Instructions For Idaho Form 402
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2IA00551-2
Instructions for Idaho Form 402
6-02-03
General Information
If you are a nonresident transacting business in Idaho and an-
Sales means all gross receipts derived from transactions and
other state or country, your entire business income is subject to
activities in the regular course of your trade or business. Gross
Idaho apportionment. The elements of the apportionment for-
receipts means gross sales, less returns and allowances. Gross
mula are the property, sales, and payroll factors of your trade or
receipts from sales of tangible personal property are assigned to
business.
Idaho if:
Property Factor
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property is delivered or shipped to a purchaser in Idaho regard-
The property factor is a fraction. The numerator is the average
less of F.O.B. point or other conditions of sales; or
value of real and tangible personal property owned or rented and
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property is shipped from an office, store, warehouse, factory,
used in Idaho during the tax year to produce business income.
or other place of storage in Idaho and the taxpayer is not tax-
The denominator is the average value of all the real and tangible
able in the state of the purchaser (throwback sales) or the
personal property you owned or rented and used during the tax
purchaser is the United States Government.
year to produce business income. Property used in the produc-
tion of nonbusiness income is excluded from the factor.
Sales also include gross receipts from services and all other gross
receipts such as interest, dividends, rents, royalties, gross re-
Property is included in the factor if it is actually used or capable of
ceipts from the sale of property, and other income you derive in the
being used during the tax year in the regular course of the trade or
regular course of your business. If gross receipts do not fairly
business of the taxpayer.
represent the extent of your business activity in Idaho, you may
petition, or may be required, to use another method to obtain an
For example, a plant temporarily idle, work-in-process, and raw
equitable result. Income from services is attributable to Idaho to
material reserves not currently being processed are included in
the extent the services are performed in Idaho.
the property factor. Property under construction during the tax year,
except inventoriable goods in process, is excluded from the prop-
Payroll Factor
erty factor until the property is used or capable of being used in the
The payroll factor is a fraction. The numerator is the compensa-
regular course of business.
tion paid in Idaho during the tax year to produce business income.
The denominator is the total compensation paid during the tax
Property you own is valued at its original cost. Original cost is the
year to produce business income. Compensation connected with
basis of the property for federal income tax purposes (prior to any
the production of nonbusiness income is excluded from the pay-
federal adjustments) when it was acquired. Adjustments must be
roll factor.
made for subsequent capital additions or improvements, special
deductions or partial dispositions because of sale, exchange,
The total amount paid to employees is determined on the basis of
abandonment, etc. Depreciation does not reduce original cost.
the taxpayer's accounting method. Under the accrual method, all
compensation properly accrued is deemed to have been paid.
The average value of the property you own is computed by averag-
ing the values at the beginning and end of the tax year. The Idaho
If you are required to report the compensation under the cash
State Tax Commission may require or allow the averaging of
method for unemployment compensation purposes, compensa-
monthly values to properly reflect the average values.
tion paid to employees may be included in the payroll factor using
the cash method.
Property rented is valued at eight times the net annual rental rate.
The net annual rental rate for any item of rented property is the total
Compensation means wages, salaries, commissions and any
rents paid for the property, less the aggregate annual subrental
other form of payment to employees for personal services. Pay-
rates paid by subtenants. Subrents are not deducted if they are
ments made to an independent contractor, or any person not prop-
business income.
erly classifiable as an employee, are excluded.
Sales Factor
Compensation is paid in Idaho if any one of the following tests are
The sales factor is double weighted for all taxpayers except elec-
met:
trical and telephone utilities. Electrical and telephone utilities use
a single-weighted sales factor.
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the individual's service is performed entirely within Idaho; or
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the individual's service is performed both in and outside Idaho
The sales factor is a fraction. The numerator is the gross receipts
but the service performed outside Idaho is incidental to the
derived during the year from transactions and activities attribut-
individual's service in Idaho, or
able to Idaho in the regular course of your trade or business. The
•
some of the service is performed in Idaho and the base of
denominator is the total gross receipts derived during the tax year
operations or, if there is no base of operations, the place from
from transactions and activities everywhere in the regular course
which the service is directed or controlled is in Idaho; or
of your trade or business. Receipts derived from the production of
•
some of the service is performed in Idaho and the base of
nonbusiness income are excluded from the sales factor.
operations, or the place from which the service is directed or
controlled, is not in any state in which some part of the
service is performed, but the individual's residence is in Idaho.
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