D.C. Mun. Regs. tit. 9, r. 9-161

Current through Register Vol. 71, No. 36, September 6, 2024

Rule 9-161 - COMBINED REPORTING: WATER'S-EDGE DETERMINATION

161.1Water's-edge determination. Absent an election to report based upon a worldwide unitary combined reporting basis, taxpayer members of a unitary group shall determine each of their apportioned shares of the net business income or loss of the combined group on a water's-edge unitary combined reporting basis. In determining tax on a water's-edge unitary combined reporting basis, members shall take into account all or a portion of the income and apportionment factors as required under D.C. Official Code § 47-1810.07 (2005 Repl.) as follows:

(a)One hundred percent (100%) included. All the income and apportionment factors must be included for the following members:

(1) Domestic corporations and entities.

(2) Any member, regardless of where it is incorporated or formed, if the average of its property, payroll, and sales factors within the United States is twenty percent (20%) or more;

(3) Domestic international sales corporations (DISC) described in I.R.C. §§ 991 -994, foreign sales corporations (FSC) described in I.R.C. §§ 921 -927, and export trade corporations (ETC) described in I.R.C. §§ 970 -972; and

(4) Any member doing business in a tax haven, as defined in D.C. Official Code § 47-1801.04(49) (2005 Repl.).

(b)Partially included. The following members that are not described above are included only to the extent of any U.S. source income and factors:

(1) Any member shall include its business income that is effectively connected or treated as effectively connected with the conduct of a trade or business within the United States and, for that reason, is subject to federal income taxation;

(2) Controlled foreign corporation (CFC) defined in I.R.C. § 957, if they have Subpart F income defined in I.R.C. § 952.

(3) Any member that is a resident of a country that does not have a comprehensive income tax treaty with the United States and earns more than twenty percent (20%) of its income, directly or indirectly, from intangible property or service-related activities that are deductible against the business income of the other members of the water's-edge group, to the extent of that income and the apportionment factors related thereto.

D.C. Mun. Regs. tit. 9, r. 9-161

Final Rulemaking published at 59 DCR 10875, 10886 (September 14, 2012)

Authority: The Deputy Chief Financial Officer of the District of Columbia Office of Tax and Revenue (OTR) of the Office of the Chief Financial Officer, pursuant to the authority set forth in D.C. Official Code § 47-1335 (2005 Repl.), section 201(a) of the 2005 District of Columbia Omnibus Authorization Act, approved October 16, 2006 (120 Stat. 2019; P.L. 109-356, D.C. Official Code § 1-204.24 d (2012 Supp.)) of the Home Rule Act, and the Office of the Chief Financial Officer Financial Management and Control Order No. 00-5, effective June 7, 2000.