Idaho Idaho Apportionment And Combined Reporting Adjustments

Idaho Apportionment And Combined Reporting Adjustments
Form 42, Apportionment and Combined Reporting Adjustments and Instructions 2023
Form 42
Apportionment and Combined Reporting Adjustments
Include with Idaho Income Tax Return as Page 3
Name as shown on return

Federal Employer Identification Number (EIN)

Part I. Apportionment Formula

Check if using three factor apportionment ▪

Property (Owned Property at Original Cost)
Beginning of Year

Total

1. Inventories ......................................................................

1 ▪

2. Real and tangible personal property ..............................
Ending of Year
3. Inventories ......................................................................

2 ▪

4. Real and tangible personal property ..............................

4 ▪

5. Total of lines 1 through 4 ................................................

5

Idaho

▪
▪

3 ▪

6. Average. Line 5 divided by 2 ..........................................

6

7. Rented property (capitalized at 8 times rents paid) ........

7 ▪

8. Total property. Add lines 6 and 7 ....................................

8 ▪

Percentage

▪
▪

▪
▪

%

9. Idaho property percentage. Compute percentage to four decimal places ........................................... 9
Sales (Gross Receipts)
10. Gross sales, less returns and allowances ...................... 10 ▪

▪
▪
▪
▪
▪

11. Sales delivered or shipped to Idaho purchasers ............ 11
12. Idaho “throwback” sales ................................................. 12
13. Sales of services ............................................................ 13 ▪
14. Other business gross receipts ........................................ 14 ▪
15. Total gross receipts. Add lines 10 through 14 ................. 15 ▪

%

16. Idaho sales percentage. Compute percentage to four decimal places .............................................. 16
17. Reserved ...........................................................................................................................................
Payroll
18. Total wages and salaries ................................................. 18 ▪
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17

%
%
%

19. Idaho payroll percentage. Compute percentage to four decimal places ............................................ 19
20. Total Percentage. See instructions ................................................................................................... 20
21. Idaho Apportionment Factor. See instructions ............................................................................... 21

Part II. Combined Reporting Adjustments
Additions
1. Income of unitary foreign subsidiaries. See instructions ..................................

Water’s Edge

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▪

1

2. Federal taxable income of unitary subsidiaries not included on the federal return ....

2 ▪

3. Income of foreign corporations subject to federal taxation ...............................

3 ▪

4. Intercompany transactions eliminated on the federal return ............................

4 ▪

5. Other additions. Include explanation ................................................................

5 ▪

6. Total additions. Add lines 1 through 5. Enter on Form 41, line 17 ....................

6

Worldwide

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▪

Subtractions
7 ▪
7. Federal taxable income of nonunitary subsidiaries included on the federal return
8. Exclusion for foreign dividends
a. Foreign dividends ......................................................................................... 8a ▪
b. Enter 80% if no spreadsheets filed or 85% if spreadsheets filed ................. 8b
c. Dividend exclusion. Multiply line 8a by line 8b .............................................

8c ▪

9. Intercompany dividends included on the combined return ...............................

9 ▪

10. Intercompany transactions included on the federal return ............................... 10 ▪
11. Other subtractions. Include explanation ........................................................... 11 ▪
12. Total subtractions. Add lines 7, 8c, 9, 10, and 11. Enter on Form 41, line 29 ..... 12
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%
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Form 42 — Instructions
Apportionment and Combined Reporting Adjustments
Part I of this form provides the computation of
the Idaho apportionment factor and is used by
taxpayers who have income from business activity
that’s taxable in Idaho and another state or country.
If the taxpayer is a partner in a partnership or a
shareholder in an S corporation, the taxpayer must
take into account the activity of the pass-through
entity in determining whether the taxpayer has
income from business activity that’s taxable in Idaho
and another state or country. Include the taxpayer’s
share of the pass-through entity’s property, payroll,
and sales numbers from Form ID K-1 in the
amounts reported on this form.
Part II of this form provides the worldwide and
water’s-edge adjustments to compute combined
income. Part II is used by a corporation that has
ownership in at least one foreign affiliate.
Partnerships don’t use Part II.
Factor information is available at tax.idaho.gov.

Part I Specific Instructions
Instructions are for lines not fully explained on the
form. Compute all percentages to four places to
the right of the decimal point (00.0000%). Include
a schedule showing apportionment detail by
company if filing for a unitary group.
Single sales factor is the default apportionment
method. Electrical, telephone and
communications corporations (as defined in
Idaho Code) and Multistate Tax Commission
(MTC) special industries (construction
contractors, airlines, railroads, trucking
companies, television and radio broadcasting,
publishing, and financial institutions) can elect
to use a three-factor method. If you’re using
three-factor apportionment, check this box
and provide a list of the companies using the
three-factor method.
All taxpayers must complete all three sections
(property, payroll and sales) of Part I. Only
three-factor taxpayers will use all three factors to
compute their apportionment factor.

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Property
Lines 1 through 4. Enter the beginning and end
of the year total property and Idaho property
amounts.
Line 9. Divide Idaho property by total property
(amounts on line 8).
Sales
Lines 11 and 12. Enter the amounts from line 10
that were delivered or shipped to Idaho buyers
(line 11) or that were throwback sales to Idaho
(line 12). A sale made in a state with no jurisdiction
to tax the seller is a throwback sale.
Line 14. Include a detailed schedule.
Line 16. Divide Idaho gross receipts by total gross
receipts (amounts on line 15.)
Payroll
Line 19. Divide Idaho wages and salaries by total
wages and salaries (amounts on line 18).
Total Percentage
Line 20. For taxpayers using the three-factor
apportionment method, add the percentages on
lines 9, 16 and 19.
For all other taxpayers, use the percentage on line
16.
Idaho Apportionment Factor
Line 21. For taxpayers using the three-factor
apportionment method, divide the total on line 20
by three. If any of the factors don’t apply to your
business, divide the total on line 20 by the number
of factors used. For example, if your business has
no employee anywhere, your factor is reduced by
one.
For all other taxpayers, use the percentage on
line 20.

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Form 42 — Instructions (continued)
Part II Specific Instructions
To the extent that amounts listed for water’s-edge
filers are different than the amounts listed for
worldwide filers, separate instructions are listed.

Additions
Line 1 Income From Unitary Foreign
Subsidiaries
Water’s-edge Filers. Disregard this line and go
to line 2.
If foreign affiliates aren’t included in a
consolidated federal return, the corporation can
select one of the following options. The option
selected must be used for all foreign affiliates
not included in a consolidated federal return and
must be adjusted for the Idaho additions and
subtractions listed on Form 41.
Option 1. Enter the net income before income
taxes stated on each affiliate’s profit and loss
statement prepared for the United States
Securities and Exchange Commission (SEC). If
the profit and loss statement isn’t filed with the
SEC, enter the net income or loss before income
taxes reported on the profit and loss statement
prepared for reporting to shareholders that’s
subject to review by an independent auditor.
Option 2. The net income or loss reported on the
profit and loss statements may be adjusted to
tax accounting standards as would be required
by the Internal Revenue Code (IRC) if the
corporation was incorporated in the United States.
If a corporation chooses to make the book-to-tax
adjustments, all book-to-tax adjustments must
be made for all unitary foreign corporations not
included in the consolidated federal return. The
book-to-tax adjustments must be consistently
applied each year the group files a worldwide
return.
Include a schedule of the foreign affiliate income
by corporation. Also include schedules of the
book-to-tax adjustments, if any.

and that weren’t included in the federal
consolidated return. This is the amount reported
on the subsidiary’s federal income tax return,
Form 1120, adjusted for the Idaho additions
and subtractions listed on Form 41. Include a
schedule identifying this income by corporation.
Line 3 Income of Foreign Corporations Subject
to Federal Taxation
Water’s-edge Filers. Enter the federal taxable
income reported by corporations incorporated
outside the United States that are required to file
a federal income tax return. This includes foreign
corporations filing a federal Form 1120F.
Worldwide Filers. The income of foreign corporations
is included on line 1.
Include a schedule identifying this income by
corporation and also include copies of the federal
income tax returns filed by each.
Line 4 Intercompany Eliminations
Enter the amount of intercompany transactions
between the combined group and nonunitary
subsidiaries eliminated on the federal consolidated
return. The income of the nonunitary subsidiaries
is a subtraction on line 7. Include a schedule
identifying the intercompany transactions
by corporation.
Line 5 Other Additions
Enter any miscellaneous Idaho additions. Include
a schedule identifying each miscellaneous addition
by corporation.

Subtractions
Line 7 Federal Taxable Income of Nonunitary
Subsidiaries Included on the Federal Return
Enter the federal taxable income of nonunitary
subsidiaries included in the federal consolidated
return. Include a schedule identifying the income or
loss by corporation.

Line 2 Federal Taxable Income of
Nonconsolidated Unitary Subsidiaries
Enter the federal taxable income of unitary
subsidiaries incorporated in the United States
that are more than 50% commonly owned
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Form 42 — Instructions (continued)
Line 8 Dividend Exclusion
The following dividend exclusions are applicable
only to water’s-edge filers.
a.	 Foreign Dividends. Enter the total amount of
dividends paid by foreign affiliates. Include
the amounts of income from controlled foreign
corporations under subpart F if included in
federal taxable income. Enter the income from
possession corporations included in line 2.
Don’t include on this line any actual dividends
paid by the possession corporations.
b.	 Exclusion Percentage. If you elected to forgo
filing the water’s-edge spreadsheets as shown
on line 8b, Form 41, enter 80%. Enter 85%
if you’re filing the water’s-edge domestic
disclosure spreadsheets.

Include a schedule identifying payors, payees
and dividend amounts regardless of the filing
method.
Line 10 Intercompany Transactions Included on
the Federal Return
Enter the intercompany transactions between
members of the combined group that haven’t
otherwise been eliminated.
Line 11 Other Subtractions
Enter any miscellaneous Idaho deductions.
Include a schedule identifying each miscellaneous
deduction by corporation.

Line 9 Intercompany Dividends Included on
the Combined Return
Enter the amount of dividends paid by one
member to another member of the unitary group
that haven’t been subtracted elsewhere on this
form or Form 41.

Contact us:

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