Pennsylvania Three-Factor Capital Stock/Foreign Franchise Tax - Manufacturing Exemption Schedule

Three-Factor Capital Stock/Foreign Franchise Tax - Manufacturing Exemption Schedule
Three-Factor Capital Stock/Foreign Franchise Tax - Manufacturing Exemption Schedule (RCT-105)
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1050015105

RCT-105 (07-15)(FI)

File with rCT-101

COMMONWeaLTH OF PeNNSYLVaNIa
THree-FaCTOr CaPITaL STOCK/FOreIGN FraNCHISe Tax
MaNUFaCTUrING exeMPTION SCHeDULe

START

➜

COrPOraTION NaMe

reVeNUe ID

MMDDYYYY

Tax Year
BeGINNING
Tax Year
eNDING

PreParaTION INSTrUCTIONS FOr exeMPTION SCHeDULe
This schedule is to be completed by corporations actually engaged in producing a manufactured article; any processing operation as
enumerated in Section 601(a) of the Tax Reform Code of 1971; or research and development as defined in Section 601(a) of the Tax Reform
Code of 1971 and electing to utilize the three-factor apportionment formula in accordance with the provisions of the Tax Reform Code of
1971. This schedule is also to be completed by domestic companies claiming the manufacturing, processing or research and development
exemption and electing to utilize the three-factor apportionment formula in accordance with the provisions of the Tax Reform Code of 1971.
All parts of the PA Corporate Tax Report, RCT-101, must also be completed. Tables 1, 2 and 3 of the Insert Sheet, RCT-106, are to be used
for corporate net income tax apportionment fractions. The processing and research and development exemptions do not apply to the corporate net income tax. Foreign corporations not engaged in manufacturing should not use this schedule.
The manufacturing exemption is allowable for tangible property exclusively used in manufacturing and for wages and salaries of employees
exclusively engaged in manufacturing. Corporations having tangible property within Pennsylvania or salaries and wages, etc., assigned to
Pennsylvania that are used for both manufacturing and nonmanufacturing activities may claim an exemption for that portion that is used in
manufacturing. See Column B-2, Table 1 and Table 2, Page 2, of this schedule.
Compliance with these instructions and submission of all required data by the person responsible for the preparation of this schedule will
facilitate processing. See Page 4 regarding a description of the corporation’s activities. This description must be completed each year.

TaBLe I - TaNGIBLe PrOPerTY
The average value of tangible property located outside of Pennsylvania should be excluded from the numerator of the tangible property
fraction. In addition, the average value of tangible property used exclusively in manufacturing should also be excluded from the numerator.
Thus, the numerator shall consist of the average value of tangible property in Pennsylvania not used in producing a manufactured article.
The denominator is the average value of all tangible property wherever situated.
Column B should include the average value of all tangible property within Pennsylvania used in both a manufacturing and nonmanufacturing
activity.
Property owned by the taxpayer is valued at its original cost. Property rented by the taxpayer is valued at eight times the net annual rental
rate. Net annual rental rate is the annual rate paid by the taxpayer less any annual rental rate received by the taxpayer from sub-rentals.
The average value of property is determined by averaging the values at the beginning and end of the tax period, but the Department of
Revenue may require the averaging of monthly values during the tax period if reasonably required to reflect properly the average value of
the taxpayer’s property.
No exemption will be allowed for raw materials and supplies in an amount exceeding one year’s requirement for manufacturing activity,
unless the need therefore is properly substantiated by an attached schedule. Inventories that exceed one year’s supply should appear in
Column A. Goods, wares, merchandise and all forms of tangible personal property located within Pennsylvania purchased for the purpose
of resale should also be included in Column A.

TaBLe II - WaGeS aND SaLarIeS
Wages, salaries, commissions and other compensation of employees not apportioned to Pennsylvania should be excluded from the numerator.
In addition, wages, salaries, commissions and other compensation paid to employees exclusively engaged in manufacturing should be
excluded from the numerator. Thus, the numerator shall consist of wages, salaries, commissions and other compensation of employees
apportioned to Pennsylvania and not engaged exclusively in manufacturing. The denominator is total expenditures for wages, salaries,
commissions and other compensation to all employees.

TaBLe III - SaLeS
All PA sales must be included in the numerator of the sales fraction. Thus, the numerator shall consist of all sales attributable to Pennsylvania
of both manufactured and nonmanufactured goods. The denominator is the amount of all taxpayer’s sales subject to apportionment.
THIS SCHeDULe MUST Be COMPLeTeD IN DeTaIL aND aTTaCHeD TO THe LaST PaGe OF THe rCT-101.

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1050015205

TaBLe 1 – TaNGIBLe PrOPerTY – USe WHOLe DOLLarS ONLY (attach additional schedule(s) if necessary)
DeSCrIPTION aND LOCaTION OF
TaNGIBLe PrOPerTY
OWNeD - OrIGINaL COST VaLUe
reNTeD - eIGHT TIMeS NeT
aNNUaL reNTaL raTe

a - IN PeNNSYLVaNIa aND NOT
USeD IN MaNUFaCTUrING
(Include in Numerator)
BeGINNING OF Year

eND OF Year

B - IN PeNNSYLVaNIa, BUT USeD BOTH IN
MaNUFaCTUrING aND NONMaNUFaCTUrING aCTIVITIeS
B-1 - aMOUNT OF COLUMN B USeD IN B-2 - aMOUNT OF COLUMN B USeD IN
MaNUFaCTUrING aCTIVITIeS
NONMaNUFaCTUrING aCTIVITIeS
(exclude from Numerator)
(Include in Numerator)
BeGINNING OF Year

eND OF Year

eND OF Year

BeGINNING OF Year

1. Inventory . . . . . . . . . . . . . . .
2. Buildings and Other
Depreciable Assets . . . . . . . . .
3. Land . . . . . . . . . . . . . . . . . . .
4. Other Tangible Property . . . . .
5. Partner’s Share of Property
Owned by Partnerships . . . . . .
6. Less Construction in Progress
)(
)(
)(
)(
(if included above) . . . . . . . . (
7. Totals . . . . . . . . . . . . . . . . . .
8. Total Beginning and End of Year
9. Average Value (1/2 of Above) .
10.Add: Corporate Tangible and/or
Real Property Rented* . . . . . .
Partnership Tangible and/or
Real Property Rented* . . . . . .
11.Total Average Value . . . . . . . .
(A)Average value of tangible property apportioned to Pennsylvania (Line 11, Column A plus B-1)
Carryover to RCT-101, Schedule A-1, Line (1a), . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(B)Average value of all tangible property (Line 11, Column E)
Carryover to RCT-101, Schedule A-1, Line (1b), . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

)(

)

TaBLe 2 - WaGeS, SaLarIeS, COMMISSIONS aND OTHer COMPeNSaTION PaID TO eMPLOYeeS - USe WHOLe DOLLarS ONLY (attach additional schedule(s) if necessary)
DeSCrIPTION
WaGeS, SaLarIeS,
COMMISSION aND OTHer
COMPeNSaTION TO
eMPLOYeeS IN:

a - TOTaL aPPOrTIONeD TO
PeNNSYLVaNIa FOr eMPLOYeeS
NOT eNGaGeD IN
MaNUFaCTUrING
(Include in Numerator)

B - aMOUNT aTTrIBUTaBLe TO eMPLOYeeS eNGaGeD BOTH IN
MaNUFaCTUrING aND NONMaNUFaCTUrING aCTIVITIeS
B-1 - aMOUNT OF COLUMN B
B-2 - aMOUNT OF COLUMN B
aTTrIBUTaBLe TO
aTTrIBUTaBLe TO
NONMaNUFaCTUrING aCTIVITIeS
MaNUFaCTUrING aCTIVITIeS
(Include in Numerator)
(exclude from Numerator)

1. Cost of Goods Sold . . . . . . . . . .
2. Compensation of Officers . . . . . .
3. Salesmen’s Salaries and
Commissions . . . . . . . . . . . . . .
4. Repairs . . . . . . . . . . . . . . . . . .
5. Other . . . . . . . . . . . . . . . . . . . .
6. Partner’s Share of Payroll
from Partnerships . . . . . . . . . . .
7. Total Wages and Salaries . . . . . .
(A) Payroll apportioned to Pennsylvania (Column A plus B-1)
Carryover to RCT-101, Schedule A-1, Line (2a), . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(B) Total payroll (Column E)
Carryover to RCT-101, Schedule A-1, Line (2b), . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
TaBLe 3 - SaLeS - USe WHOLe DOLLarS ONLY (exclude receipts from the sale, redemption, maturity or exchange of securities, except those held by the taxpayer primarily for sale to
customers in the ordinary course of its trade or business.)

DeSCrIPTION

a - INSIDe PeNNSYLVaNIa

B - INSIDe aND OUTSIDe
PeNNSYLVaNIa

1.
2.
3.
4.

Sales (Net of Returns & Allowances)
Interest, Rents, Royalties . . . . . .
Other Income (receipts only) . . .
Gross Sales Price of Assets
(except securities)** . . . . . . . . .
5. Partner’s Share of Receipts from
Partnerships . . . . . . . . . . . . . . .
6. Total Sales . . . . . . . . . . . . . . . .
(A) Total sales apportioned to Pennsylvania (Total of Column A)
Carryover to RCT-101, Schedule A-1, Line (3a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(B) Total sales (Total of Column B)
Carryover to RCT-101, Schedule A-1, Line (3b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

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1050015305

C - aCTUaLLY aND exCLUSIVeLY USeD
IN MaNUFaCTUrING
(exclude from Numerator)
BeGINNING OF Year

D - OUTSIDe PeNNSYLVaNIa
(exclude from Numerator)

eND OF Year

BeGINNING OF Year

e - TOTaL TaNGIBLe PrOPerTY
(Columns a, B-1, B-2, C, D)

eND OF Year

BeGINNING OF Year

eND OF Year

1.
2.
3.
4.
5.
6.

(

)(

)(

)(

)(

)(

)

7.
8.
9.
10.

11.

Property Factor - Divide A by B (calculate to six decimal places) and carryover to Schedule A-1, Line (1c), of RCT-101.

C - aMOUNT aTTrIBUTaBLe TO eMPLOYeeS
exCLUSIVeLY eNGaGeD
IN MaNUFaCTUrING
(exclude from Numerator)

D - TOTaL aPPOrTIONeD OUTSIDe OF
PeNNSYLVaNIa
(exclude from Numerator)

e - TOTaL WaGeS, SaLarIeS, eTC.
(Columns a, B-1, B-2, C, D)

1.
2.
3.
4.
5.
6.
7.

Payroll Factor - Divide A by B (calculate to six decimal places) and carryover to Schedule A-1, Line (2c), of RCT-101.

**** eight times net annual rental rate (attach Schedule).
* ** Unless you are a securities dealer.

Sales Factor - Divide A by B (calculate to six decimal places) and carryover to Schedule A-1, Line (3c), of RCT-101.

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1050015405

MaNUFaCTUrING, PrOCeSSING Or reSearCH aND DeVeLOPMeNT aCTIVITY INFOrMaTION
1. During this reporting period, did any of the following changes occur?

Y/N

a.

Change from nonmanufacturing activities to manufacturing activities?................................................................

b.

Change from manufacturing activities to nonmanufacturing activities?................................................................

c.

Change during this reporting period due to plant(s) beginning or terminating a manufacturing operation? ..................
If yes to a, b or c above, give date(s) change(s) occurred and submit details explaining such change(s).

2. Did manufacturing activities cease anytime during the year
(other than normal shutdowns, e.g., vacation time, retooling time, etc.)? .....................................

Y/N

If yes, indicate reason for inactivity and period(s) of inactivity, and submit time(s) company became inactive and resumed operation(s).

➧

The PA Department of Revenue requires a description of the corporation’s activities be furnished in sufficient detail to enable the taxing
officials to make a determination of the validity of the claim for the manufacturing exemption. Must be completed in full each year. attach
additional schedule(s) if necessary.

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