Income/Franchise:
Idaho: Administrative Ruling Addresses Unitary Groups, Business Income, and Apportionment

Docket No. 0-543-033-344, Idaho State Tax Comm. (11/30/22). In a redacted administrative ruling involving a foreign Idaho taxpayer, the Idaho State Tax Commission (Commission) addresses several state corporate income tax issues and topics such as the classification of income (business versus nonbusiness), whether certain affiliates operate as a unitary group, computation of the property factor for apportionment purposes, and application of Idaho’s sales factor “throwback” rule on sales made to a foreign affiliate. Among the Commission’s conclusions in the ruling are that i) certain income from the sale of a partnership interest constituted business income subject to apportionment as the partnership was unitary with the taxpayer and served as an integral part of the taxpayer’s business; ii) the historical cost of certain assets was the correct value to use in calculating the property factor denominator of the apportionment factor as the Idaho code does not recognize impairment write-downs and corresponding losses recognized under International Financial Reporting Standards; and iii) certain sales made to an affiliate in Mexico were subject to Idaho throwback and thus must be included in the numerator of the taxpayer’s Idaho sales factor as the taxpayer did not show that the sales were taxable in Mexico. Please contact us with any questions.