(A) Gross receipts from transactions between separate entities, affiliated through direct or indirect common ownership, are included in taxable gross receipts.
(B) Example:
(1) Taxpayer is a wholly-owned corporate subsidiary of ABC Company. All of ABC’s accounting and administrative functions are performed by taxpayer. Taxpayer bills ABC a “management fee” equal to its costs and expenses so that, by design, no profit is generated by taxpayer. ABC purports to “reimburse” taxpayer all of its expenses.
(2) So long as taxpayer and ABC Company are separate legal entities, the intercompany management fees paid by ABC to taxpayer are taxable gross receipts.
(Ord. 2015-5, passed 4-28-2015)