64:27:01:16.  Limitations of deductions. Deductions allowed in SDCL 10-39-45.2(6) are limited to expenditures incurred in production activities in this state.

          Source: 2 SDR 21, effective September 18, 1975; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

          General Authority:SDCL 10-39-49.

          Law Implemented:SDCL 10-39-45.2(6).

          Declaratory Ruling: The formula for determining net profit for mineral extraction tax on profit of minerals extracted in-state and shipped out-of-state for processing, where N = net profit, G = total gross yield, AS = in-state administrative costs and salaries, TS = South Dakota state and local taxes, CS = allowable costs incurred in-state, CO = allowable costs incurred out-of-state, and GS = gross yield from South Dakota minerals, is as follows:

 N = GS - (AS + TS + CS) - CO  x  GS

                                                                                                           G

Secretary of Revenue Declaratory Ruling No. 77-9.