Instructions For Schedules O And P (Form N-30) - Hawaii Allocation And Apportionment Of Income
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1
2INSTRUCTIONS
SCHS. O & P (FORM N-30)
STATE OF HAWAII — DEPARTMENT OF TAXATION
INSTRUCTIONS FOR SCHEDULES O AND P (FORM N-30)
(REV. 2013)
ALLOCATION AND APPORTIONMENT OF INCOME
Corporations who qualify and elect to report and pay income tax on the basis of a percentage of gross sales made during the tax year, as provided in Article III,
section 2 of the Multistate Tax Compact, Chapter 255, Hawaii Revised Statutes (HRS), and section 235-71(e), HRS, Hawaii Income Tax Law, need not use Schedules
O and P but must use and file Short Form N-310, copies of which may be obtained by contacting the Department of Taxation, or at tax.hawaii.gov.
GENERAL INSTRUCTIONS
the taxpayer are owned or controlled directly or
at unitary business income. Dividends, interest,
indirectly by the same interests.
royalties, nonunitary business income, rents,
Corporations which must file Allocation and
and capital gains and losses which are not an
The following instructions set forth in general
Apportionment of Income Schedules O and P,
integral part of the unitary operations, are to be
the adjustments to be made to arrive at the
Form N-30:
allocated specifically according to location or
taxable income of a corporation carrying on
Every corporation carrying on a business
situs of property or according to the domicile of
a unitary business within and without Hawaii.
within and without Hawaii must file Allocation
the taxpayer.
They do not purport to set forth each and every
and Apportionment of Income Schedules O and
adjustment to be made.
Specific questions
Line 12. Enter here the non-business or
P, Form N-30, unless the corporation qualifies
should be submitted in writing for rulings.
nonunitary dividends included on Form N-30,
and elects to use Short Form N-310. See Part
page 1, line 8, and included on line 2 above.
DIRECTIONS FOR COMPLETING
II Uniform Division of Income for Tax Purposes,
SCHEDULE O ADJUSTMENTS FOR HAWAII
Lines 13, 14, and 15. Enter the net amount
Chapter 235, HRS, and Subchapter 2, Title 18,
TAXABLE INCOME.
from interest, royalties, and nonunitary business
Chapter 235, Hawaii Administrative Rules.
income (including rentals).
If the related
Question (e).
Explain with references to
A foreign corporation carrying on a trade or
expenses exceed the total of each such income,
the laws or regulations of another state any
business within Hawaii and subject to tax will be
no deduction may be claimed.
inconsistencies in the determination of non-
entitled to exclude from the measure of the tax
business income and in the denominators of
Line 20.
Enter here the net loss from
that portion of its income less related expenses
the factors due to a difference in state laws or
business, other than unitary business, including
which is attributable to sources without Hawaii.
regulations. Show the amount of inconsistency
rentals.
A domestic corporation will exclude from the
on a state-by-state basis.
Corporations that
measure of the tax that portion of its income
Line 21.
Enter here the net loss, other
change the way the following items were treated
and related expenses attributable to sources in
than those from sales of depreciable property,
in prior year tax returns must disclose the nature
another jurisdiction provided that such income
resulting from the sale or exchange of assets
and extent of these changes on a separate sheet
is subjected to an income tax by such other
not connected with unitary business. Losses on
as an attachment to Schedule O. Disclose any
jurisdiction.
A foreign corporation shall be
sales of depreciable property are considered to
changes to:
deemed to be carrying on a trade or business
be part of the unitary business.
within Hawaii if its net income is subject to the
•
classification of income as business or
Line 24. From Schedule P (Apportionment
taxing jurisdiction of Hawaii by reason of its
non-business income;
Formula) line 5, enter the average percent and
engaging in activities in Hawaii, or causing
multiply the amount shown on line 23 by this
•
valuation of property or inclusion of
transactions to be conducted in Hawaii with
average percent. This is the apportioned income
property in the property factor;
the object of gain, profit, or economic benefit,
from the unitary business subject to Hawaii
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whether or not such activities or transactions
determination
of
the
amount
of
income tax.
are in, or connected with, interstate or foreign
compensation paid used in the payroll
Line 26. Enter the portion of line 24, if any,
commerce.
factor; or
that is net capital gain attributable to the unitary
Only those entities which are located in any
•
inclusion of gross receipts in the sales
business. Also, enter the amount on line 26, if
of the states of the United States, the District of
factor.
any, on Form N-30, page 2, Schedule J, line 13.
Columbia, the Commonwealth of Puerto Rico, or
Disclose
only
inconsistencies
in
the
INCOME WHOLLY ATTRIBUTABLE TO
any Territory or Possession of the United States
denominators of the three factors that materially
HAWAII.
shall be considered and included as part of the
affect the apportionment percentage.
unitary business. Accordingly, only the business
Foreign and domestic corporations must
Line 1. Enter here the amount of taxable
income of those domestic entities shall be
allocate to Hawaii all gains (or losses) resulting
income shown on Hawaii Form N-30, Schedule
considered and included in the apportionment
from the sale or exchange of real estate and
J, line 1.
of income. Where a business is deemed to be
other tangible assets which have a tax situs in
unitary, the taxpayer shall be required to file a
Line 2. Enter here the dividends from N-30,
Hawaii. The amount of net capital gain as shown
combined return and the combined income shall
Schedule C, line 11.
on Schedule O, page 2, line 31(b) is taxed at the
be apportioned to the State of Hawaii based
rate of 4%. Income from nonunitary business
Line 3. Enter deductions taken for federal tax
upon the factors of property, payroll and sales.
activities conducted within Hawaii, royalties and
purposes but not allowable or allowable only in
See Tax Information Release No. 97-2 (Revised)
rentals from property owned within Hawaii, and
part, for Hawaii tax purposes.
for more information.
intangibles having a business situs in Hawaii
Line 4. Enter here the deduction for
must be allocated to Hawaii.
A unitary business is a business carried on
charitable contributions included on line 1. The
by a group of entities that includes the taxpayer
Allocation of capital gains and losses. Capital
Hawaii deduction for charitable contributions will
where there are flows of value among the entities
gains and losses from the sales of real property
be taken on line 35.
resulting from (1) functional integration, (2)
located in Hawaii are allocable to Hawaii.
Line 5. Other adjustments.
List all other
centralization of management, or (3) economies
Capital gains and losses from the sales
additions here.
of scale. Generally, if the operation of a business
of tangible personal property are allocable to
within Hawaii is integrated with, is dependent on,
Line 7. Enter here the amount of dividends
Hawaii if: (1) The property had a situs in Hawaii
or contributes to the operation of the business
received included on Form N-30, page 1, line 8.
at the time of the sale; or (2) The taxpayer’s
outside Hawaii, the entire business is unitary in
Line 8. Enter here any interest received on
commercial domicile is in Hawaii and the
character. A unitary group is a group of entities
obligations of the United States included on
taxpayer is not taxable in the state in which the
carrying on a unitary business, but does not
Form N-30, page 1, line 8.
property had a situs.
include (1) any foreign affiliate of the taxpayer; or
Line 9. Enter here other deductions or
Except in the case of the sale of a partnership
(2) any entity that is not related to the taxpayer
adjustments.
interest, capital gains and losses from the sales
within the meaning of IRC section 267(b) and
of intangible property are allocable to Hawaii if
(c). A foreign affiliate of a taxpayer is a person,
ADJUSTMENTS TO ARRIVE AT UNITARY
the taxpayer’s commercial domicile is in Hawaii.
other than the taxpayer, if no part of the business
BUSINESS INCOME SUBJECT TO TAX.
income of the person is subject to federal income
Gain or loss from the sale of a partnership
After Hawaii adjustments, the following
tax under the Internal Revenue Code of 1986,
interest is allocable to Hawaii in the ratio of
deductions or exclusions must be made to arrive
as amended, whether or not the person and
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