2005 Idaho Code - 63-3027B — WATER\'S-EDGE ELECTION

                                  TITLE  63
                             REVENUE AND TAXATION
                                  CHAPTER 30
                                  INCOME TAX
    63-3027B.  WATER'S-EDGE ELECTION. (a) Notwithstanding the provisions of
subsections (s) and (t) of section 63-3027, Idaho Code, a qualified taxpayer,
as defined in paragraph (3) of subsection (b) of this section whose income is
subject to the tax imposed under this chapter, may elect to determine its
income derived from or attributable to sources within this state pursuant to a
water's-edge election in accordance with the provisions of this chapter, as
modified by sections 63-3027B through 63-3027E, Idaho Code. A taxpayer who
makes a water's-edge election shall take into account the income and
apportionment factors of only affiliated corporations in a unitary
relationship with the taxpayer, other than corporations filing elections under
section 936 of the Internal Revenue Code, and which either file a federal
income tax return under the Internal Revenue Code or are included in a federal
consolidated return.
    (b)  For purposes of this section:
    (1)  The phrase "over fifty percent (50%) of the voting stock directly or
    indirectly owned or controlled" shall be substituted for the phrase "at
    least eighty percent (80%)" each place it appears in section 1504 of the
    Internal Revenue Code.
    (2)  Any combined return shall include only corporations the voting stock
    of which is more than fifty percent (50%) owned directly or indirectly by
    a common owner or owners.
    (3)  A "qualified taxpayer" is a corporation which files, with the state
    income tax return on which the water's-edge election is made, a consent to
    the reasonable production of documents within the taxing jurisdiction. The
    consent shall remain in effect so long as the water's-edge election is in
    effect.
    (4)  "Water's-edge combined group" shall mean all corporations or entities
    properly includable in the election of a taxpayer in subsection (a) of
    this section.
    (5)  The only income of a foreign sales corporation to be taken into
    account shall be the income subject to federal taxation, taking into
    account the provisions of section 921 of the Internal Revenue Code.
    (c)  A water's-edge election may be disregarded, and the income of the
taxpayer  determined without regard to the provisions of this section pursuant
to those conditions which may be required by the state tax commission under
subsection (b) of section 63-3027C, Idaho Code, if any corporation fails to
comply with:
    (1)  The domestic disclosure spreadsheet filing requirements defined in
    section 63-3027E, Idaho Code; or
    (2)  This state's legal and procedural requirements.