxpayer which has manufactured a product in this state for lease out-of-state subsequently removes itself from this state, that taxpayer will be required to continue to report the manufacturing tax measured by the lease payments as long as this state has any taxing jurisdiction over it.If jurisdiction over the taxpayer is to cease before the taxpayer has paid manufacturing tax on a measure equaling at least the product's "cost of production," the taxpayer will owe manufacturing tax on t

B&O TAX -- MANUFACTURING -- "VALUE OF PRODUCTS" -- SHIPMENT OF GOODS TO OUT-OF-STATE DIVISION/LOCATION FOR SALE.When goods which have not been presold are shipped to out-of-state locations for sale, their values for manufacturing tax purposes must be determined by comparable sales of similar products to comparable purchasers at comparable locations in this state.

B&O TAX -- MANUFACTURING -- "VALUE OF PRODUCTS" -- INTERNAL PRICING."Value of products" will be based on the sales price when finally sold by a taxpayer.Internal pricing between a taxpayer's divisions or locations will therefore not be a basis for establishing a product's value for manufacturing tax purposes - only the final sales price to another person.

B&O TAX -- MANUFACTURING -- "VALUE OF PRODUCTS" -- SHIPMENT OF PRESOLD GOODS TO OUT-OF-STATE DIVISION/LOCATION.When goods which have been presold by an out-of-state division/location are shipped to that division/location, the products' values must be determined by subtracting costs of transportation from their actual sales prices.

USE TAX -- MEASURE OF -- PRINTED MATERIALS.A county government which makes and uses printed materials is liable for use tax on the total value of such materials which value includes labor and overhead costs expended in the printing thereof.

MANUFACTURING TAX -- VALUE OF THE PRODUCT -- TRANSFERRED OUT OF STATE PRIOR TO SALE -- COMPARABLE SALES -- COST.Where a manufactured product is transferred outside the state prior to sale, the value of the product shall correspond as nearly as possible to the gross proceeds from sales in this state of similar products of like quality and character, and in similar quantities by other taxpayers.Valuation based on the cost of production is appropriate only after the Department has made a finding that there are no "similar" or "comparable" sales.

B&O TAXES -- MANUFACTURING -- VALUE OF PRODUCTS -- WASTE.Still gas which is flared into the atmosphere, because it could not be sold to third parties, and from which the taxpayer derived no benefit, is considered a waste product with no taxable value.

B&O TAXES -- MANUFACTURING -- VALUE OF PRODUCTS -- COMMERCIAL SALES -- COST -- ALTERNATIVE METHODS.RCW 82.04.450 and Rule 112 do not limit a determination of the "value of products" solely to a comparison of similar commercial sales, but allows for other alternative methods.In the absence of comparable sales of similar products, the cost basis is one of several alternatives that may be used.Another alternative is to use sales of similar products as a guide.