This Manual provides instructions for coding the industrial activity of corporations, who filed on a Form 1120 series return, for the 2004 Statistics of Income (SOI) Program.

The industry code should indicate the type of business activity from which the corporation received its income, or the largest portion of its income if it was consolidated or engaged in more than one business activity. If a company is consolidated or engaged in more than one kind of activity, refer to Section 7.28 for specifics on the total receipts rule.

The codes used in statistical processing (SOI Industry codes) and the descriptions of them are listed in Exhibit 1.13.7-1. These codes and their corresponding titles are listed in bold type. Naics codes & titles are listed below the SOI Industry codes and may be helpful when industry coding. The NAICS United States manual can also be useful in determining the exact code. However, the corresponding SOI industry code will have to be determined once the appropriate NAICS code is found. The NAICS United States manual is also available on CD-Rom.

It is also possible to query the industry codes on-line through the industry code look up table. The industry code lookup table lists all possible industry codes in numeric order and a description of the industry. Press the [F9] key at the SOI industry code field to access the look up screen. After accessing the lookup table, you may press the [F1] key for lookup help. The following is an explanation of the 2 different ways to look up an industry code:

The INDUSTRY CODE RESEARCH SCREEN will display amounts and codes from the Prior Year File that may be of assistance in selecting an industry code. For 2004 SOI year, if the 2003, 2002, and 2001 information are available, they will all display on the screen (See example on the next page). To access the research screen, press [Ctrl+F8] at the SOI industry code field. Access to the Industry code lookup screen [F9] or 4 digit to 6 digit lookup screen [Ctrl+F2] is available at the industry code field while in this research screen. Listed below are those displayed items and an explanation as to their use:

The cursor will be positioned at a reference source field on the screen. Enter as many of the following codes as apply and press [Enter]. Please research Moody's on all returns with total assets equal to 100 million or more. This can be especially helpful when the parent has the largest total receipts and the business description and/or code are unclear. Generally, the History, Highlights, and Business sections of Moody's are most helpful when industry coding.

Next the cursor will move to the INDUSTRY CODE COMMENT FIELD. The industry code comment field should be used to document why a company is assigned a particular industry code. The following guidelines should be followed when using the comment field:

The cursor will be placed at the SOI INDUSTRY CODE FIELD for youto enter the industry code you have selected. If you need to access theindustry code look up screen, press the [F9] key (See Exhibit 1.13.823 ). The industry code is a double entry field. After entering theindustry code for the second time, press the [Enter] key to return to the OtherInformation screen. The new industry code will be displayed. Verify that this iscorrect and press [Enter]. At this point, a series of longitudinal tests will fire.

Changes to the SOI industry code must be made through the industrycode research screen. Any time you research the industry code, whether you change the industry code or not, you must record your research on the research screen. Once you access the research screen, the system will force you to enter comments in the comment field. Please do not make singleword comments like; ein, on line, Taxpayer, PBA, etc. For consolidatedreturns, please make comments regarding receipts (See Total Receipts Rule section 7.28). If a consolidated return is coded based on an "exception to the total receipts rule" , please comment accordingly. Please keep in mind that your comments greatly assist N.O. analystsduring Source Book Review, so be as specific as possible whenannotating information pertaining to industry code changes. For instances where you accidentally access the research screen, enter "NoChange" in the comment field to allow you to exit the research screen.

Criteria for a pre-loaded industry code:

Criteria for verifying an industry code:

The industry codes for statistical returns are determined by using sets of rules (described in detail later in this Handbook) which are applied generally in the following order of priority:

Specific rulings are provided for the industry coding of industrial divisions. These guidelines are described in detail below. The SOI industry codes listed are identical to the Principal Business Activity codes issued with taxpayer instructions with the exception of a few codes added for statistical processing.

These rulings relate to problem returns which require special coding. Rulings pertaining to returns with combinations of business activities should be applied only when the principal business activity cannot be determined either from the return or from reference books.

Companies growing fruits and vegetables and selling them at roadside stands are classified under Crop Production. Companies engaged in pest control, except for crop production & forestry production, are coded 561710, Exterminating & Pest Control Services.

Companies providing irrigation systems are coded 221310, Water, Sewage & Other Systems, while companies providing landscape architectural services are coded 541320, Landscape Architecture Services.

Breeding of horses (including race horses) and other pets should be coded as 112900.

Companies primarily engaged in providing pet care services such as boarding, grooming, sitting, and training pets should be coded 812910. However, companies boarding horses should be coded 115210.

Companies primarily engaged in providing custom grain grinding services should be coded 311110 Animal Food Manufacturing.

Mining companies having nominal income from activities other than mining, but having large development or mining expenses, are coded for mining according to the principal mineral for which development work was in process. Also see combinations of manufacturing and mining in Section 7.12 (1).

The beneficiation or preparation of other mineral sand metallic ores and cleaning and grading of coal are mining whether or not the operation is associated with a mine.

Drilling oil or gas field water intake wells on a contract or fee basis is Support Activities for Mining, 213110.

This is a new industrial sector in NAICS. These companies were formerly in the same industry group as transportation companies.

Includes Electric, Natural Gas, and Combination Electric and Gas companies, as well as Water, Sewage & Other Systems.

See Total Receipts Rule 7.28 to determine the correct industry code for these companies.

Combination Electric and Gas companies are industry 221500. This code is created for SOI processing, you will not find this code in the NAICS index or manual.

Companies providing water for irrigation or providing water and irrigation are included in Water, Sewage, and Other Systems, 221300.

For Drilling oil or gas field water intake wells on a contract or fee basis see Support Activities for Mining, 213110.

Companies engaged in sales and installation or installation only are classified in the construction industry related to what is being installed.

Heavy construction equipment rental and leasing is classified in the Construction Sector (industry 238900) if an operator is involved. This is because the client is paying for the expertise and knowledge of the equipment operator, and the operator is essential to operate the equipment. If an operator is not involved, this is classified in the Real Estate and Rental and Leasing Sector (industry 532400), since the client operates the industrial equipment.

Industry code 237210 Land Subdivision and Land Development: The corporation generally has gross receipts and cost of goods as its largest income and deduction items. Interest Income is larger than rental income. Depreciable assets, other investments, and land are generally the largest asset items. Note for cemetery subdividers and developers as well as cemetery management companies see Other Services Sector with Personal and Laundry Services (812220 Cemeteries and Crematories).

Combinations of Manufacturing and Mining are coded for Manufacturing if product is manufactured entirely from whatever is mined.

Combinations of Manufacturing and Retail Trade are coded for Manufacturing. However, if the product is sold on the premises where manufactured, the return should be coded for Retail Trade. Bakeries are an exception. Bakeries which make and sell for immediate consumption such as bagel, cookie, doughnut, and pretzel shops are classified in the Accommodation and Food Services Sector — Limited Service Eating Places (722210). While bakeries which make and sell in the same premises but not for immediate consumption are included in the Manufacturing Sector — Bakeries & Tortilla Manufacturing (311800). For companies which only sell bakery goods: See Retail Trade Sector — Baked Goods Stores (445291).

If a company produces dog and cat food, or any prepared feeds and feed ingredients for animals and fowls (except slaughtering animals for pet food), assign industry 311110 Animal Food to the return. If a company produces prepared flour mixes and doughs from purchased flour [no indication the company has any milling activities], assign industry 311800 Bakeries and Tortillas to the return. Grain and Oilseed Milling to the return. Industry 311200 includes cottonseed, soybean, vegetable oilseed processing, and rice uncooked and packaged in rice mills with other ingredients. Grain and Oilseed Milling 311200 also includes manufacturing malt.

Assign code 311300 Sugar & Confectionery Products to candy stores which prepare and sell candy on the premises. Sugar & Confectionery Products also include companies which manufacture marshmallow creme. Assign code 311900 to companies which produce salted or roasted nuts, and seeds.

Retail dairies engaged in processing and manufacturing of dairy products are coded 311500.

Companies engaged in assembly cutting and packaging meats[boxed meats] from purchased meats are coded 311610. This industry also includes companies engaged in rendering animal fat, bones, and meat scraps (edible or inedible). Slaughtering animals for pet food is also included in this industry.

If a company produces canned, cured, fresh or frozen fish, seafood or marine fats and oils, assign code 311710 Seafood Product Preparation & Packaging to the return.

If a company is an egg processor [makes egg substitutes, freezes or dries eggs] assign code 311900 to the return.

If a company produces non-tomato-based sauces, mayonnaise, or salad dressing, canned pudding, or dry soup mixes and bouillon from purchased dehydrated ingredients, assign industry 311900 to the return.

Establishments that transform a basic fiber (natural or synthetic) into a product, such as yarn or fabric, that is further manufactured into usable items are coded 313000.

Manufacturing of textile products from purchased fabric is coded 314000. Processes used in these industries are generally cut and sew.

Corporations engaged in printing activities without any indication of publishing are classified in the Manufacturing Sector: Printing and Related Support Activities (industry 323100). This group includes activities such as digital printing, large format (billboards) and high resolution graphics and computer typesetting.

For corporations engaged in a combination of printing and publishing activities see the Information Sector (51). Corporations showing some evidence of publishing (for example, name of corporation or publishing expenses) are classified in the Information Sector with Publishing Industries. Other Publishers (industry 511190) includes greeting cards and miscellaneous publishing. Corporations showing sheet music royalties and having some evidence of publishing (for example, name of corporation or publishing expenses) are classified in the Information Sector with Sound Recording Industries (512200). Similarly, corporations producing original audio recordings such as recording studios and integrated record companies which are engaged in producing (releasing), promoting, and distributing recordings are also classified in the Information Sector with Sound Recording Industries (512200). The income statement for these companies may include record royalties.

All corporations manufacturing plastics products are coded for Plastics Product Manufacturing 326100, unless specifically listed by its product such as Footwear Manufacturing 316210 (including rubber and plastics).

Combinations of ready mixed concrete and the sale of sand, gravel, building materials, etc. are coded for Manufacturing (327300).

Companies which produce machinery and equipment and then lease or sell their products are considered manufacturing.

The manufacturing of small machine parts by powder metallurgy, involving the mixing, molding, pressing, and sintering of metallic powders are coded by production process rather than product. The NAICS code for this is 332110, Forging and Stamping.

Companies engaged in mass reproducing of pre-recorded audio and video cassette tapes and compact discs or those producing blank cassettes and discs are classified in the Manufacturing Sector with Computer and Electronic Products, industry 334610.

Companies engaged in the mass reproducing of computer software, such as data and programs on diskettes, magnetic tapes, cartridges, and CD-ROMS are considered manufacturing (334610). They do not generally develop software. For establishments engaged in the developing, designing, and publishing of prepackaged software see the Information Sector publishing industries (511210).

Customizing automobiles, trucks and vans on a assembly-line basis is coded Motor Vehicles & Trailer Manufacturing, 336210 and on an individual basis is coded Automotive Body, Paint, Interior & Glass Repair, 811120.

325410 — Pharmaceutical manufacturers do not include companies primarily engaged in the research of pharmaceuticals or medical/diagnostic techniques or services. If information from the return or your own research indicates a company coded 325410 is primarily engaged in research and derives most of its receipts from research, check the Schedule A. If line 3, Cost of Labor, is zero or very small, compared to other costs and receipts, the return should not be coded as a manufacturer.

Please refer to the following subsection (1.13.7.14) for instructions to both the Retail & Wholesale Trade industries.

Wholesale/Retail trade companies should have large amounts of business receipts, cost of goods, and trade notes. They may also have large amounts of inventory.

There are some companies that may be identified by a taxpayer as being retail in nature but according to the NAICS manual will be coded wholesale based on the product they sell. These products are those that are extremely unlikely to be bought by an individual consumer. Some examples are forklifts, cash registers, farm equipment and construction equipment.

See combination of manufacturing and trade in 7.12(2) & 7.29(8).

Combinations of wholesale and retail trade are coded for "Wholesale and Retail Trade, Not Allocable" (460000). Do not use this code if the taxpayer indicates only "Wholesale " or "Retail" . If it is not possible to assign a specific wholesale or retail code, assign one of the "other miscellaneous" , "all other" , or " other" codes. For example, "retail" / Men's clothing store would be assigned NAICS code 448110, since it is specific. However, "retail" /swimwear would be assigned NAICS code 448190 (other clothing stores), since it is not as specific as "men's clothing stores" .

A parent corporation which primarily provides management services for its trade subsidiaries, and which does not satisfy the specific rules for a holding company (code 551112) in 7.1 7:(1), is coded for the trade industry of the subsidiaries with the largest gross receipts.

Combinations of electrical goods and hardware or plumbing and heating equipment (wholesale) are coded for 423700, Hardware, & Plumbing & Heating Equipment & Supplies Wholesalers, 444130, Hardware Stores or 444190, Other Building Materials Dealers.

Companies which report a PBA code in wholesale trade and scrap metals or materials for the product or business activity should be coded 423930 Recyclable Materials Wholesalers. See Naics Manual Index: Metal scrap and waste wholesaling.

Groceries and Related Product Wholesalers (424400) includes wholesale meat trading or distributing, unless the company specifically indicates that it is boxing beef, (cutting up and reselling purchased fresh carcasses). This industry also includes cleaning, oil treating, packing and grading of eggs and coffee roasting by wholesale growers.

For companies cutting up and reselling purchased fresh carcasses (boxed meats) see Manufacturing: Animal Slaughtering & Processing (311610). For bottled water see the Manufacturing (312110).

Companies which operate grain elevators as part of wholesaling grain and field beans are coded for Wholesale Trade; Farm Products Raw Materials - 424500. For consolidated companies with subsidiaries which are traders of grain or field beans, code the company for Wholesale Trade. Companies operating grain elevators for storage only are coded for Warehousing and Storage 493100. If grain elevator is reported by taxpayer but you cannot determine if the company is engaged in any wholesale trade activities, create a Communication Log.

Baked Goods Stores (445291) include companies which only sell bakery goods. For companies which bake and sell on the premises see Manufacturing: Bakeries & Tortilla (not for immediate consumption — 311800). For companies which bake and sell for immediate consumption, see Accommodation and Food Services Sector — Limited Service Eating Places (722210).

For Auctioning property

For industries 425110 and 425120, there should be no Cost of Goods Sold. If COGS is present, please code for another wholesale trade industry. Contact National Office if another industry code cannot be determined.

Boat rental or leasing, commercial is coded Commercial and Industrial Machinery and Equipment Rental and Leasing, 532400. Boat rental, pleasure is coded Other Consumer Goods Rental, 532290.

Companies operating marinas and performing incidental boat repairs are coded Other Amusement and Recreation Industries, 713900.

Repairing aircraft except on a factory basis is Support Activities for Air Transportation, 488100.

Repairing railroad cars on a contract or fee basis Support Transportation for Rail Transportation, 488210.

For companies providing water for irrigation or providing water and irrigation see Utilities Sector: Water Sewage and Other Systems, 221300.

Companies operating grain elevators for storage only are coded for Warehousing and Storage 493100. Companies which operate grain elevators as part of wholesaling grain and field beans are coded for Wholesale Trade Farm Products Raw Materials 424500. For consolidated companies with subsidiaries which are traders of grain or field beans, code the company for Wholesale Trade. If grain elevator is reported by taxpayer but you cannot determine if the company is engaged in any wholesale trade activities, create a Communication Log.

This is a new industrial sector in NAICS.

This sector includes publishing industries including; Newspapers (511110), Periodicals (511120), Books (511130), Database and Directories (511140), Other Publishers (511190), and Software Publishers (511210).

Corporations engaged in a combination of printing and publishing activities are included in this sector. Corporations showing some evidence of publishing (for example, name of corporation or publishing expenses) are classified with the Publishing Industries.

Other Publishers (511190) includes greeting cards and miscellaneous publishing.

Establishments engaged in designing, developing, and publishing prepackaged software are classified with publishing industries (511210).

This sector also includes motion picture and video industries (512100) and sound recording industries (512200). See Real Estate and Rental and Leasing for video rentals (532230).

Corporations showing sheet music royalties and having some evidence of publishing (for example, name of corporation or publishing expenses) are classified with Sound Recording Industries (512200). Similarly, corporations producing original audio recordings such as recording studios and integrated record companies which are engaged in producing (releasing), promoting, and distributing recordings are also classified with Sound Recording Industries (512200). The income statement for these companies may include record royalties.

Broadcasting and telecommunications industries are included in this sector as well. These companies are engaged in radio and television broadcasting (515100), cable network & program distribution (515210), and telecommunications including paging, cellular, satellite, and other similar activities (517000).

This sector includes firms which provide information services such as news syndicates, libraries, and on-line information providers (519100).

Companies which provide data processing services at their own locations for others are also included in this group (518210).

Offices of other holding companies (551112). Generally, this includes companies whose principal sources of income include one or more of the following-dividends the largest, capital gains is the second largest, and interest and royalties are present. If there is a large amount of gross receipts or cost of goods, it probably should not be a 551112 (Bank holding companies are coded 551111).

When a company reports it's description as "investments in real estate" or " real estate investments" , use industry code 237210 when the corporation has gross receipts and cost of goods as its largest income and deduction items and depreciable assets, other investments, and land as its largest asset items. Code 551112 includes investing not elsewhere classified.

For industries 522220, 522298 , 523900, 525990, and 551112, use the Total Receipts Rule (see 7.28 of Industry Code Manual) to verify the largest company or largest group of companies (ex. total of 10 companies 6 companies=80% of receipts). Edit the business activity code, the product/service code, and the corporation name of the largest company in the pop-up window. For the largest group of companies, enter the largest company from that group (ex. of the 6 companies that =80% of receipts, enter the one that is the largest according to TRR). The business activity code should correspond with the product/service code (ex. holding company 551112). If the business activity code does not correspond with the product/service code, further research into the company and it’s subsidiaries needs to be done by using the industry code manual, the NAICS book, the internet, the list of pba's provided for the taxpayer, etc. DO NOT directly accept the numeric code in this situation.

The following are some key words that may assist in coding within this sector. However, these key word should be considered with any other factors that may exist.

Finance companies engaged in agricultural lending (i.e.; Farm Loans) should be coded 522298.

Companies providing credit card services with collection by a central agency are coded Business Credit Institutions, 522210.

Companies engaged in automobile financing or automobile financing in combination with leasing are coded 522220. These companies lend money to individuals for the purpose of providing collaterized goods through a contractual installment sale. They are not Finance companies (522291) because Finance companies are engaged in making unsecured loans. Automobile loans are rarely unsecured loans.

For corporations which show indications that they may belong in a non-finance industry, check income items on the return as you would under the total receipts rule in Section 7.28. See treatment of management services for trade subsidiaries in Section 7.14(5).

For product/service: commercial paper:

Decide if it is a holding company or not. Check Form 851 and Moody's and paragraph 8 below. Decide if it is a bank or a savings & loan company. Use total receipts rule.

Companies should be coded in 522120/551111 as opposed to 522110, if:

Industry 522120 includes the following companies;

Corporations are also coded 522120 if —

Industries in the Real Estate subsector group establishments that are primarily engaged in renting or leasing real estate to others; managing real estate for others; selling, buying, or renting real estate for others; and providing other real estate related services, such as appraisal services.

Lessors of Real Estate (531110,531120/531310). In trying to decide if a return should be in industry 531110 or 531120, or 531310, look to see if depreciable assets is the largest asset item and is about two- thirds or more of total assets and interest paid is larger than cost of goods. If so, the return should be in 531110 or 531120 where the corporations usually owns and operates the buildings. In industry 531310, the corporations usually just manage the buildings for their clients.

For business activity or product code that includes cooperative, or co-ops assign industry code 531114. If cooperative (co-op) is not mentioned in the name, business activity or product code and the corporation name includes "tenant or owners " and the business description or product code includes apartment, assign code 531114.

Real Estate & Holding Companies. Ind. 551112 has large: other investments, net worth, interest/dividends received, and interest paid. There are minimal depreciable assets and no cost of goods or gross receipts (except for consolidated companies that have manufacturing subs, yet are coded 551112 because the holding company has the largest receipts). Any investment in real estate or land held for investment or resale is found in other investments.

Rental and Leasing Services. This group includes companies which rent or lease: automotive equipment (532100), consumer electronics and appliances (532210), formal wear and costumes (532220), video tapes and discs (532230), general rental centers (532310), other consumer goods (532290), and commercial and industrial machinery and equipment (532400).

While this group includes coin-operated machine rental and leasing (532400), see Other Services for Coin-operated Laundries and Drycleaners (812310).

This is a new industrial sector in NAICS. This group includes legal services, accounting and bookkeeping, payroll services, architectural & engineering services, consulting services, advertising, marketing research, and veterinary services.

Title insurance companies that do not file on form 1120PC should be coded other legal services (524290). Business activity & product codes describing these companies include title insurance or title underwriting. Companies providing title services such as title searches are coded 541190.

This sector also includes custom computer programming i.e. writing custom software (541511), computer system design services (541512), computer facilities management at client’s location (541513) and Other Computed Related Services such as computer disaster recovery and software installation (541519).

If "consulting" or "Management" is used in the business activity, use the taxpayer provided pba code to help determine the appropriate SOI indy code. The internet or other resources may be helpful if a pba code is not provided by the taxpayer. If no other helpful information is available see section 7.27 (unallocable) to check assets and receipts mix for an indication of another business activity. If so, use that information to code the return. If there is no indication that the return belongs in another industry, code as 541600.

This is a new industrial sector in the NAICS CLASSIFICATION SYSTEM. This group includes bank holding companies and other holding companies.

See Finance and Insurance 7.17 for more details.

This is a new industrial sector in the NAICS CLASSIFICATION SYSTEM.

This group includes employment services, private mail centers, copy shops, collection agencies, credit bureaus, court reporting and other steno type services, investigation and security services, services related to buildings such as: exterminating and pest control, janitorial, landscaping, and carpet cleaning, as well as trade show organizers and waste management.

This is a new industrial sector in the NAICS CLASSIFICATION SYSTEM.

This group includes schools, colleges and universities.

This is a new industrial sector in the NAICS CLASSIFICATION SYSTEM.

This group includes offices of physicians, dentists, mental health specialists, chiropractors, optometrists, physical, occupational & speech therapists and other health practitioners.

Outpatient care facilities such as: family planning centers, mental health and substance abuse centers, HMO medical centers, kidney dialysis centers, ambulatory surgical and emergency centers are also included with this group.

Other services in this sector include medical and diagnostic laboratories, home health care services, ambulance service, blood & organ banks, hospitals, nursing care facilities, vocational rehabilitation services, child day care services.

This is a new industrial sector in the NAICS CLASSIFICATION SYSTEM.

This group includes performing arts, spectator sports, museums, historical sites, amusement parks and game machine arcades operated in own facilities (713100), operating gambling facilities and providing service at client’s location including casinos that are not operated by a hotel and coin-operated gambling device concession operators such as slot machine operators (713200). For hotels that operate casinos within the hotel see Accommodation and Food Services: Casino Hotels (721120). Recreational activities also include companies operating music machines, other activities such as golf courses, skiing facilities, marinas, fitness centers, and bowling centers, as well as companies which provide and service amusement machines at client’s location (713900).

Combinations of bowling and restaurant income are coded for Other Amusement & Recreation Industries, 713900.

This is a new industrial sector in the NAICS CLASSIFICATION SYSTEM.

Accommodations include hotels, casino hotels, recreational vehicle parks and camps, rooming and boarding houses.

Food services includes full-service restaurants, limited-service eating places such as doughnut, cookie, and pretzel shops, food contractors and caterers, and drinking places for alcoholic beverages.

This is a new industrial sector in NAICS.

This sector includes businesses engaged in repair and maintenance activities (811) and businesses which provide personal and laundry services (812).

Repair and maintenance for automobiles include: mechanical and electrical (811110), body, paint, interior & glass (811120), other maintenance such as oil change, lubrication shops, and car washes (811190).

This group also includes repair shops for: electronic & precision equipment (811210), commercial & industrial machinery and equipment (811310), home & garden equipment and appliances (811410), reupholstering & furniture (811420), footwear & other leather goods (811430), and other personal & household goods (811490) such as bicycles, pleasure boats, china, and clocks (these are repair shops without retailing new products).

Personal service providers include: barber shops, beauty shops & nail salons (812111-812113), other personal care services such as weight control and dieting centers (812190), funeral homes (812210), cemeteries and crematories including cemetery subdividers and developers (812220), laundry and dry-cleaning facilities: coin-operated (812310) except coin-operated (812320), linen and uniform suppliers / industrial launderers (812330), pet care services except veterinarian (812910), see photo finishing (812920), parking lots & garages (812930), other personal services (812990) such as bonding service, service for reporting lost or stolen credit cards, dating service, psychic services, renting coin-operated lockers, shoe shine parlors, and singing telegram service.

See Professional, Scientific, and Technical Services for Veterinary Service 541940.

For coin-operated machine rental and leasing, see Real Estate and Rental and Leasing: Commercial and Industrial Machinery & Equipment Rental & Leasing (532400). For coin-operated laundries and drycleaners, see Other Services (812310).

For auctions and auction markets see Wholesale Trade for: automobiles (423100); livestock, horses, mules, tobacco, and other farm products (424500). See Retail Trade for: art auctions (453920); auction houses for general merchandise (453990); and Internet auctions (454110). For independent auctioneers which auction tangible personal property of others on a contract or fee basis see Administrative and Support and Waste Management and Remediation Services; (561900) Other Support Services.

Companies designing, developing and publishing prepackaged software are now classified under 511210, software publishers. Companies reproducing computer software, such as CD-ROMS, magnetic tapes, and game cartridges are now classified under 334610.

Computer facilities management services are 541513. They provide on site operation and management of customers' computer systems and/or data processing facilities. All other facility support services are 561210.

Companies that provide landscape architectural services are coded 541320, since it is a service related to landscaping. It is not an agricultural product.

Offices of ophthalmologists and optometrists are Services even if a majority of their revenue comes from retail sales. See Health Care and Social Assistance, sector 62.

Bars and restaurants owned and operated for members of civic, social and fraternal associations are Religious, Grantmaking, Civic, Professional, & Similar Organizations, 813000.

Managing construction projects for others on a contract or fee basis but assuming no responsibility for completion of the project is coded Management, Scientific & Technical Consulting Services, 541600.

Offices of veterinarians and veterinarian services are coded Veterinary Services, 541940.

If homeowners or condominium association is included in the corporation name, business activity, or product code, assign industry code 813000. If "association" is not included with homeowners or condominium, call the National Office.

When reviewing industry code 900000, check to see what receipt-deduction and asset-liability are the largest. Use this information to determine where the return may belong. If the largest receipts are dividends or interest, the largest deduction is interest paid and the largest asset item is investments, the return is coded as a holding company (551112).

Consolidated returns (those with subsidiaries that file the same type of tax form as the parent) are single returns containing combined financial data for a parent company and one or more subsidiary or affiliated companies. The companies in the group may be engaged in different kinds of industrial activities, but you must assign a single industry code to indicate the one predominant activity of the whole group. In doing this, you code by the " total receipts" rule and by the specific rulings and exceptions in Sections 7.6 and 7.29 using the combined receipts (after inter-company elimination's and lease income exclusions) and other relevant information for all the companies in the group. However, if the return does not report which subsidiary(s)/company(s) inter-company elimination's are from, code according to the total receipts reported. The financial statements of each company in the group will usually be shown on attached schedules, and each company's description of its own business activity will be shown on Form 851, Affiliations Schedule.

Except for those returns which are mentioned in Sections 7.6-7.27, 7.29 and 7.30. (Specific Rulings, Exceptions to the Total Receipts Rule, and Coding Foreign Income-Form 1120-F) the industry code to be entered is the code for the business activity accounting for the largest percentage of the corporation's "Total receipts." The Total Receipts Rule is a two step process: (a) identifying the company(s) accounting for the largest percentage of the total receipts and (b) identifying the business activity of the company(s) using the Form 851. " Total receipts" means the sum of the following entries (after excluding any income from Safe Harbor leases):

If the taxpayer supplies a description of its principal business activity, product or service or a business code, check the activity, product or code, first against the on-line guide and then NAICS manual, to determine the proper SOI Industry Code. The code determined from these sources may or may not be the code selected by the taxpayer.

If the code determined in (3), above, does not agree with the distribution of the taxpayer's receipts; or if the cost items, deductions, or attached schedules cause you to doubt the code; or if the taxpayer does not supply a usable code or description, look up the company in the appropriate reference materials. If the information from reference materials seems to agree with what is reported on the return, code on the basis of that information. The following reference materials may be useful in determining industry codes:

If you were not able to determine the proper industry code under (2), (3), or (4) above, search attached schedules for indications of business activity (for example: kinds of depreciable property). In addition, the income statement items and the balance sheet items may help indicate business activity. For example:

Unless instructed elsewhere, create a Communication Log rather than using "miscellaneous" or " other" codes when a corporation's business activity can only be classified within a certain group or subgroup of industries, or when the business activity is known but is not specifically identified in the NAICS Manual classification structure. When total assets of a specific company are greater than $500 million, contact the National Office before coding a company in a nonallocable industry.

In some cases, it is not necessary or possible to code according to the "total receipts" rule. These cases are listed in (2) through (13), below.

Returns with no "Gross income" but having "Deductions" are coded according to any available information pertaining to the business activity.

Banking

Open-End Investment Fund (Form 1120 RIC) are coded 525910. These returns are filed on Form 1120-RIC (which is titled "Regulated Investment Companies" on the form). If the taxpayer files Form 1120 and business activity is regulated investment company code "Other Financial Vehicles" , 525990.

Real estate investment trusts (REITS), are coded 525930. These returns are filed on Form 1120 REIT. If the taxpayer files Form 1120 and business activity is real estate investment trusts code "Other Financial Vehicles" , 525990.

Oil Companies— Industry code 324110 takes priority over 211110, 213110, 424700, 447100, 454311, 454312, 486000, and 541360.

Combinations of Manufacturing and installation (Construction) are usually coded for Manufacturing, especially if the construction involves the installation of the manufactured articles. Examples of such combinations are passenger and freight elevators or industrial furnaces and machinery. This rule includes the manufacturing and installation by contract. Code for construction only when the installation receipts are clearly predominant, at least 75% of total receipts.

Combinations of Manufacturing and Trade are coded for manufacturing when most of the receipts are from whatever is manufactured by the related company. If the manufactured good is made in a foreign country, and only distributed in the U.S., then code for wholesale. Also, Schedule A should be checked for cost of labor. If cost of labor is not present or is small compared to the other Sch. A items, then DO NOT code for manufacturing.

Returns showing rents as the largest single item of total receipts should not automatically be coded as real estate. Rent is a normal source of receipts in other industries also. For example, the actual operation of warehousing, pipeline transportation, and piers, as well as real estate, would normally show rents from real property but should be coded for the warehousing, pipeline transportation, etc. Rental of rooms, clothing, vending machines, automobiles without drivers, and construction and other equipment are coded as services If the primary source of income of a manufacturer of business machines is rents, code for manufacturing.

Returns of newspapers or periodicals or other publishing which show advertising as the largest single item of total receipts are not coded as advertising, but are classified in the publishing industries as newspapers (511110), or periodicals (511120), or miscellaneous publishing (511190).

Industry codes Electric Power Generation, Transmission and Distribution, 221100, Natural Gas Distribution, 221210, and Combination Electric and Gas Services, 221500 have specific rules for both unconsolidated and consolidated returns. Code according to the following procedure:

Health Maintenance Organizations (HMO's) — If a company designates itself as an HMO, it is important to determine whether it is primarily providing medical services or insurance premiums.

Construction — Building, Developing, and General Contracting (233)

When a corporation reports domestic income (i.e., effectively connected with a trade or business within the U.S.) and foreign income, code for domestic income. A sure indication of an effectively connected income is the completion of pages 3 through 6 of Form 1120-F. An industry code should be assigned based on the information given on these pages.

Do not code solely on the basis of Question I, Page 1, Form 1120-F which may be answered "No" even though the return has evidence of effectively connected income within the U.S.

Do not code solely on the basis of the business code number, business activity, product, or service shown on page 4. These may be a designation of the major source of income which might derive from foreign operations even though effectively connected income is established on pages 3 through 6 of the return.

Corp. Name of Largest Company. This field exist only for consolidated returns. This is a must enter field. Edit as reported by the taxpayer using the Total Receipts Rule (TRR). The corporation name of the largest company can be found on the Form 851 or attached schedules to the 851. If enough information is not provided by the taxpayer to use the TRR (i.e.; form 851 or receipts schedule is missing), then edit parent company as largest and comment accordingly. If there are multiple companies with the same pba-cd that sum to the largest group of companies while completing the Total Receipts Rule, please enter the largest company from that group of companies in this field. If an exception to the Total Receipts Rule is used to code the return, the largest company should still be edited here and the exception used should be noted in the indy code comments field.

Business Activity of Largest Company . This field exist only for consolidated returns. This is a must enter field. Edit as reported by the taxpayer using the Total Receipts Rule (TRR). The business activity of the largest company can be found on the Form 851 or attached schedules to the 851.

PBA Code of Largest Company. This field exists only for consolidated returns. This is a must enter field. Edit as reported by the taxpayer using the Total Receipts Rule (TRR). The pba code of the largest company can be found on the Form 851 or attached schedules to the 851. If an invalid pba code is reported by the largest company, enter a valid pba code that corresponds to the description.

If an invalid pba code is reported by the largest company, enter a valid pba code that corresponds to the description.

EIN of Largest Company. This field exists only for consolidated returns. This is a must enter field. The EIN of the largest company can be found on the Form 851 or attached schedules to the 851. If there is not enough information available to determine which company is largest or the ein has not been provided on Form 851, enter 99-9999999 as the ein and enter a comment in the indy code research comments field, explaining why the ein is not available.

Percentage of Total Receipts for Largest Company.. This field exists only for consolidated returns. This is a must enter field. See Total Receipts Rule, Section 7.28(2) for details on how this percentage is calculated. If the return is being coded based on the combined total receipts of a group of companies with the same pba-cd, that sum to the largest, then enter the percentage of total receipts for the group in this field. Otherwise, enter the percentage for the single largest company. If there is not enough information to determine this percentage, then enter zero and a corresponding statement in the Indy Code Research comments field, explaining why this percentage cannot be calculated.