Taxpayer sold computers and related hardware to customers in New Mexico. The Taxpayer sold the computers pursuant to contracts which either provided that the title to the merchandise passed at the Taxpayer’s shipping location, its out-of-state warehouses, or there was a shipping term that provided that the merchandise was shipped F.O.B. Taxpayer’s shipping location. The contracts also provided that the Taxpayer would replace goods lost or damaged in transit to the customer. The Taxpayer argued that its had no gross receipts from the sale of the computers because the title to the merchandise passed outside of New Mexico at the Taxpayer’s shipping location. The second issue raised by the Taxpayer was that the Department had improperly denied it a deduction for the sale of computers to a customer from whom the Taxpayer had received a 1992 series NTTC during the course of the audit. The issue with respect to the deduction was whether the Taxpayer had presented the NTTC to the Department’s auditors at the commencement of the audit. The protest was denied in part and granted in part. With respect to the location of the Taxpayer’s sales, New Mexico looks to where risk of loss passes in addition to where title passes to determine the location of a sale. In this case, although the title to the merchandise passed outside of New Mexico, because the Taxpayer bore the risk of loss if the merchandise was lost or damaged in transit, the sale was not consummated until the Taxpayer met its obligation to deliver conforming goods, and that happened in New Mexico. Thus, the sales were subject to the gross receipts tax. With respect to the NTTC issue, it was determined that the Taxpayer presented the NTTC to the Department’s auditors at the commencement of the audit and that the Taxpayer was entitled to the deduction it had claimed.
Apple Computer, Inc.