2005 Idaho Code - 63-3026A — COMPUTING IDAHO TAXABLE INCOME OF PART-YEAR OR NONRESIDENT INDIVIDUALS, TRUSTS AND ESTATES

                                  TITLE  63
                             REVENUE AND TAXATION
                                  CHAPTER 30
                                  INCOME TAX
    63-3026A.  COMPUTING IDAHO TAXABLE INCOME OF PART-YEAR OR NONRESIDENT
INDIVIDUALS, TRUSTS AND ESTATES. (1) For nonresident individuals, trusts, or
estates the term "Idaho taxable income" includes only those components of
Idaho taxable income as computed for a resident which are derived from or
related to sources within Idaho. This is to be computed without the deductions
for either the standard deduction or itemized deductions or personal
exemptions except as provided in subsection (4) of this section.
    (2)  For part-year resident individuals, trusts or estates the term "Idaho
taxable income" includes the total of: (a) Idaho taxable income as computed
for a resident for the portion of the tax period during which a taxpayer is
domiciled in or is residing in Idaho, plus (b) those components of Idaho
taxable income which are derived from or related to sources within Idaho for
that  portion of the tax period during which a taxpayer is not domiciled in
and is not residing in Idaho. This is to be computed without the deductions
for either the standard deduction or itemized deductions or personal
exemptions except as provided in subsection (4) of this section.
    (3)  For the purposes of subsections (1) and (2) of this section:
    (a)  Income shall be considered derived from or relating to sources within
    Idaho when such income is attributable to or resulting from:
         (i)   Any business, trade, profession or occupation conducted or
         carried on in this state, including the distributive share of
         partnership income and deductions, and the pro rata share of S
         corporation income and deductions;
         (ii)  The ownership or disposition of any interest in real or
         tangible personal property located in this state;
         (iii) The ownership or disposition of any interest in intangible
         personal property only to the extent that such property is employed
         in a business, trade, profession or occupation conducted or carried
         on in this state. Provided however, that interest income from an
         installment sale of real or tangible personal property shall
         constitute income from sources within this state to the extent that
         the property sold was located within this state. Provided further,
         that interest income received by a partner or shareholder of a
         partnership or S corporation from such partnership or S corporation
         shall constitute income from sources within this state to the extent
         that the partnership or S corporation is transacting business within
         this state;
         (iv)  A resident estate or trust;
         (v)   A nonresident estate or trust to the extent the income and
         deductions of the nonresident estate or trust were derived from or
         related to sources within this state;
         (vi)  The conduct of pari-mutuel wagering, charitable gaming or any
         other form of gambling taking place within this state, except as
         expressly limited in section 67-7439, Idaho Code;
         (vii) Gains or losses realized from the sale or other disposition of
         a partnership interest or stock in an S corporation to the extent of
         the partnership's or S corporation's Idaho apportionment factor in
         the taxable year immediately preceding the year of sale.
    (b)  Notwithstanding the provisions of subsection (3)(a) of this section,
    transactions and investments made, placed or directed by Idaho resident
    registered broker-dealers and investment advisers or institutions exempt
    from registration under the Idaho securities act in securities listed with
    or through the New York Stock Exchange, the American Stock Exchange or any
    other stock exchange registered with the United States securities and
    exchange commission and approved by the director of the department of
    finance which generate dividends, interest, capital gains or similar
    profits or returns for nonresidents not otherwise subject to Idaho income
    taxation shall not result in the intangible property being deemed to have
    a situs outside the domicile of the owner.
    (c)  Notwithstanding the provisions of subsection (3)(a) of this section,
    when intangible property owned by a  limited liability company,
    partnership or other entity taxed as a partnership for federal income tax
    purposes generates dividends, interest, capital gains or similar profits
    or returns, such income shall not constitute income derived from or
    related to sources within Idaho, provided that the business activity of
    such entity is limited to the investment in securities and activities
    incident thereto.
    (d)  Compensation paid by the United States for active service in the
    armed forces of the United States, performed by an individual not
    domiciled in this state, shall not constitute income derived from or
    related to sources within this state.
    (e)  The income of nonresident or part-year resident individuals, trusts
    or estates which is derived from or related to sources both within and
    without this state shall be attributable to this state in the manner
    prescribed in the rules of the state tax commission.
    (4)  In computing the Idaho taxable income of a part-year or nonresident
individual, trust or estate, the standard deduction or itemized deductions, as
defined in section 63-3022(j), Idaho Code, if applicable, and the exemptions,
as defined in section 151 of the Internal Revenue Code or any allowance in
lieu of such deduction, shall be allowed in the proportion that paragraph (a)
of this subsection bears to paragraph (b) of this subsection:
    (a)  The Idaho taxable income of the taxpayer modified as follows:
         (i)   No allowance shall be made for either the standard deduction or
         itemized deductions;
         (ii)  No deduction shall be made for personal exemptions or any
         allowance in lieu of such deduction.
    (b)  The Idaho taxable income as would be calculated for a resident of
    Idaho modified as follows:
         (i)   No allowance shall be made for either a standard deduction or
         itemized deductions;
         (ii)  No deduction shall be made for personal exemptions or any
         allowance in lieu of such deduction;
         (iii) Compensation for active military service in the armed forces
         shall not be deducted;
         (iv)  Income earned within the original exterior boundaries of any
         federally created Indian reservation by an enrolled Indian in a
         federally recognized Indian tribe on a federally recognized Indian
         reservation shall be added if not otherwise included.
    (5)  An adjustment may be made to eliminate distortions in the amount of
net  income attributable to a taxpayer's activities within the state of Idaho.
Such deductions shall be limited to circumstances involving itemized
deductions as referred to in subsection (4) of this section and which reflect:
    (a)  A failure to reflect the net income or deduction after reimbursements
    have been received; or
    (b)  A failure to reflect the net amount of mortgage interest income or
    expense from activities within Idaho.
    (6)  For the purposes of subsections (1) and (2) of this section,
deductions and adjustments allowed in computing the Idaho taxable income of
nonresident and part-year resident individuals, trusts and estates shall be
prescribed in the rules of the state tax commission. Such rules shall be based
upon:
    (a)  Whether or not the deduction or adjustment is related to the
    production of income reportable to Idaho;
    (b)  Whether or not the deduction or adjustment is related to income
    received, expenses paid, or events of tax consequence which occurred
    during a portion of a taxable year that the taxpayer was domiciled in or
    residing in Idaho; or
    (c)  Any other appropriate basis for making the adjustment. An
    "appropriate basis" is one which the state tax commission finds is needed
    to insure that the amount of Idaho taxable income is fairly and reasonably
    related to a taxpayer's activities in this state.