An Arizona Department of Revenue hearing officer determined that the gross receipts from a taxpayer’s deemed asset sale pursuant to I.R.C. § 338(h)(10), including gross receipts attributable to goodwill, could not be included in the taxpayer’s sales factor for corporate income tax apportionment purposes. The taxpayer asserted that goodwill is an intangible asset, and gross receipts attributable to goodwill should be sourced based on costs of performance, which were outside Arizona. The hearing officer noted that Ariz. Admin. Code R15-2D-903 excludes from the sales factor substantial amounts of gross receipts arising from an incidental or occasional sale of a fixed asset used in the regular course of the taxpayer’s trade or business. Goodwill is an intangible asset, not a fixed asset, but the hearing officer concluded that the gross receipts attributable to goodwill could not be included in the sales factor because they do not fairly reflect the taxpayer’s day-to-day business activity in Arizona. Relying on a legal ruling issued by the California Franchise Tax Board, the hearing officer found “no logical basis for distinguishing between fixed assets and intangibles.” In the Matter of [Redacted], Case No. 201200235-C (Ariz. Dep’t of Revenue, May 31, 2013).