Instructions For Apportionment Of Income Worksheet

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Instructions for Apportionment
tion 401K plan is included in the factor; however, the employer’s
of Income Worksheet
matching contribution is not included.
Enter payroll values in boxes T1 and T2. Divide the total in
Complete “Apportionment of Income Worksheet for Indiana”
box T1, column A by the total from box T2, column B. Enter the
whenever the partnership has income derived from sources both
percent in box T3, column C.
within and outside Indiana and has any nonresident or corporate
3. Receipts Factor: The receipts factor is a fraction. The numerator
partners. The income attributed to Indiana must be determined by
is the total receipts of the taxpayer in this state during the tax year,
an apportionment formula. The Department will not accept returns
and the denominator is the total receipts of the taxpayer every-
filed for adjusted gross income tax purposes on the separate ac-
where during the tax year. This factor is double-weighted in the
counting method.
apportionment of income formula. All gross receipts of the tax-
This apportionment formula must be used unless written per-
payer which are not subject to allocation, such as nonbusiness
mission from the Department is granted. Distributive share for gross
income, are to be included in this factor.
income tax purposes is determined under 45 I.A.C. 1-1-159.1. Also
The numerator of the receipts factor must include all sales
see 45 I.A.C. 3.1-1-153, adjusted gross tax treatment for unitary
made in Indiana, sales made from this state to the U.S. Government,
corporate partners.
and sales made from this state to a state not having jurisdiction to
Detailed Apportionment Instructions:
tax the activities of the seller. The numerator will also contain
Note: Interstate transportation companies should consult Sched-
intangible income attributed to Indiana including interest from con-
ule E-7 for details concerning apportionment of income.
sumer and commercial loans, installment sales contracts and credit
and debit cards as prescribed under I.C. 6-3-2-2.2.
1. Property Factor: The property factor is a fraction. The numera-
Total receipts include gross sales of real and tangible personal
tor is the average value during the tax year of real and tangible
property less returns and allowances. Sales of tangible personal
personal property used in the business within this state (including
property are in this state if the property is delivered or shipped to a
rental property), and the denominator is the average value during
purchaser within this state regardless of the f.o.b. point or other
the tax year of such property everywhere. The average value of
conditions of sale, or the property is shipped from an office, store,
property shall be determined by averaging the values of the begin-
warehouse, factory, or other place of storage in this state, and the
ning and the end of the tax period. (Beginning Value + Ending
taxpayer is not subject to tax in the state of the purchaser.
Value divided by 2 = “Average Value.”) If the values have fluctu-
Sales or receipts not specifically assigned above shall be as-
ated, the averaging of monthly values may be necessary to reflect
signed as follows: (1) gross receipts from the sale, rental, or lease
the average value of the property for the tax period. If, in the
of real property are in this state if the real property is located in
calculation of the property factor, the average values of properties
this state; (2) gross receipts from the rental, lease, or licensing the
are composed of a combination of values, attach a schedule show-
use of tangible personal property are in this state if the property is
ing how these average values were calculated. For example, the
in this state. If property was both within and outside Indiana
use of original cost for owned properties plus the value of rental or
during the tax year, the gross receipts are considered in this state
leased facilities based upon a capitalization of rents paid, which
to the extent the property was used in the state; (3) gross receipts
cannot be checked against the balance sheet or the profit and loss
from intangible personal property are in this state if the taxpayer
statement, must be supported. Property owned by the taxpayer is
has economic presence in this state and such property has not
valued at its original cost. Property rented by the taxpayer is val-
acquired a business situs elsewhere. Interest income and other
ued at eight (8) times the net annual rental rate.
receipts from loans or installment sales contracts that are prima-
Complete appropriate lines for both within Indiana and ev-
rily secured by or deal with real or tangible personal property are
erywhere. Add lines (a) through (e) in columns A and B. Divide
attributable to Indiana if the security or sale property is located in
sum in box S1, column A by the sum from box S2, column B. Enter
Indiana; consumer loans not secured by real or tangible personal
the percent in box S3, column C.
property are attributable to this state if the loan is made to an
2. Payroll Factor: The payroll factor is a fraction. The numerator is
Indiana resident; and commercial loans and installment obliga-
the total wages, salaries, and other compensation paid to employ-
tions not secured by real or tangible personal property are attrib-
ees in this state for services rendered in the business, and the
utable to Indiana if the proceeds of the loan are to be applied in
denominator is the total of such compensation for services ren-
Indiana. Interest income, merchant discounts, travel and enter-
dered for the business everywhere. Normally, the Indiana payroll
tainment credit card receivables and credit card holder’s fees are
will match the unemployment compensation reports filed with the
attributable to the state where the card charges and fees are regu-
state as determined under the Model Unemployment Compensa-
larly billed. Receipts from the performance of fiduciary and other
tion Act. Compensation is paid in this state if (a) the individual’s
services are attributable to the state where the benefits of the ser-
service is performed entirely within the state; (b) the individual’s
vices are consumed. Receipts from the issuance of traveler’s checks,
service is performed both within and outside the state, but the
money orders, or United States savings bonds are attributable to
service performed outside the state is incidental to the individual’s
the state where those items are purchased. Receipts in the form of
service within the state; (c) some of the service is performed in the
dividends from investments are attributable to Indiana if the
state and (1) the base of operations, or if there is no base of opera-
taxpayer’s commercial domicile is in Indiana; and (4) gross receipts
tions, the place where the service is directed or controlled is in the
from the performance of services are in this state if the services are
state; or (2) the base of operations or the place where the service is
performed in this state. If such services are performed partly within
directed or controlled is not in any state in which some part of the
and partly outside this state, a portion of the gross receipts from
service is performed, but the individual’s residence is in this state.
performance of the services shall be attributed to this state based
Payments to independent contractors and others not classified as
upon the ratio the direct costs incurred in this state bear to the total
employees are not included in the factor. Payments to employees
direct costs of the services, unless the services are otherwise di-
for service attributable to nonbusiness income should be excluded.
rectly attributed to Indiana according to I.C. 6-3-2-2.2.
That portion of an employee’s salary directly contributed to a Sec-
14

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