Instructions For Idaho Form 402 printable pdf download

IA00551-2

Instructions for Idaho Form 402

9-27-02

General Information

If you are a nonresident transacting business in Idaho and another

Sales means all gross receipts derived from transactions and activi-

state or country, your entire business income is subject to Idaho ap-

ties in the regular course of your trade or business. Gross receipts

portionment. The elements of the apportionment formula are the

means gross sales, less returns and allowances. Gross receipts

property, sales, and payroll factors of your trade or business.

from sales of tangible personal property are assigned to Idaho if:

Property Factor

• property is delivered or shipped to a purchaser in Idaho regard-

The property factor is a fraction. The numerator is the average value

less of F.O.B. point or other conditions of sales; or

of real and tangible personal property owned or rented and used in

• property is shipped from an office, store, warehouse, factory,

Idaho during the tax year to produce business income. The de-

or other place of storage in Idaho and the taxpayer is not tax-

nominator is the average value of all the real and tangible personal

able in the state of the purchaser (throwback sales) or the

property you owned or rented and used during the tax year to pro-

purchaser is the United States Government.

duce business income. Property used in the production of nonbusi-

ness 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 receipts

Property is included in the factor if it is actually used or capable of

from the sale of property, and other income you derive in the regular

being used during the tax year in the regular course of the trade or

course of your business. If gross receipts do not fairly represent the

business of the taxpayer.

extent of your business activity in Idaho, you may petition, or may be

required, to use another method to obtain an equitable result. In-

For example, a plant temporarily idle, work-in-process, and raw ma-

come from services is attributable to Idaho to the extent the services

terial reserves not currently being processed are included in the prop-

are performed in Idaho.

erty factor. Property under construction during the tax year, except

inventoriable goods in process, is excluded from the property factor

Payroll Factor

until the property is used or capable of being used in the regular

The payroll factor is a fraction. The numerator is the compensation

course of business.

paid in Idaho during the tax year to produce business income. The

denominator is the total compensation paid during the tax year to

Property you own is valued at its original cost. Original cost is the

produce business income. Compensation connected with the pro-

basis of the property for federal income tax purposes (prior to any

duction of nonbusiness income is excluded from the payroll factor.

federal adjustments) when it was acquired. Adjustments must be

made for subsequent capital additions or improvements, special de-

The total amount paid to employees is determined on the basis of

ductions or partial dispositions because of sale, exchange, aban-

the taxpayer's accounting method. Under the accrual method, all

donment, etc. Depreciation does not reduce original cost.

compensation properly accrued is deemed to have been paid.

The average value of the property you own is computed by averag-

If you are required to report the compensation under the cash method

ing the values at the beginning and end of the tax year. The Idaho

for unemployment compensation purposes, compensation paid to

State Tax Commission may require or allow the averaging of monthly

employees may be included in the payroll factor using the cash

values to properly reflect the average values.

method.

Property rented is valued at eight times the net annual rental rate.

Compensation means wages, salaries, commissions and any other

The net annual rental rate for any item of rented property is the total

form of payment to employees for personal services. Payments made

rents paid for the property, less the aggregate annual subrental rates

to an independent contractor, or any person not properly classifi-

paid by subtenants. Subrents are not deducted if they are business

able as an employee, are excluded.

income.

Compensation is paid in Idaho if any one of the following tests are

Sales Factor

met:

The sales factor is double weighted for all taxpayers except electrical

and telephone utilities. Electrical and telephone utilities use a single-

• the individual's service is performed entirely within Idaho; or

weighted sales factor.

• the individual's service is performed both in and outside Idaho

but the service performed outside Idaho is incidental to the

The sales factor is a fraction. The numerator is the gross receipts

individual's service in Idaho, or

derived during the year from transactions and activities attributable

• some of the service is performed in Idaho and the base of

to Idaho in the regular course of your trade or business. The de-

operations or, if there is no base of operations, the place from

nominator is the total gross receipts derived during the tax year from

which the service is directed or controlled is in Idaho; or

transactions and activities everywhere in the regular course of your

• some of the service is performed in Idaho and the base of

trade or business. Receipts derived from the production of nonbusi-

operations, or the place from which the service is directed or con-

ness income are excluded from the sales factor.

trolled, is not in any state in which some part of the service

is performed, but the individual's residence is in Idaho.

Instructions For Idaho Form 402

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