Pennsylvania PA Schedule H - Apportioned Business Income (Loss)/Calculation of PA Net Business Income (Loss)

PA Schedule H - Apportioned Business Income (Loss)/Calculation of PA Net Business Income (Loss)
2023 PA Schedule H - Apportioned Business Income (Loss)/Calculation of PA Net Business Income (Loss) (PA-20S/PA-65 H)
IMPORTANT: FILL IN FORM MUST BE DOWNLOADED ONTO YOUR COMPUTER PRIOR TO COMPLETING
2306910056

PA SCHEDULE H
Apportioned Business Income
(Loss)/Calculation of PA Net
Business Income (Loss)
PA-20S/PA-65 H (DR) 04-23 (FI)
PA Department of Revenue

START

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2023

OFFICIAL USE ONLY

9 DIGIT - NO DASH
Name as shown on PA-20S/PA-65 Information Return

FEIN

APPORTIONED INCOME (LOSS) FROM A BUSINESS, PROFESSION, OR FARM DERIVED FROM SOURCES BOTH WITHIN
AND OUTSIDE PENNSYLVANIA.
Complete this schedule and submit it with the PA-20S/PA-65 Information Return if a PA S corporation, partnership or limited liability company filing as
a partnership or PA S corporation for federal income tax purposes derives business income from sources within and outside Pennsylvania or is located
in a KOZ. If one or more of the partners is a C corporation, the partnership must also complete PA-20S/PA-65 Schedule H-Corp and submit a copy to
each corporate partner. DO NOT USE THIS SCHEDULE TO APPORTION PA-SOURCE INCOME FROM OTHER ENTITIES.
The entity must calculate a figure as required in 1C, 2C and 3C to apply to net business income (loss) to determine the amount from within Pennsylvania.
Line 5 is an average of the sum of three fractions shown below.

NET BUSINESS INCOME (LOSS) APPORTIONMENT FORMULA
Submit a statement listing all places BOTH WITHIN AND OUTSIDE PENNSYLVANIA where the entity operates its business.

TABLE 1 - PROPERTY FACTOR

Description

Total Everywhere

Real and Tangible Property Owned (original cost value)
Land and Buildings, including property rented * . . . . . . .
Machinery and Equipment, including property rented * . .
Furniture and Fixtures, including property rented * . . . . .
Automobiles and Trucks, including property rented * . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Tangible Property, including property rented * . . . .
Total Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 (A)
* Eight times net annual rental rate (Attach Schedule)
1C Property factor (divide 1(B) by 1(A) - calculate to six decimal places)
TABLE 2 - PAYROLL FACTOR
Description
Wages, salaries, commissions and other compensation
to employees in:
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation of officers . . . . . . . . . . . . . . . . . . . . . . . . .
Salesmen’s salaries and commissions . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 (B)
●

Total Everywhere

Within Pennsylvania

2 (A)

2 (B)

2C Payroll factor (divide 2(B) by 2(A) - calculate to six decimal places)
TABLE 3 - SALES FACTOR

Within Pennsylvania

Description

●

Total Everywhere

Sales (Net of Returns and Allowances) . . . . . . . . . . . . . . . . .
Interest, Dividends, Rents, Royalties . . . . . . . . . . . . . . . . . .
Other Income (receipts only) . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Sales Price of Assets (except securities**) . . . . . . . .
Total Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (A)
** Unless you are a securities dealer
3C Sales factor (divide 3(B) by 3(A) - calculate to six decimal places)

Within Pennsylvania

3 (B)
●

1 Real and Tangible Property. Enter the amount from Line 1C.

1

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2 Wages, Salaries, Commissions, and Other Compensation. Enter the amount from Line 2C.

2

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3 Sales. Enter the amount from Line 3C.

3

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4 Total Lines 1 through 3.

4

l

5

l

5 Apportionment - Divide Line 4 by 3, if all three factors apply; by 2, if only two factors apply;
or by 1, if only one factor applies. Calculate to six decimal places.
6 Total Net Income (Loss) from business. Schedule M, Part II, Section VII, Line 2

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7 Net Income (Loss) for Pennsylvania. Multiply Line 6 by Line 5.
Enter on the PA-20S/PA-65 Information Return, Section II, Line 2e.

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Special Apportionment to be completed only by railroad, truck, bus, and airline entities, pipeline or natural gas entities and water transportation entities. (Refer to PA-20S/PA-65 Schedule H instructions)
(A) Numerator
(A)
(B) Denominator

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2023
Instructions for PA-20S/PA-65 Schedule H

PA-20S/PA-65 H IN (DR) 04-23

Apportioned Business Income (Loss) Calculation of PA Net Business Income (Loss)

GENERAL INFORMATION
PURPOSE OF SCHEDULE
Use this schedule if a PA S corporation, partnership or entity
formed as a limited liability company that is classified as
a partnership or PA S corporation for federal income tax
purposes derives business income from sources within and
outside Pennsylvania or is located in a Keystone Opportunity
Zone (KOZ). If one or more of the partners is an entity, the
partnership must also complete PA-20S/PA-65 Schedule
H-Corp and submit a copy to each entity partner.
IMPORTANT: Railroad, truck, bus, airline, pipeline,
natural gas or water transportation companies do not
use the 3 factor approach shown on Schedule H. Rather,
they use a special apportionment at the bottom of the schedule. See Special Apportionment.
If an entity receives a federal Schedule K-1 in place of a PA
Schedule K-1 from another pass through entity, do not use
PA-20S/PA-65 Schedule H to apportion PA-source
income from another entity. Report the information on
PA-20S/PA-65 Information Return, Section I, Line 1b and
Section II, Lines 2b and 2f.

ALLOCATING INCOME
A PA S corporation or partnership must apportion net income
(loss) from the operation of its business, profession or farm
according to the following rules regarding an entity operating
within and/or outside of Pennsylvania.

OPERATION WHOLLY
WITHIN PENNSYLVANIA
If the operation of the business is wholly within Pennsylvania, the entity apportions income (loss) exclusively to Pennsylvania. The operation of a business is wholly within
Pennsylvania if, during the entire taxable year:
● The entity or its representative maintained or operated
within Pennsylvania an office, shop, store, warehouse,
factory, agency or commercial establishment where it
systematically and regularly conducted or managed
such business; and
● The entity or its representative did not maintain and
operate outside Pennsylvania any office, shop, store,
warehouse, factory, agency or commercial establishment where it systematically and regularly conducted or
managed such business.
For purposes of this rule, do not take into account any
establishment maintained or operated by a representative
of a PA S corporation or partnership if the representative
acted as an independent contractor.

OPERATION WHOLLY
OUTSIDE PENNSYLVANIA
If the operation of the business is wholly outside Pennsylvania, the entity cannot apportion to Pennsylvania any item of
income (loss), cost, or expense that it derives or incurs. The
operation of a business is wholly outside Pennsylvania if,
during the taxable year:
● The entity does not conduct in Pennsylvania any acts
or transactions in the ordinary course of operating its
business; or
● The entity only conducts in Pennsylvania acts or transactions in the ordinary course of operating its business
that, with a fair measure of permanency or continuity,
are either or both of the following:
◦ The solicitation of orders or sales sent outside Pennsylvania for approval or rejection and, if approved, are
filled by shipment or delivery of goods or services from
a point outside Pennsylvania; or
◦ The solicitation of orders in Pennsylvania by the entity
or entity representative to a prospective customer, and
such customer sells entity’s product to its customers
via solicitation as described in the previous bullet.
For purposes of the above, an entity is not engaged in business activities within Pennsylvania during a taxable year
merely by reason of sales of tangible personal property in
Pennsylvania or the solicitation of orders for sales of tangible
personal property in Pennsylvania on behalf of the entity by
one or more independent contractors that maintain an office
in Pennsylvania solely for making sales or soliciting orders
for sales.

OPERATION PARTLY
WITHIN PENNSYLVANIA
When an entity operates a business that is neither wholly
within nor wholly outside Pennsylvania under the above
definitions, it allocates by separate accounting if:
● The business operations within Pennsylvania and the
business operations outside Pennsylvania constitute
independent profit centers, meaning there are no transfers of finished or partly finished goods, raw materials,
supplies, services, or operational assets interspersed;
each center is free to buy outside; and because of geographical location, no center is in direct competition with
another; and
● The entity keeps its books so revenues, costs, and
expenses attributable to Pennsylvania operations can
be properly disclosed.
Otherwise, the entity must complete a PA-20S/PA-65
Schedule H.

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Submit a statement that lists all places both within and outside Pennsylvania where the PA S corporation or partnership
conducts business activity or farming. Include the street
address, city, state, and the type of business, profession or
farm.

COMPLETING PA SCHEDULE H
BUSINESS NAME
Enter the complete name of the entity or business as shown
on the PA-20S/PA-65 Information Return.
FEIN
Enter the nine-digit federal employer identification number
(FEIN) of the entity or business as shown on the PA-20S/
PA-65 Information Return.

TABLE 1
PROPERTY FACTOR (REAL AND TANGIBLE
PROPERTY)
The property factor is a fraction. The numerator is the average value of real and tangible personal property employed
in the business and located in Pennsylvania. The denominator is the average value of the real and tangible property
employed in the business everywhere.
CALCULATING PROPERTY FACTOR
● The PA S corporation or partnership values owned property at its original cost.
● Real property includes property the entity rents and uses
in the business.
● If the values of the Pennsylvania real or tangible personal property the entity employs in its business are
zero at the beginning of any month during the taxable
year, the entity determines its average value of property
by averaging the values at the beginning and ending of
the taxable year. Otherwise, the entity determines its
average value of property by averaging the monthly
values.
● The entity values rented property by multiplying the
gross rents paid during the taxable year by 8.
● Gross rents are the sum of money or other consideration
paid directly or indirectly by the PA S corporation or partnership for its benefit for the use or possession of the
rented property.
Gross rents include:
● The amount paid for the use or possession of real
property or any part thereof, whether designated as a
fixed sum of money or a percentage of sales, profits, or
otherwise;
● The amount paid as additional rent, or instead of rent,
the amount the entity paid in interest, taxes, insurance,
repairs or other amounts under the terms of a lease or
other arrangement; and
● The portion of the cost of any improvement to real estate
made by or on behalf of the taxpayer, which reverts to
the owner or the lessor upon termination of the lease
or other arrangement based on the unexpired term
of the lease commencing with the completion date of
the improvement, or the life of improvement, if its life
expectancy is less than the unexpired term of the lease.
If the entity erects (or another erects on behalf of the
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entity) a building on leased land, the entity determines
the value of the land by multiplying the gross rent by 8
and the value of the building in the same manner as if
owned by the PA S corporation or partnership. The proportional cost of an improvement (other than the building
on leased land) is generally equal to the amount of
allowable amortization in calculating Pennsylvania net
income, whether the lease does or does not contain an
option of renewal.
Gross rents shall not include:
● Any portion of a payment or credit to the proprietor of
the business or to a shareholder or partner in the PA S
corporation or partnership conducting the business for
the use of real property;
● Amounts payable for separate charges for water and
electric service furnished by the lessor;
● Amounts payable for storage if no designated space
under the control of the taxpayer as a tenant is rented
for storage purposes; and
● That portion of any rental payment that, at the discretion
of the department, is applicable to property subleased
by the taxpayer and not used by him or her in conducting
business.

TABLE 2
PAYROLL FACTOR (WAGES, SALARIES,
COMMISSIONS, AND OTHER COMPENSATION)
The payroll factor is a fraction. The numerator is the total
current employee wage and salary expense for the taxable
year the PA S corporation or partnership incurs in connection
with its business activity within Pennsylvania. The denominator is the total current employee wage and salary expense
the entity incurs in connection with its business everywhere.
DETERMINING PAYROLL FACTOR
The entity incurs employee wage and salary expense in connection with its business activity in Pennsylvania if one of
the following applies:
● The employee performs personal services entirely within
Pennsylvania;
● The employee performs personal services outside
Pennsylvania that are incidental to the usual services
the employee performs in Pennsylvania; or
● The employee performs some personal services in
Pennsylvania, and at least one of the following applies:
◦ The employee’s “base of operations” is in Pennsylvania;
◦ The place from which the employee receives direction
or control is in Pennsylvania; and/or
◦ The employee is a resident of Pennsylvania.
Base of operations refers to the place or fixed center from
which the individual works. An individual’s base of operations
may be his/her business office, or a place at which the employee is to receive directions and instructions if the contract
of employment so specifies. In the absence of more controlling factors, an individual’s base of operations may be the
place to which he/she has business mail, supplies, and
equipment sent, or the place where he/she maintains
business records.

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TABLE 3
SALES FACTOR (SALES)
The sales factor is a fraction. The numerator is total gross
receipts derived from sales in Pennsylvania during the
taxable year. The denominator is total gross receipts derived
from all sales during the taxable year. The sales factor
includes income such as interest, dividends, or from property
dispositions, but only to the extent described in these
instructions.
CALCULATING SALES FACTOR
For purposes of calculating the sales factor, only sales
of stock-in-trade or inventory held primarily for sale to
customers in the ordinary course of the business, sales of
services to customers, and sales of certain assets shall be
taken into account. A sale of stock-in-trade or inventory is in
Pennsylvania if:
● The seller delivers or ships the property from outside
Pennsylvania into Pennsylvania to any purchaser other
than the federal government;
● The seller delivers or ships the property from Pennsylvania and the purchaser is the federal government;
● The seller delivers or ships the property from Pennsylvania to another state or country, and the other state or
country has no jurisdiction to tax the net income of the
business derived from such sales; or
● The seller delivers or ships the property from a point
within Pennsylvania to a purchaser in Pennsylvania.
A sale of services is in Pennsylvania if the seller performs
the services wholly within Pennsylvania.
A sale of services is in Pennsylvania if the seller performs a
greater portion of the services in Pennsylvania than outside
Pennsylvania, based on cost or performance. A sale of a tangible asset in Pennsylvania is a sale of property within Pennsylvania. A sale of certain intangible assets employed in a
going concern in Pennsylvania is a sale of property within
Pennsylvania.
ALLOCATING GAIN (LOSS) FROM THE DISPOSITION
OF TANGIBLE PROPERTY
Generally, the revenue, cost, expense, and liability that a PA
S corporation or partnership derives from or incurs in the
sale, exchange or disposition of real property or tangible personal property is entirely derived from or incurred in the state
or country in which the property is physically located.
Special rules, however, apply with respect to the following:
● Stock-in-trade or other property of a kind the entity includes in its inventory at the close of the taxable year;
● Property the entity holds primarily for sale to customers
in the ordinary course of its business operations; and
● Tangible and intangible assets the entity employs in a
line of business.
Gross proceeds from the disposition of tangible property is
included in the sales factor with respect to such assets if:

● The entity reinvests proceeds from the sale of the assets
in the same line of business (as defined by the North
American Industry Classification System (NAICS) code)
within the same entity; and
● The entity must use the proceeds to acquire like-kind
property used in the same business, profession, or farm.
GAIN (LOSS) FROM THE DISPOSITION OF
INTANGIBLE PERSONAL PROPERTY, OTHER
THAN GOODWILL
Generally, the revenue, cost, expense and liability that the
PA S corporation or partnership derives from or incurs in the
sale, exchange or disposition of intangible personal property
other than goodwill from the disposition of a going concern,
is derived from or incurred in the state or country in which
the entity has physical presence. Refer to Personal Income
Tax Bulletin 2005-02, Gain or Loss Derived from the Disposition of a Going Concern.
Gross proceeds from the disposition of intangible personal
property other than goodwill is included in the sales factor
with respect to such assets if:
● The entity reinvests proceeds from the sale of the assets
in the same line of business (as defined by the North
American Industry Classification System (NAICS) code)
within the same entity;
● The entity must use the proceeds to acquire like-kind
property used in the same business, profession, or farm.
INTEREST INCOME
Generally, the PA S corporation or partnership allocates any
item of interest, cost, expense or liability incurred in the
production of interest.
The PA S corporation or partnership classifies interest as net
profits and therefore apportions the interest along with other
net profits in the following instances:
● Interest the PA S corporation or partnership derives
from, and costs, expenses or liabilities the PA S corporation or partnership incurs in connection with, purchase
money mortgages on real estate or land contracts;
● Interest the PA S corporation or partnership derives
from, and costs, expenses or liabilities the PA S corporation or partnership incurs in connection with, assets it
employs as working capital (generally current assets) in
its business and from accounts and notes receivable
from sales or products or services it sells in the ordinary
course of business; and
● Interest incidental to the production or collection of rental
or royalty income.
The PA Personal Income Tax Guide sets forth in detail the
rules for classifying interest income. Interest that is not net
profits may be classified as interest income, net rental
income or net gains.
DIVIDEND INCOME
Generally, the PA S corporation or partnership allocates any
item of dividend, cost, expense or liability incurred in the production of dividends. The special rules for allocating interest
income described previously also apply to dividend income.

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NOTE: Include interest and dividend income when it
is reportable as net profits from the operation of a
business. If interest and dividend income were reclassified
for Pennsylvania personal income tax purposes on PA-20S/
PA-65 Schedule M, then it would be reported on PA-20S/
PA-65 Schedule H.
If not reclassified, interest and dividend income are not
reportable on PA-20S/PA-65 Schedule H and are not includable in the sales factor for apportionment purposes.
RENTAL INCOME FROM REAL ESTATE
Rent the PA S corporation or partnership derives from real
estate that it does not employ in the operation of its business
– and costs, expenses, and liabilities the entity incurs in the
production or collection of such rents – are allocable to
Pennsylvania only if the rental property is in Pennsylvania.
RENTAL INCOME FROM TANGIBLE PERSONAL
PROPERTY RENTS
The PA S corporation or partnership allocates the rent it
derives from tangible personal property it does not employ
in its business operation and costs, expenses and liabilities
that it incurs in the production or collection of such rents –
by multiplying the net rent by a fraction. The numerator is
the number of days the property is physically in Pennsylvania during the rental period.
The denominator is the number of days for all rental periods
in the taxable year.
If the physical location of the property during the rental
period is unknown, the entity allocates it to the state or country in which the property was located at the time the rent
payer obtained possession.
ROYALTIES FROM REAL PROPERTY
Proceeds derived from non-operating interests in coal, oil,
gas, or other minerals in place and costs, expenses, and
liabilities incurred in the production of such receipts – are
allocable to Pennsylvania only if the property from which the
operating interests are served is located in Pennsylvania.
ROYALTIES FROM PATENTS AND COPYRIGHTS
The PA S corporation or partnership allocates patent and
copyright royalties not includable in the calculation of net
profits from the operation of a business – and the costs,
expenses, and liabilities incurred in the production and
collection of such royalties – to Pennsylvania only if and to
the extent that:
● The payer employed the patent in the production,
fabrication, manufacturing, or other processing in
Pennsylvania;
● The payer produced the patented products in Pennsylvania; or
● The payer originates the printing or publication in
Pennsylvania.

TABLE INSTRUCTIONS
NET BUSINESS INCOME (LOSS) APPORTIONMENT
FORMULA
The entity must calculate a figure as required in 1C, 2C and
3C to apply to net business income (loss) to determine the
amount from within Pennsylvania. The figure is an average
of the sum of three factors from Tables 1, 2, and 3.
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Submit a statement listing all places within and outside
Pennsylvania where the entity operates its business.

TABLE 1
PROPERTY FACTOR (REAL AND TANGIBLE
PROPERTY)

COLUMN 1A
TOTAL EVERYWHERE
Enter the average value of the real and tangible personal
property owned or rented and used in business or farming,
within and outside Pennsylvania.

COLUMN 1B
WITHIN PENNSYLVANIA
Enter the average value of the real and tangible personal
property owned or rented and used in business or farming
within Pennsylvania. Refer to Table 1 on page 2 on how to
calculate average value.

LINE 1C
PROPERTY FACTOR
Divide Column 1B by Column 1A. Calculate to six decimal
places. Enter the amount.

TABLE 2
PAYROLL FACTOR (WAGES, SALARIES,
COMMISSIONS, AND OTHER COMPENSATION)

COLUMN 2A
TOTAL EVERYWHERE
Enter the total compensation paid within and outside Pennsylvania during the taxable year.

COLUMN 2B
WITHIN PENNSYLVANIA
Enter the total compensation paid within Pennsylvania during the entire taxable year.

LINE 2C
PAYROLL FACTOR
Divide Column 2B by Column 2A. Calculate to six decimal
places. Enter the amount.

TABLE 3
SALES FACTOR (SALES)

COLUMN 3A
TOTAL EVERYWHERE
Enter the total sales within and outside Pennsylvania during
the entire taxable year.

COLUMN 3B
WITHIN PENNSYLVANIA
Enter the total sales within Pennsylvania during the entire
taxable year.

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LINE 3C
SALES FACTOR
Divide Column 3B by Column 3A. Calculate to six decimal
places. Enter the amount.

LINE INSTRUCTIONS
LINE 1
REAL ESTATE AND TANGIBLE PROPERTY
Enter the amount from Table 1, Line 1C.

LINE 2
WAGES, SALARIES, COMMISSIONS, AND OTHER
COMPENSATION
Enter the amount from Table 2, Line 2C.

LINE 3
SALES
Enter the amount from Table 3, Line 3C.

LINE 4
TOTAL
Add the amounts from Lines 1, 2, and 3.

LINE 5
APPORTIONMENT
Divide Line 4 by 3 if all three factors apply; by 2 if only two
factors apply; or by 1 if only one factor applies. Calculate to
six decimal places. Enter the amount. For example, if the
entity entered amounts only for Property and Sales in Column A, then the entity divides the amount on Line 4 by 2.

multiplying total transportation income by a factor. The factor
is derived by taking the numerator which is total revenue
miles within PA for a taxable period and dividing it by the
denominator, total revenue miles everywhere.
Please view the example for the special apportionment
which includes calculations for the transportation of people
and property.
● RAILROAD, TRUCK, BUS OR AIRLINE ENTITIES
All business income of railroad, truck, bus or airline entities
is apportioned to Pennsylvania by multiplying the income by
a fraction. The numerator of the fraction is the taxpayer’s
total revenue miles within Pennsylvania during the taxable
period. The denominator of the fraction is the total revenue
miles of the taxpayer everywhere during the taxable period.
A revenue mile is the average receipts derived from the
transportation by the taxpayer of persons or property one
mile.
Where revenue miles are derived from the transportation of
persons and property, the revenue mile fractions attributable
to each class of transportation are calculated separately. The
average of the two fractions, weighted in accordance with
the ratio of total receipts from each class of transportation
everywhere to total receipts from both such classes of transportation everywhere, is used to apportion business income
to Pennsylvania.
Example. Company A is in the business of transporting persons and property. During the current tax period Company
A reported receipts of $1 million, $400,000 from transportation of persons and $600,000 from the transportation of
property. Company A’s Pennsylvania revenue miles for the
transportation of persons is $40,000. The Pennsylvania revenue miles from the transportation of property are $120,000.
The special apportionment fraction for Company A for the
current tax period is calculated as shown below.

LINE 6
TOTAL NET INCOME (LOSS) FROM BUSINESS
Do not include income from other partnerships, estates,
or trusts. Enter the amount from the PA-20S/PA-65 Schedule M, Part II, Section VII, Line 2.

LINE 7
NET INCOME (LOSS) FOR PENNSYLVANIA
Multiply the amount on Line 6 by the amount on Line 5. Enter
the amount on Line 2e, Section II of the PA-20S/PA-65
Information Return.

Example
Transportation of Persons
Receipts for Transportation
PA Rev Miles $ 40,000 X of persons
$ 400,000 = .040000
Total Rev Miles $400,000

Total Receipts $1,000,000

Transportation of Property
Receipts for Transportation
PA Rev Miles $ 120,000 X of property
$ 600,000 = .120000
Total Rev Miles $600,000

Total Receipts $1,000,000

Company A’s apportionment for the current tax period is
0.040000 + 0.120000 or 0.160000.

SPECIAL APPORTIONMENT
Only railroad, truck, bus and airline entities, pipeline or natural gas entities and water transportation entities complete
this line.
Enter as the numerator (A) total revenue miles in Pennsylvania. Enter as the denominator (B) total revenue miles
everywhere. Calculate to six decimals places and enter here
and on Line 5.
All business income for transportation companies is allocated to PA based on a special apportionment involving revenue miles. A revenue mile is the average receipts derived
from the transportation of persons or property by the taxpayer for one mile. Business income is apportioned to PA by

● PIPELINE OR NATURAL GAS ENTITIES
All business income of pipeline entities is apportioned to
Pennsylvania by multiplying the income by a fraction. The
numerator of the fraction is the revenue ton miles, revenue
barrel miles, or revenue cubic feet miles of the taxpayer in
Pennsylvania during the tax period. The denominator is the
revenue ton miles, revenue barrel miles, or revenue cubic
feet miles of the taxpayer everywhere during the tax period.
A revenue ton mile, revenue barrel mile, or revenue cubic
feet mile means, respectively, the receipts derived from the
transportation by the taxpayer of one ton of solid property,
one barrel of liquid property or one cubic foot of gaseous
property transported one mile.

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All business income of natural gas entities subject to
regulation by the Federal Power Commission or by the
Pennsylvania Public Utility Commission is apportioned to
Pennsylvania by multiplying the income by a fraction. The
numerator of the fraction is the cubic foot capacity of the taxpayer’s pipelines in Pennsylvania. The denominator of the
fraction is the cubic foot capacity of the taxpayer’s pipelines
everywhere, at the end of the taxable period. Determine the
cubic foot capacity of a pipeline by multiplying the square of
its radius (in feet) by its length (in feet).
● WATER TRANSPORTATION ENTITIES OPERATING
ON HIGH SEAS
All business income of water transportation entities operating on high seas is apportioned to Pennsylvania by multiplying the business income by a fraction. The numerator of the
fraction is the number of port days spent inside Pennsylvania. The denominator of the fraction is the total number of
port days spent outside and inside Pennsylvania.

out of use because of seasonal reduction of services. Days
in port are calculated by dividing the aggregate number of
hours in all ports by 24.
● WATER TRANSPORTATION ENTITIES OPERATING
ON INLAND WATERS
All business income of water transportation entities operating on inland waters are apportioned to Pennsylvania by
multiplying the business income by a fraction.
The numerator of the fraction is the taxpayer’s total revenue
miles within Pennsylvania during the taxable period. The
denominator of the fraction is the total revenue miles of
the taxpayer everywhere during the taxable period. In the
determination of revenue miles, one-half of the mileage of all
navigable waterways bordering Pennsylvania and another
state shall be considered Pennsylvania miles. A revenue
mile means the revenue receipts derived from the transportation by the taxpayer of persons or property one mile.

Port days does not include periods when ships are not in
use because of strikes, withheld from service for repair or

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