Idaho Individual Apportionment for Multistate Businesses

Individual Apportionment for Multistate Businesses
Form 402, Individual Apportionment for Multistate Businesses and Instructions
Form 402
Individual Apportionment for Multistate Businesses
For the calendar year

or fiscal year beginning

, ending

Names as shown on return

Social Security number or EIN

Total
Property (At original cost)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

Beginning of
Year

Idaho
End of
Year

Beginning of
Year

End of
Year

Inventories ...................................................................
Buildings ......................................................................
Machinery and equipment ...........................................
Furniture and fixtures ..................................................
Delivery equipment .....................................................
Land ............................................................................
Other assets (describe) ...............................................
Less: Construction in progress ....................................
Owned property. Add lines 1 through 7 less line 8 ......
Average owned property. See instructions .............................................
Rented property (capitalize @ 8 times the rents) ...................................
Total owned and rented property. Add lines 10 and 11 ...........................
Idaho owned and rented property. Add lines 10 and 11 ................................................................................

%

14. Idaho property percentage. Compute the percentage to four decimal places ..............................................

Sales (Gross receipts)

Total

Idaho

15. Gross sales, less returns and allowances ..........................................................................
16. Sales delivered or shipped to Idaho purchasers:
a. Shipped from outside Idaho ..................................................................................................
b. Shipped from within Idaho ....................................................................................................
17. Sales shipped from Idaho to:
a. The United States government ...................................................................................
b. Purchasers in a state where the taxpayer was not subject to a net income tax
or a tax based upon or measured by net income ........................................................
18.
19.
20.
21.
22.
23.
24.
25.
26.

Sales of services ................................................................................................................
Dividends ...........................................................................................................................
Interest income subject to apportionment ..........................................................................
Gross rents received ..........................................................................................................
Gross royalties ...................................................................................................................
Gross sales from Form 4797 and/or Schedule D ..............................................................
Other Income .....................................................................................................................
Total gross receipts. Add lines 15 and 18 through 24 ........................................................
Idaho gross receipts. Add lines 16 through 24 ..............................................................................................

%

27. Idaho sales percentage. Compute percentage to four decimal places .........................................................

%

28. Idaho sales percentage doubled. Multiply line 27 by 2. Utility companies see instructions ..........................

Payroll (Wages, salaries, other employee compensation)
29.
30.
31.
32.
33.
34.

Total

Idaho

Compensation of officers ....................................................................................................
Salaries and wages ............................................................................................................
Labor included in cost of goods sold ..................................................................................
Other ..................................................................................................................................
Total wages and salaries. Add lines 29 through 32 ............................................................
Idaho wages and salaries. Add lines 29 through 32 .....................................................................................

35. Idaho payroll percentage. Compute percentage to four decimal places ......................................................

%

36. Total percent. Add lines 14, 28 and 35. Utility companies add lines 14, 27 and 35 ....................................

%

37. Idaho apportionment factor. Average percentage. See instructions .............................................................

%

EFO00170

05-09-2019

Form 402 — Instructions
Individual Apportionment for Multistate Businesses
General Instructions
If you’re a nonresident transacting business in
Idaho and another state or country, your entire
business income is subject to Idaho apportionment.
The elements of the apportionment formula are the
property, sales, and payroll factors of your trade or
business.

2019

property, less the aggregate annual subrental rates
paid by subtenants. Subrents aren’t deducted if
they’re business income.
Sales Factor
The sales factor is double weighted for all taxpayers
except electrical and telephone utilities. Electrical and
telephone utilities use a single-weighted sales factor.

Property Factor
The property factor is a fraction. The numerator
is the average value of real and tangible personal
property owned or rented and used in Idaho
during the tax year to produce business income.
The denominator is the average value of all the
real and tangible personal property you owned or
rented and used during the tax year to produce
business income. Property used in the production of
nonbusiness income is excluded from the factor.

The sales factor is a fraction. The numerator is
the gross receipts derived during the year from
transactions and activities attributable to Idaho in
the regular course of your trade or business. The
denominator is the total gross receipts derived
during the tax year from transactions and activities
everywhere in the regular course of your trade or
business. Receipts derived from the production of
nonbusiness income are excluded from the sales
factor.

Property is included in the factor if it is actually
used or capable of being used during the tax year
in the regular course of the trade or business of the
taxpayer.

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

For example, a plant temporarily idle,
work-in-process, and raw material reserves not
currently being processed are included in the
property factor. Property under construction
during the tax year, except inventoriable goods
in process, is excluded from the property factor
until the property is used or capable of being
used in the regular course of business.
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 federal
adjustments) when it was acquired. Adjustments
must be made for subsequent capital additions
or improvements, special deductions or partial
dispositions because of sale, exchange,
abandonment, etc. Depreciation doesn’t reduce
original cost.
The average value of the property you own is
computed by averaging the values at the beginning
and end of the tax year. The Tax Commission may
require or allow the averaging of monthly values to
properly reflect the average values.
Property rented is valued at eight times the net
annual rental rate. The net annual rental rate for any
item of rented property is total rents paid for the
EIN00071

05-09-2019

• Property is delivered or shipped to a purchaser
in Idaho regardless of F.O.B. point or other
conditions of sales; or
• Property is shipped from an office, store,
warehouse, factory, or other place of storage
in Idaho and the taxpayer isn’t taxable in the
state of the purchaser (throwback sales) or the
purchaser is the United States Government.
Sales also include gross receipts from services and all
other gross receipts such as interest, dividends, rents,
royalties, gross receipts from the sale of property,
and other income you derive in the regular course of
your business. If gross receipts don’t fairly represent
the extent of your business activity in Idaho, you may
petition, or may be required, to use another method
to obtain an equitable result. Income from services
is attributable to Idaho to the extent the services are
performed in Idaho.
Payroll Factor
The payroll factor is a fraction. The numerator is the
compensation paid in Idaho during the tax year to
produce business income. The denominator is the
Page 1 of 3

Form 402 — Instructions (continued)
total compensation paid during the tax year to
produce business income. Compensation connected
with the production of nonbusiness income is
excluded from the payroll factor.
The total amount paid to employees is determined
on the basis of the taxpayer’s accounting method.
Under the accrual method, all compensation
properly accrued is deemed to have been paid.

2019

Carriers of Freight and Passengers
If you’re in the business of transporting passengers,
freight or mail by motor carrier, your apportionment
factor should reflect the movement of your
transportation equipment and personnel. This is done
by including the transportation revenue, property
and payroll in the Idaho numerators based on the
percentage of miles traveled in Idaho to miles traveled
everywhere.

If you’re required to report the compensation under
the cash method for unemployment compensation
purposes, compensation paid to employees may be
included in the payroll factor using the cash method.

Other revenue, fixed property, and compensation of
employees assigned to fixed locations are included in
the factors based on the general apportionment rules.

Compensation means wage, salaries, commissions
and any other form of payment to employees
for personal services. Payments made to an
independent contractor, or any person not properly
classifiable as an employee, are excluded.

Contractors
You must use the same long-term contract accounting
method for Idaho reporting purposes that you used for
federal reporting purposes.

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

The individual’s service is performed entirely
within Idaho; or

•	

The individual’s service is performed both in
and outside Idaho but the service performed
outside Idaho is incidental to the individual’s
service in Idaho; or

•	

Some of the service is performed in Idaho and
the base of operations or, if there is no base of
operations, the place from which the service is
directed or controlled is in Idaho; or

•	

Some of the service is performed in Idaho
and the base of operations, or the place from
which the service is directed or controlled, isn’t
in any state in which some part of the service
is performed, but the individual’s residence is
in Idaho.

Modified Factors for Certain Industries
Idaho has adopted the Multistate Tax Commission
(MTC) regulations for the following special
industries. Examples of the computations of these
factors are found in the applicable MTC regulations.
You can find them under Laws and Rules at
tax.idaho.gov.

EIN00071

05-09-2019v4

If the percentage of completion method is used, the
following special rules apply in addition to the general
property, payroll, and sales factor rules.
The property factor denominator includes the average
value of the taxpayer’s cost of construction in
progress (including materials and labor) to the extent
the costs exceed progress billings. The portion of this
amount attributable to construction projects in Idaho
is included in the Idaho numerator. Don’t include any
value in the property factors for your equity in the
projects if progress billings exceed construction costs.
The sales factor includes only the portion of the gross
contract price which corresponds to the percentage
of the entire contract which was completed at the end
of the tax year. For example, if the project was 30%
complete at the end of the tax year, 30% of the bid
price should be included in the gross receipts. Gross
receipts from a construction project are attributable
to Idaho if the construction is located in Idaho. Gross
receipts from a construction project located partially in
Idaho are included in the numerator based on ratio of
construction costs for the project in Idaho for the tax
year to the total of construction costs for that project
for the tax year.
Compensation paid for work on a particular
construction project is included in the payroll factor
even though capitalized into the cost of construction.
Compensation is attributable to the state where most
of the employee’s service is performed, regardless of
where reported for unemployment tax purposes.
Page 2 of 3

Form 402 — Instructions (continued)
Specific Instructions
Instructions are for lines not fully explained on the form.

2019

Line 28. For all taxpayers other than electrical and
telephone utilities, multiply the amount on line 27
by two. This is your double-weighted sales factor.

Property
Line 8. Enter the cost of property or equipment
under construction if included in the totals on the
lines above. Don’t include inventoriable goods in
process.

Payroll
Line 35. Divide Idaho wages and salaries, line 34,
by total wages and salaries, line 33. Compute the
percentage to four decimal places.

Line 10. To compute total average owned property,
add beginning and end of the year amounts from
the total columns on line 9, and divide by two.
To compute Idaho average owned property, add
beginning and end of the year amounts from the
Idaho columns on line 9, and divide by two.

Total Percentage
Line 36. For all taxpayers other than electrical and
telephone utilities, add the percentages on lines 14,
28, and 35. For electrical and telephone utilities, add
the percentages on lines 14, 27, and 35.

Line 11. Multiply your total and Idaho net annual
rents by eight, and enter here.
Line 14. Divide Idaho owned and rented property,
line 13, by total owned and rented property, line 12.
Compute the percentage to four decimal places.
Sales
Lines 16a and b. Enter the amounts from line 15
that were delivered or shipped to Idaho purchasers.
Lines 17a and b. Enter the amounts from line 15
that were throwback sales to Idaho. A sale made in
a state that has no jurisdiction to tax the seller is a
throwback sale.
Line 27. Divide Idaho gross receipts, line 26,
by total gross receipts, line 25. Compute the
percentage to four decimal places.

Idaho Apportionment Factor
Line 37.
•	

For all taxpayers other than electrical and
telephone utilities, divide the total percentage
on line 36 by four.

•	

For electrical and telephone utilities, divide
the total percentage on line 36 by three.

•	

If any of the factors don’t apply to your
business, divide the total on line 36 by the
number of factors used. For example, if your
business has no employees anywhere, your
factor is reduced by one.

Multiply the apportionment factor by the net income/
loss of multistate activities reported on your Schedule
C, E and F. Enter the resulting amount on the
applicable lines of Idaho Form 43.

Electrical and telephone utilities. This is your
single-weighted sales factor. Go to line 29.

Contact us:

In the Boise area: (208) 334-7660 Toll free: (800) 972-7660
Hearing impaired (TDD) (800) 377-3529
tax.idaho.gov/contact
EIN00071

05-09-2019v4

Page 3 of 3