How would apportionment factors be determined?
Sales Factor: Separately identified sales of prewritten, “canned” software are considered to be sales of tangible personal property. Such sales are apportioned based on destination in accordance with VR 630-3-415, copy attached. Sales of service fees, establishment fees, and other transactions not involving the sale of tangible personal property are apportioned based on “cost of performance” pursuant to VR 630-3-416, copy attached. Because the Taxpayer’s costs of performance are likely to be greater outside than inside of Virginia, the Taxpayer is not likely to have a positive Virginia sale factor as a result of its fee income. Property Factor: The Virginia property factor is based on real and tangible personal property used in Virginia. Accordingly, the presence of the taxpayer’s intangible software licensed to Virginia users not create a Virginia property factor. See Public Document (P.D.) 94-88 (3/25/94) The value of any diskettes present in Virginia would likely be de minimis, and
