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Double Weight Sales Factor
A corporation (or family of corporations filing together) with income from sources within NM as well as from sources outside the state, apportions the income based on a three-factor formula. NM taxes the total corporate income times the average proportion of corporate sales, payroll and property in NM. The 3 factors (sales, payroll and property) have equal weight (33.33% each) in the formula. For a limited time (through the year 2010) manufacturers may elect to use a modified formula which gives the sales factor a 50% weight, reducing the other two to 25% apiece. The sales factor now has twice the significance of the other two, thus, the “double-weighted sales factor formula.”
For purposes of electing the four factor apportionment method, “manufacturing” excludes construction, farming, power generation and processing of natural resources, while allowing certain natural-gas-fired, wholesale power plants to qualify. The taxpayer, having elected to use the double-weighted formula, must use it for at least three consecutive years.
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