Form 402 - Idaho Individual Apportionment For Multistate Businesses Page 2
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3EFO00170-2
Instructions for Idaho Form 402
08-01-09
GENERAL INSTRUCTIONS
Sales means all gross receipts derived from transactions and
activities in the regular course of your trade or business. Gross
receipts means gross sales, less returns and allowances. Gross
If you are a nonresident transacting business in Idaho and
receipts from sales of tangible personal property are assigned to
another state or country, your entire business income is subject
Idaho if:
to Idaho apportionment. The elements of the apportionment
formula are the property, sales, and payroll factors of your trade
• property is delivered or shipped to a purchaser in Idaho
or business.
regardless of F.O.B. point or other conditions of sales; or
• property is shipped from an office, store, warehouse, factory,
Property Factor
or other place of storage in Idaho and the taxpayer is not
The property factor is a fraction. The numerator is the average
taxable in the state of the purchaser (throwback sales) or the
value of real and tangible personal property owned or rented
purchaser is the United States Government.
and used in Idaho during the tax year to produce business
income. The denominator is the average value of all the real and
Sales also include gross receipts from services and all other
tangible personal property you owned or rented and used during
gross receipts such as interest, dividends, rents, royalties, gross
the tax year to produce business income. Property used in the
receipts from the sale of property, and other income you derive in
production of nonbusiness income is excluded from the factor.
the regular course of your business. If gross receipts do not fairly
represent the extent of your business activity in Idaho, you may
Property is included in the factor if it is actually used or capable of
petition, or may be required, to use another method to obtain an
being used during the tax year in the regular course of the trade
equitable result. Income from services is attributable to Idaho to
or business of the taxpayer.
the extent the services are performed in Idaho.
For example, a plant temporarily idle, work-in-process, and raw
Payroll Factor
material reserves not currently being processed are included in
The payroll factor is a fraction. The numerator is the
the property factor. Property under construction during the tax
compensation paid in Idaho during the tax year to produce
year, except inventoriable goods in process, is excluded from the
business income. The denominator is the total compensation
property factor until the property is used or capable of being used
paid during the tax year to produce business income.
in the regular course of business.
Compensation connected with the production of nonbusiness
income is excluded from the payroll factor.
Property you own is valued at its original cost. Original cost is the
basis of the property for federal income tax purposes (prior to any
The total amount paid to employees is determined on the basis of
federal adjustments) when it was acquired. Adjustments must be
the taxpayer's accounting method. Under the accrual method, all
made for subsequent capital additions or improvements, special
compensation properly accrued is deemed to have been paid.
deductions or partial dispositions because of sale, exchange,
abandonment, etc. Depreciation does not reduce original cost.
If you are required to report the compensation under the
cash method for unemployment compensation purposes,
The average value of the property you own is computed by
compensation paid to employees may be included in the payroll
averaging the values at the beginning and end of the tax year.
factor using the cash method.
The Tax Commission may require or allow the averaging of
monthly values to properly reflect the average values.
Compensation means wages, salaries, commissions and any
other form of payment to employees for personal services.
Property rented is valued at eight times the net annual rental
Payments made to an independent contractor, or any person not
rate. The net annual rental rate for any item of rented property
properly classifiable as an employee, are excluded.
is the total rents paid for the property, less the aggregate annual
subrental rates paid by subtenants. Subrents are not deducted if
Compensation is paid in Idaho if any one of the following tests are
they are business income.
met:
Sales Factor
• the individual's service is performed entirely within Idaho; or
The sales factor is double weighted for all taxpayers except
• the individual's service is performed both in and outside Idaho
electrical and telephone utilities. Electrical and telephone utilities
but the service performed outside Idaho is incidental to the
use a single-weighted sales factor.
individual's service in Idaho, or
• some of the service is performed in Idaho and the base of
The sales factor is a fraction. The numerator is the gross
operations or, if there is no base of operations, the place from
receipts derived during the year from transactions and activities
which the service is directed or controlled is in Idaho; or
attributable to Idaho in the regular course of your trade or
• some of the service is performed in Idaho and the base of
business. The denominator is the total gross receipts derived
operations, or the place from which the service is directed or
during the tax year from transactions and activities everywhere
controlled, is not in any state in which some part of the service
in the regular course of your trade or business. Receipts derived
is performed, but the individual's residence is in Idaho.
from the production of nonbusiness income are excluded from the
sales factor.
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