On January 4, 2019, the Pennsylvania Department of Revenue
issued
Corporation Tax Bulletin 2019-01 taking the position that
receipts from hedging transactions, including those of a securities
dealer, should be excluded from the numerator and the denominator
of a corporation's Corporate Net Income Tax sales factor. The
Bulletin is effective for taxable years beginning after December
31, 2018.
The Bulletin states that taxpayers must exclude from their sales
factor gross receipts related to gain or loss from a transaction
identified as a hedge under Internal Revenue Code section 475(c)(3)
(pertaining to dealers in securities) or section 1221(b)(2)(A)
(pertaining to capital assets). It also excludes from the sales
factor: (i) receipts attributed to accrued interest income or
expense, gain or loss on a debt instrument, a payable, a receivable
or a forward contract payable in a foreign currency for foreign
currency gain or loss that is computed under Internal Revenue
