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10500011200

RCT-105 (8-02)

Account ID

File with Form RCT-101

COMMONWEALTH OF PENNSYLVANIA

THREE-FACTOR CAPITAL STOCK/FOREIGN FRANCHISE TAX

MANUFACTURING EXEMPTION SCHEDULE

For use by foreign or domestic corporations, limited partnerships and joint-stock associations with multi-state activities and who are engaged in man-

ufacturing, processing or research and development and are claiming exemption and electing to utilize the three (3) factor apportionment formula.

For Calendar Year ______ or Fiscal Year Beginning __________________________ ______ Ending ___________________________ ______

(Business Name)

PREPARATION INSTRUCTIONS FOR EXEMPTION SCHEDULE

his schedule is to be completed by corporations actually engaged in (1) producing a manufactured article, (2) any processing operation as

enumerated in Act No. 93 of August 31, 1971, or (3) research and development as defined in Act No. 93 of August 31, 1971, and electing to utilize the

3 factor apportionment formula in accordance with the provisions of Act No. 2 of March 4, 1971, as amended, and domestic companies claiming the

manufacturing, processing or research and development exemption and electing to utilize the three (3) factor apportionment formula in accordance with

the provisions of Act No. 2 of March 4, 1971, as amended. All parts of form RCT-101 (Combined Pennsylvania Corporate Tax Report) 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 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, 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 2A, of this schedule.

Full compliance with these instructions and submission of all required data by the person responsible for the preparation of the schedule will eliminate

needless inquiry and accelerate settlement by this Department. See the note at the top of page 3, of this schedule, regarding a description of the

corporation’s activities.

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 addi-

tion, 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 ending of the tax period, but the Department of Revenue may require the averag-

ing 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 (1) 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

Sales not apportioned to Pennsylvania should be excluded from the numerator of the sales fraction. Thus, the numerator shall consist of all sales

attributable to Pennsylvania of both manufactured and non-manufactured goods. The denominator is the amount of all taxpayer’s sales subject to

apportionment.

THIS SCHEDULE MUST BE COMPLETED IN DETAIL AND SUBMITTED AS PART OF THE COMBINED PENNSYLVANIA CORPORATE TAX

REPORT(FORM RCT-101) AND STAPLED TO THE LAST PAGE OF THE RCT-101.

10500011200

Form Rct-105 - Three-Factor Capital Stock/foreign Franchise Tax Manufacturing Exemption Schedule - 2002

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