This mileage ratio includes vertical miles: for determining the numerator of the mileage ratio, California assumes that launches in the state will have a value of 62 miles above the Earth's surface, where the boundary between orbital and suborbital space lies. For launches outside the state, that value would be zero. The regulation notes that if the exact mileage is not available due to secrecy or confidentiality issues, the mileage ratio denominator is "conclusively presumed" to be 310 miles above the Earth, multiplied by the number of launches under the applicable contract. 

Once the mileage ratio is calculated, the taxpayer then multiplies that ratio by the revenue recognized under the applicable contracts, resulting in the product of each contract. Finally, the products of each contract is then added up, resulting in the sum total of the projected mileage from all launch contracts that taxpayer has in an applicable tax year. This number is the numerator of the mileage factor. The denominator is the total revenue recognized from all launch contracts in the applicable tax year.  

These new rules are meant to reduce the need for space transportation companies, which have grown into a multi-billion dollar industry, to take tax positions based on uncertain or untested applications of the Uniform Division of Income for Tax Purposes Act, which is generally how apportionment is calculated.