New Mexico has issued a ruling regarding the application of gross receipts taxes to the home sale and construction activities of a seller of residential real estate and an affiliated construction company. If the seller contracts with the construction company to build a home on a lot that it then sells to a customer, the seller’s services in selling the home are deductible from gross receipts since they are receipts from the sale of real property. In this scenario, the construction company’s sales of construction services to the seller of the home are subject to gross receipts tax. If the seller buys an already-constructed home from the construction company and sells it to a customer, the seller’s receipts from the home sale are deductible. In this scenario, the construction company’s sales of construction services are subject to gross receipts tax. However, the construction company may deduct the cost of the lot from receipts derived from the sales of the completed home to the seller.(Ruling No. 430-14-1, New Mexico Taxation and Revenue Department, July 25, 2014, released October 2014)