[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR121.104]

[Page 285-286]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 121_SMALL BUSINESS SIZE REGULATIONS--Table of Contents
 
           Subpart A_Size Eligibility Provisions and Standards
 
Sec. 121.104  How does SBA calculate annual receipts?

    (a) Definitions. In determining annual receipts of a concern:
    (1) Receipts means ``total income'' (or in the case of a sole 
proprietorship, ``gross income'') plus ``cost of goods sold'' as these 
terms are defined or reported on Internal Revenue Service (IRS) Federal 
tax return forms; Form 1120 for corporations; Form 1120S for Subchapter 
S corporations; Form 1065 for partnerships; and Form 1040, Schedule F 
for farm or Schedule C for sole proprietorships). However, the term 
receipts excludes net capital gains or losses, taxes collected for and 
remitted to a taxing authority if included in gross or total income, 
proceeds from the transactions between a concern and its domestic or 
foreign affiliates (if also excluded from gross or total income on a 
consolidated return filed with the IRS), and amounts collected for 
another by a travel agent, real estate agent, advertising agent, 
conference management service provider, freight forwarder or customs 
broker.

[[Page 286]]

    (2) Completed fiscal year means a taxable year including any short 
period. Taxable year and short period have the meaning attributed to 
them by the IRS.
    (3) Unless otherwise defined in this section, all terms shall have 
the meaning attributed to them by the IRS.
    (b) Period of measurement. (1) Annual receipts of a concern which 
has been in business for 3 or more completed fiscal years means the 
receipts of the concern over its last 3 completed fiscal years divided 
by three.
    (2) Annual receipts of a concern which has been in business for less 
than 3 complete fiscal years means the receipts for the period the 
concern has been in business divided by the number of weeks in business, 
multiplied by 52.
    (3) Annual receipts of a concern which has been in business 3 or 
more complete fiscal years but has a short year as one of those years 
means the receipts for the short year and the two full fiscal years 
divided by the number of weeks in the short year and the two full fiscal 
years, multiplied by 52.
    (c) Use of information other than the Federal tax return. Where 
other information gives SBA reason to regard Federal Income Tax returns 
as false, SBA may base its size determination on such other information.
    (d) Annual receipts of affiliates. (1) If a concern has acquired an 
affiliate or been acquired as an affiliate during the applicable 
averaging period or before small business self-certification, the annual 
receipts in determining size status include the receipts of both firms. 
Furthermore, this aggregation applies for the entire applicable period 
used in computing size rather than only for the period after the 
affiliation arose. Receipts are determined for the concern and its 
affiliates in accordance with paragraph (b) of this section even though 
this may result in different periods being used to calculate annual 
receipts.
    (2) The annual receipts of a former affiliate are not included as 
annual receipts if affiliation ceased before the date used for 
determining size. This exclusion of annual receipts of a former 
affiliate applies during the entire period used in computing size, 
rather than only for the period after which the affiliation ceased .

[61 FR 3286, Jan. 31, 1996, as amended at 65 FR 48604, Aug. 9, 2000]