Hawaii Schedules O and P (From N-20) Allocation and Apportionment of Income

Schedules O and P (From N-20) Allocation and Apportionment of Income
Schs O & P Form N-20 (2020) Schedules O and P (Form N-20) Allocation and Apportionment of Income
Clear Form

	 SCHEDULES O & P
	
(FORM N-20)
	
(Rev. 2020)		

STATE OF HAWAII — DEPARTMENT OF TAXATION

			SCHEDULES O AND P (FORM N-20)
		ALLOCATION AND APPORTIONMENT OF INCOME
			

ATTACH THESE SCHEDULES TO FORM N-20

If the partnership had ordinary income or (loss) from trade or business activities both within and without Hawaii, complete these schedules to determine the
business income or (loss) apportioned to Hawaii. Each partnership must state specifically the income attributable to the State and the income attributable
everywhere with respect to each partner. Note: Compute all percentages to 5 decimal places (.00000%).

Schedule O — Apportionment of Income
1	 Ordinary income (loss) from trade or business activities for Hawaii tax purposes (From Form N-20, page 1, line 16) . 	
2	 Apportionment factor (From Schedule P, line 8 below).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  	%
3	 Business income apportioned to Hawaii (line 1 multiplied by line 2) (To Form N-20, Schedule K, line 1, col. b).  .  .  .  . 

Schedule P — Computation of Apportionment Factors
Property –– (use original cost)

		

In Hawaii

	   	 Total Everywhere

	 Beginning of taxable year		  End of taxable year

	 Beginning of taxable year	 	

End of taxable year

Land
Buildings
Inventories
Leasehold interests*
Rented Property*
Other Property
* Enter net annual rent X 8.
	

	
	
	
	
	
	
	
	
	

1	
2	
3	
4	
5	
6	
7	
8	
9	

A. In Hawaii		

B. Everywhere

Property values (average value of property above) .  .  .  .  .  .  .  .  .  .  .  .  .  .
%
Property factor (line 1, col. A divided by line 1, col. B).  .  .  .  .  .  .  .  .  .  .  .  .	
Total compensation.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
%
Payroll factor (line 3, col. A divided by line 3, col. B).  .  .  .  .  .  .  .  .  .  .  .  .  .	
Total sales.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
%
Sales factor (line 5, col. A divided by line 5, col. B).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  	
%
Total of factors (add lines 2, 4, and 6) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  	
%
Average of factors (see instructions) (To Schedule O, line 2 above).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  	
Are the amounts shown on Form N-20, page 1, lines 4 through 7, and on Schedule P, column “B. Everywhere,” lines 1, 3, and 5 above, the same as
those reported in returns or reports to other states under the Uniform Division of Income for Tax Purposes Act?    YES   NO  If "NO," please
explain.		
		
		

Ordinary income or (loss) from trade or business
activities shall be attributed to the State by the use
of the apportionment of business income allocation
provisions of the Uniform Division of Income for Tax
Purposes Act (UDITPA), section 235-29, HRS.
Business income shall be apportioned to this
State by multiplying the income by a fraction, the
numerator of which is the property factor plus
the payroll factor plus the sales factor, and the
denominator of which is three. If the denominator
of the property factor, payroll factor, or sales factor
is zero, the denominator of the fraction in section
235-29, HRS, is reduced by the number of factors
with a zero denominator, and the numerator of that
fraction shall not include any factor with a zero
denominator.
PROPERTY FACTOR
The property factor is a fraction, the numerator
of which is the average value of the partnership’s
real and tangible personal property owned or

N20SCHOP_I 2020A 01 VID01

rented and used in this State during the tax period
and the denominator of which is the average value
of all the partnership’s real and tangible personal
property owned or rented and used during the
tax period. Property owned by the partnership
is valued at its original cost. The average value
of property shall be determined by averaging the
values at the beginning and ending of the tax
period. The use of monthly values may be required
if necessary to properly reflect the average value of
the partnership’s property. Property rented by the
partnership is valued (or capitalized) at eight times
the net annual rental rate. Where property is rented
for less than a 12 month period, the rent paid for the
actual period of rental shall constitute the annual
rental rate for the tax period.
If the subrents taken into account in determining
the net annual rental rate under section 18-235-3102, HAR, produce a negative or clearly inaccurate
value for any item of property, another method which

ID NO 01

will properly reflect the value of rented property
may be required by the department or requested by
the taxpayer. In no case, however, shall the value
be less than an amount which bears the same ratio
to the annual rental rate paid by the taxpayer for
the property as the fair market value of that portion
of the property used by the taxpayer bears to the
total fair market value of the rented property. If
property owned by others is used by the taxpayer
at no charge or rented by the taxpayer for a nominal
rate, the net annual rental rate for the property shall
be determined on the basis of a reasonable market
rental rate for the property, section 18-235-38-02,
HAR.
PAYROLL FACTOR
The payroll factor is a fraction, the numerator of
which is the total amount paid in this State during the
tax period by the partnership for compensation, and
the denominator of which is the total compensation
paid everywhere during the tax period.
(continued on next page)
SCHEDULES O & P
(FORM N-20)

SCHEDULES O & P
(FORM N-20)
(Rev. 2020)
SALES FACTOR
The sales (or gross receipts) factor is a fraction,
the numerator of which is the total sales of the
partnership in this State during the tax period, and
the denominator of which is the total sales of the
partnership everywhere during the tax period.
If this apportionment does not fairly represent
the extent of the partnership’s business activity in
this State, the partnership may request the use
of separate accounting, the exclusion of one or
more of the factors, the inclusion of one or more
additional factors, or the use of any other method
to accurately reflect the partnership’s business
activity in the State. Complete Schedules O and P
to show this computation. Other items are attributed
as follows:
•	 Net rents and royalties from real property located
in Hawaii are attributed to Hawaii. Federal
Form 8825 may be attached to Form N-20 as a
schedule of expenses.
•	 Net rents and royalties from tangible personal
property are attributed to Hawaii if and to the
extent that the property is utilized in Hawaii.
•	 Capital gains and losses from sale of real property
located in Hawaii are attributed to Hawaii.
•	 Capital gains and losses from sales of tangible
personal property are attributable to Hawaii if the
property had a situs in Hawaii at the time of the
sale.
•	 Interest and dividends are attributed to Hawaii
if the partnership’s commercial domicile is in
Hawaii.
•	 Patent and copyright royalties are attributed
to Hawaii if and to the extent that the patent or
copyright is utilized by the payor in Hawaii.

Page 2
•	 Intangible property is attributed to Hawaii if it is
used in Hawaii.
•	 Services are attributed to Hawaii if it is used or
consumed in Hawaii.
Where substantial amounts of gross receipts
arise from an occasional sale of a fixed asset used
in the regular course of the taxpayer’s trade or
business, those gross receipts shall be excluded
from the sales factor. For example, gross receipts
from the sale of a factory or plant will be excluded.
Insubstantial amounts of gross receipts arising
from occasional transactions or activities may
be excluded from the sales factor unless their
exclusion would materially affect the amount of
income apportioned to this State. For example, the
taxpayer ordinarily may include in or exclude from
the sales factor gross receipts from transactions
such as the sale of office furniture or business
motor vehicles. A transaction qualifying as a casual
sale as defined in section 237-1, HRS, and section
18-237-1, HAR, shall be considered an occasional
transaction.
Where the income producing activity in respect
to business income from intangible personal
property can be readily identified, the income is
included in the denominator of the sales factor and,
if the income producing activity occurs in this State,
in the numerator of the sales factor as well. For
example, usually the income producing activity can
be readily identified in respect to interest income
received on deferred payments on sales of tangible
property (section 18-235-35-01(a)(1), HAR) and
income from the sale, licensing, or other use of
intangible personal property (section 18-235-3701(b)(4), HAR).
Where business income from intangible
property cannot readily be attributed to any
particular income producing activity of the taxpayer,

the income cannot be assigned to the numerator
of the sales factor for any state and shall be
excluded from the denominator of the sales factor.
For example, where business income in the form of
dividends received on stock, royalties received on
patents or copyrights, or interest received on bonds,
debentures, or government securities results from
the mere holding of the intangible personal property
by the taxpayer, the dividends and interest shall be
excluded from the denominator of the sales factor.
Income from a foreign affiliate as defined in section
18-235-38.5-02, HAR, including dividends from a
foreign affiliate and interest paid on intercompany
loans, shall be excluded from the denominator of
the sales factor.
Where gains and losses on the sale of liquid
assets are not excluded from the sales factor by
other provisions under this section, such gains
or losses shall be treated as provided in this
subsection. This subsection does not provide
rules relating to the treatment of other receipts
produced from holding or managing such assets.
If a taxpayer holds liquid assets in connection with
one or more treasury functions of the taxpayer,
and the liquid assets produce business income
when sold, exchanged or otherwise disposed, the
overall net gain from those transactions for each
treasury function for the tax period is included in the
sales factor. For purposes of this subsection, each
treasury function will be considered separately,
section 18-235-38-03, HAR.
Amounts received by a qualified high
technology business as royalties and other income
derived from patents, copyrights, and trade secrets
owned by the qualified high technology business
and developed and arising out of a qualified high
technology business are excluded from Hawaii
income. Expenses related to this income are
deductible.