Form Rct-105 - Three-Factor Capital Stock/foreign Franchise Tax Manufacturing Exemption Schedule
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4RCT-105 (05-12) (FI)
1050012105
DO NOT PLACE ANY DASHES (-) OR SLASHES (/) IN THE FIELDS
File with RCT-101
COMMONWEALTH OF PENNSYLVANIA
THREE-FACTOR CAPITAL STOCK/FOREIGN FRANCHISE TAX
MMDDYYYY
MANUFACTURING EXEMPTION SCHEDULE
TAX YEAR
BEGINNING
START
TAX YEAR
CORPORATION NAME
REVENUE ID
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 cor-
porate 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.
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. See the note at the top of Page 4 of this schedule, 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.
1050012105
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