[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR121.104]

[Page 306-307]
 
                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) Receipts means ``total income'' (or in the case of a sole 
proprietorship, ``gross income'') plus ``cost of goods sold'' as these 
terms are defined and reported on Internal Revenue Service (IRS) tax 
return forms (such as Form 1120 for corporations; Form 1120S and 
Schedule K for S corporations; Form 1120, Form 1065 or Form 1040 for 
LLCs; Form 1065 and Schedule K for partnerships; Form 1040, Schedule F 
for farms; Form 1040, Schedule C for other sole proprietorships). 
Receipts do not include net capital gains or losses; taxes collected for 
and remitted to a taxing authority if included in gross or total income, 
such as sales or other taxes collected from customers and excluding 
taxes levied on the concern or its employees; proceeds from transactions 
between a concern and its domestic or foreign affiliates; and amounts 
collected for another by a travel agent, real estate agent, advertising 
agent, conference management service provider, freight forwarder or 
customs broker. For size determination purposes, the only exclusions 
from receipts are those specifically provided for in this paragraph. All 
other items, such as subcontractor costs, reimbursements for purchases a 
contractor makes at a customer's request, and employee-based costs such 
as payroll taxes, may not be excluded from receipts.
    (1) The Federal income tax return and any amendments filed with the 
IRS on or before the date of self-certification must be used to 
determine the size status of a concern. SBA will not use tax returns or 
amendments filed with the IRS after the initiation of a size 
determination.
    (2) When a concern has not filed a Federal income tax return with 
the IRS for a fiscal year which must be included in the period of 
measurement, SBA will calculate the concern's annual receipts for that 
year using any other available information, such as the concern's 
regular books of account, audited financial statements, or information 
contained in an affidavit by a person with personal knowledge of the 
facts.
    (b) Completed fiscal year means a taxable year including any short 
year. ``Taxable year'' and ``short year'' have the meanings attributed 
to them by the IRS.
    (c) Period of measurement. (1) Annual receipts of a concern that has 
been in business for three or more completed fiscal years means the 
total receipts of the concern over its most recently completed three 
fiscal years divided by three.
    (2) Annual receipts of a concern which has been in business for less 
than three complete fiscal years means the total receipts for the period 
the concern has been in business divided by the number of weeks in 
business, multiplied by 52.
    (3) Where a concern has been in business three or more complete 
fiscal years but has a short year as one of the years within its period 
of measurement, annual receipts means the total receipts for the short 
year and the two full fiscal years divided by the total number of weeks 
in the short year and the two full fiscal years, multiplied by 52.
    (d) Annual receipts of affiliates. (1) The average annual receipts 
size of a business concern with affiliates is calculated by adding the 
average annual receipts of the business concern with the average annual 
receipts of each affiliate.
    (2) If a concern has acquired an affiliate or been acquired as an 
affiliate during the applicable period of measurement or before the date 
on which it self-certified as small, the annual receipts used in 
determining size status includes the receipts of the acquired or 
acquiring concern. Furthermore, this aggregation applies for the entire 
period of measurement, not just the period after the affiliation arose.
    (3) If the business concern or an affiliate has been in business for 
a period of

[[Page 307]]

less than three years, the receipts for the fiscal year with less than a 
12 month period are annualized in accordance with paragraph (c)(2) of 
this section. Receipts are determined for the concern and its affiliates 
in accordance with paragraph (c) of this section even though this may 
result in using a different period of measurement to calculate an 
affiliate's annual receipts.
    (4) The annual receipts of a former affiliate are not included if 
affiliation ceased before the date used for determining size. This 
exclusion of annual receipts of a former affiliate applies during the 
entire period of measurement, rather than only for the period after 
which affiliation ceased.
    (e) Unless otherwise defined in this section, all terms shall have 
the meaning attributed to them by the IRS.

[61 FR 3286, Jan. 31, 1996, as amended at 65 FR 48604, Aug. 9, 2000; 69 
FR 29203, May 21, 2004]