(4)

Excludable Factors (Zero in Numerator or Denominator).

In the event any of the factors has a denominator which is zero or an insignificant amount, that factor shall be omitted from the computation. For this purpose, an insignificant amount shall mean an amount so small that inclusion of the factor would result in an apportionment that does not fairly represent the taxpayer's business activity in Philadelphia. If, however, the numerator is zero and the denominator is represented by an amount which is not insignificant, the resultant percentage is zero, and is includible in the computation.

(5)

Weighted Averaging. A weighted average of factors shall be obtained by adding the property factor plus the payroll factor plus twice the sales factor and dividing that total by four. If any factor is excludable as provided in subsection 408 (4), then the weighted average shall be computed as the sum of includible factors (with the sales factor multiplied by two, if it is one of the includible factors) divided by the number of includible factors (with the sales factor, if includible, counted as two includible factors)

# Example 1:

Corporation W had no property in Philadelphia but the average value of its property everywhere in 19X1 amounted to $275,000. W's payroll in Philadelphia in 19X1 amounted to zero and the total payroll everywhere was $125,000. W reported receipts in Philadelphia in 19X1 of $5,000,000 and receipts everywhere of $8,000,000. The apportionment fraction is computed as follows:

=0

=0

= .625 X 2 = 1.25

Property

$

0

275,000

Payroll

$

0

# Sales

125,000 $5,000,000 8,000,000

as follows: Property

$275,000

=

1.00

Payroll

275,000 $125,000 125,000

=

1.00

= 1.25

# Example 2:

Corporation Y had no property and no payroll assignable outside of Philadelphia. Y’s average value of property in 19X2 amounted to $275,000 and its total payroll in 19X2 was $125,000. Y reported receipts in Philadelphia in 1994 of $5,000.000 and receipts everywhere of $8,000,000. The apportionment fraction is computed

# Total Percentages

Average of Percentages (1.25 ÷ 4) = .3125

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