Vermont Apportionment & Allocation Schedule (Instructions)

Apportionment & Allocation Schedule (Instructions)
Form BA-402 (Instructions)
SCHEDULE BA-402 Instructions
Apportionment & Allocation Schedule
General Instructions
Please use BLUE or BLACK ink only.
This schedule is required for all Corporate Income Tax entities having activity (income or loss) outside of Vermont.
You do not have to complete this schedule if your business activity is exclusively in Vermont. If a Schedule BA‑402
is not attached to the return, apportionment will be assumed to be 100%. If you are claiming the “No Vermont
Activity” exception from the minimum tax, then you must submit a Schedule BA-402 that accurately reports
“everywhere” activity and no Vermont activity.
Review Regulation § 1.5833-1, Allocation and Apportionment of Vermont Net Income by Corporations. See
https://tax.vermont.gov/document/allocation-and-apportionment-regulation for a copy of the regulation. Please
note that the Department has issued new regulations effective December 1, 2021. The Department considers the
Reg. § 1.5833 to also be applicable when defining Vermont business income from multi-state businesses passed
through to individuals, estates, and trusts under 32 V.S.A. § 5823. As such, except as otherwise provided in statute,
preparers may appropriately rely on these regulations when preparing Part IV of Schedule BI-477, Vermont income
Adjustment Calculation: Pass-Through Nonresident, (attached to Form BI‑471, Business Income Tax Return). If
the income or loss of a taxable entity is derived from any trade, business, or activity conducted entirely within
Vermont, the net income shall be apportioned to Vermont in full.

Line-by-Line Instructions

Enter your Business Name and Federal Employer Identification Number
Enter the corporation name and federal employer identification number of the entity filing the tax
return. Only one Schedule BA-402 is required to be filed per tax return. This must include the sum
of the contributing factors for all members of the Vermont combined group.

PART 1 DIRECTLY ALLOCATED NON-APPORTIONABLE INCOME AND FOREIGN DIVIDENDS
	

Line 1A	
Line 1B	

Non-business or non-apportionable income (income which is not included in the apportioned tax
base) are allocated directly to the state in which the income was generated, or in which the incomeproducing assets are located. If the income-producing asset has no location (is not a tangible asset),
the income will be allocated to the state of commercial domicile, the principal place from which
the business is directed or managed. Review Regulation § 1.5833 for guidance on apportionable
vs. non-apportionable income. Enter the amount of Non-apportionable Income from Everywhere.
Enter the amount of Non-apportionable Income from Vermont.
Amounts from Lines 1A and 1B will be used on Form CO-411, Corporate Income Tax Return, for
corporate income tax filers.
Use Line 1B to report a deduction for income received from a pass-through entity of which this
company is an owner, but upon which composite tax has already been paid by that pass-through
entity. This situation would arise if a pass-through entity was required to file a composite return
and pay tax, but the corporation filing this return had additional income or activity in Vermont, thus
triggering a filing requirement. The Line 1B deduction is the mechanism to prevent double taxation
of the pass-through income. NOTE: Unitary businesses must still report the pro-rata factors of the
pass-through which filed the composite return.
Instructions for Schedule BA-402

tax.vermont.gov

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Lines 2A and 2B should only be used by Unitary filers.
Line 2A	
Enter the total amount of Foreign Dividends paid to the unitary group. This is the amount reported
on Form CO-411, Line 4(d).
Line 2B	
If applying for foreign dividends factor relief, enter the Vermont Foreign Dividends Taxable Income
from Schedule CO-419, Line 6. Otherwise, multiply Line 2A by Line 14 and enter the amount here.

PART 2 APPORTIONMENT FACTORS
DO NOT REPORT NEGATIVE VALUES ON SCHEDULE BA-402. This schedule is to apportion or
allocate activity, not report income. It is not possible to have negative activity in “Vermont”
or “Everywhere.” For certain items of gain or loss, report gross proceeds, not net gain or loss.
For Unitary filers, the “Everywhere” figures reported should be those for the entire group.
If this entity holds an interest in a unitary pass-through entity, then the pro-rata share of the passthrough entity’s apportionment factors must be added to Lines 3 through 12. If the pass-through
entity is not unitary then the distributed income is reported on Lines 1A and 1B, and the pro-rata
share of pass-through entity’s apportionment factors are excluded from Lines 2 through 20.

SECTION A: Apportioned Income, Sales and Receipts Factor
Line 3	

Enter the total sales or gross receipts for the year. Per 32 V.S.A. § 5833, effective Jan. 1, 2020, and
Vermont Regulation § 1.5833, sales of services and intangibles are now sourced using marketbased sourcing. Gross receipts received from activity in the regular course of the taxpayer’s trade
or business, such as sales of tangible personal property and sales of real estate, shall be included in
this line. NOTE: Any factors passed through from partnership income should be entered separately
on Line 9.
Receipts from non-apportionable activity should be excluded.
Receipts do not include the following, even if the income is due to an apportionable activity
1)	

damages and other amounts received as the result of litigation

2)	

property acquired by an agent on behalf of another

3)	

tax refunds and other tax benefit recoveries

4)	

contributions to capital

5)	

income from forgiveness of indebtedness

6)	

amounts realized from exchanges of inventory that are not recognized by the Internal
Revenue Code

7)	

Amounts realized as a result of factoring accounts receivable recorded on an accrual
basis

8)	

Hedging transactions

9)	

The holding of cash or securities

10)	 Treasury receipts, or the maturity, redemption, sale, exchange, loan or other disposition
of cash or securities
See Vermont Regulation § 1.5833 for more detail.

Instructions for Schedule BA-402
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Line 4 	

Enter the total of all receipts from services received in or delivered to Vermont. Under the
market-based approach, effective January 1, 2020, sales of services are assigned to Vermont when
the services or benefits of the services are received in or delivered to Vermont, or if the customer
or marketplace is located in Vermont.

Line 5 	

Enter the sales of tangible personal property shipped or delivered to Vermont from outside
Vermont, except when the purchaser is the United States Government.

Line 6 	

Enter the sales of tangible personal property shipped or delivered to Vermont from within
Vermont, except when the purchaser is the United States Government. Also use this line for sales
of real property included in Line 2 if the property is in Vermont.

Line 7 	

Special Industries: Enter pro-rated sales sourced to Vermont according to the appropriate ratio
for your industry. For broadcasters, you will apply a percentage of the applicable sales to Vermont
based on the “audience factor,” as determined by our regulations. For trucking companies, you will
apply a percentage of the applicable sales to Vermont based on a ratio determined by your mileage.
Attach a statement to the return showing your calculations and application of this ratio to your sales.
NOTE: VERMONT REQUIRES PRIOR APPROVAL to use alternative apportionment for any
person whose industry is not covered by the Special Rules.

Line 8 	

Enter receipts from business interest and dividends. Interest and dividends are apportioned if the
acquisition, management, employment, development, or disposition of the property is or was related
to the operation of the taxpayer’s trade or business. Interest or dividends that are not apportioned
are reported on Schedule BA-402, Lines 1A and 1B.

Line 9 	

Factors from pass through entities: Verify that the “unitary member” box is checked on all
Schedules K-1VT issued to your organization. Where a unitary partnership exists, take the sum of
all sales factors indicated on Line 15 of all Schedules K-1VT issued to you by these entities and
enter that total here.

Line 10	

Enter receipts from royalties as reported by filers of federal Form 1120S, U.S. Income Tax Return
for an S Corporation, Schedule K, Line 6; federal Form 1065, U.S. Return of Partnership Income,
Schedule K, Line 7; or federal Form 1120, U.S. Corporation Income Tax Return, Line 7. Royalties
are sourced to Vermont on a market-based sourcing basis.

Line 11 	

Enter the total gross rental receipts for the year as reported by filers of federal Form 1120S,
Schedule K, Line 3a; federal Form 1065, Schedule K, Line 3a; federal Form 8825, Line 2; or federal
Form 1120, Line 6.
Enter other business income as reported by filers of federal Form 1120S, Line 5; federal Form 1065,
Line 7; or federal Form 1120, Line 10. Include taxable income from Vermont sources earned as a
shareholder or partner and reported on federal Schedule K-1, e.g., from income-producing assets
and activity located in Vermont. Include supporting detail for calculation of “Other Business
Income” included on Line 12A and 12B. Schedules sent that re-state “Other” or “Miscellaneous”
Income with no further detail may be considered incomplete or insufficient. If you do not include
the required supporting information, then your return is incomplete.
Total sales and gross receipts. Add Lines 3 through 12 and enter the “Everywhere” and “Vermont”
values on Lines 13A and 13B, respectively. Calculate the Vermont apportionment percentage for
sales and gross receipts by dividing Line 13B by Line 13A.

Line 12	

Line 13	

Instructions for Schedule BA-402
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Line 14	

Vermont Sales and Receipts factor as percent of “Everywhere.” Calculate the Vermont
apportionment percentage here. DIVIDE Line 13B by Line 13A. MULTIPLY the result by 100
and carry the result out to the sixth decimal place. Enter this figure on Form CO-411, Line 6; or
Schedule BI-477, Line 13.

SECTION B: Salaries and Wages Factor (Informational purposes only)
Line 15	

Enter the salaries and wages paid or accrued during the taxable year for “Everywhere” and for
“Vermont” on Lines 15A and 1B, respectively. Salaries and wages are apportioned to Vermont if
they were paid for services performed in the state. Payments to employees for board, rent, housing,
lodging, and any other benefits paid in exchange for labor will be treated as compensation if they
are considered as income under the Internal Revenue Code. To the extent that employee services
produce both business and nonbusiness income, proration is required.

SECTION C: Property Factor (Informational purposes only)
Lines 16-20 	 Use the average of the beginning and ending values based on the original cost.
	
DO NOT INCLUDE INTANGIBLE PROPERTY IN THIS FACTOR. Tangible personal
property is within Vermont if it is physically situated or located here. Property of the taxpayer held
in Vermont by an agent, consignee, or factor is situated or located within Vermont. Property in
transit between locations of the taxpayer to which it belongs is considered to be at the destination
for purposes of the property factor. Property in transit between a buyer and seller which is included
by a taxpayer in the denominator of its property factor in accordance with its regular accounting
practices is included in the numerator according to the state of destination. The value of mobile or
movable property such as construction equipment, trucks, or leased electronic equipment which
are located within and without this state during the tax period is determined for purposes of the
numerator of the factor on the basis of total time within the state during the tax period. Construction
in progress, except as otherwise provided in the regulations, and Intangible Property should not
be included in the property factor. (See Reg. § 1.5833(B)(5). If you report activity on Line 18,
“Other assets,” then you must include a schedule.
Line 21	
The value of the rented or leased real or tangible personal property, both within and outside
Vermont, is determined by multiplying the gross rent payable during the tax year by a factor of eight.
The gross rent to be used includes all money or other considerations payable directly or indirectly for
the use and possession of the property and includes payments measured as a percentage of profits,
payments in addition to or in lieu of rent for interest, taxes, insurance, repairs, or other amounts
paid on behalf of the lessor which may be required by the lease.
Line 22	

Total property values. Add Lines 16 through 21 and enter the “Everywhere” values (left column)
and the “Vermont” values (right column) on Lines 22A and 22B respectively.

Contacting the Department
Mailing address:	
	
Vermont Department of Taxes	
133 State Street	
Montpelier, VT 05633-1401	

Taxpayer Services:	
Email Address:	
Website Address:	
Forms:	

(802) 828-5723
[email protected]
tax.vermont.gov
(802) 828-2515
Instructions for Schedule BA-402

tax.vermont.gov

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