Example 1: Corporation A's distributive share of Partnership P's income is 20%. Corporation A manufactures toys which are sold in seven other states by Partnership P. Corporation A's business income for the year, disregarding its distributive share of Partnership P's income, was $1,000,000. Partnership P's business income for the same year was $800,000. The business income of Corporation A is $1,160,000 ($1,000,000 plus 20% of $800,000).
Example 1: Corporation A's interest in Partnership P is 20%. Corporation A's distributive share of Partnership P's income is included in business income of Corporation A to be apportioned by formula. Corporation A owns a building (original cost of $100,000) which is rented to Partnership P for $12,000 per year. Corporation A must include the original cost of $100,000 for the building in its Property Factor. Therefore, no portion of the rental value of the rented property will be reflected in the Property Factor of Corporation A.
Example 2: Same facts as in Example 1 except Partnership P owns the building and rents it to Corporation A. Corporation A will include $20,000 (20% of $100,000) in its Property Factor because of its interest in Partnership P, and in addition, Corporation A will include $76,800 (($12,000 8) 80%) of rental value in its Property Factor in order to give weight in the property factor to the rented building used in Corporation A's operation. Thus, the value of the building to be used in the Property Factor of Corporation A is $96,800 ($20,000, plus $76,800).
Example 1: Corporation A's interest in Partnership P is 20%, and its distributive share of Partnership P's income is included in business income of Corporation A to be apportioned by formula. Corporation A's own payroll is $1,000,000 and the payroll of Partnership P is $800,000. Corporation A's total payroll for purposes of the Payroll Factor is $1,160,000 (1,000,000, plus 20% of $800,000).
Example 1: Corporation A's interest in Partnership P is 20%, and its distributive share of Partnership P's income is included in business income of Corporation A to be apportioned by formula. Corporation A's sales were $20,000,000 for the year, $5,000,000 of which were made to Partnership P. Partnership P made sales of $10,000,000 during the same year, none of which were to Corporation A or the other partners. The denominator of Corporation A's Sales Factor is $21,000,000 determined as follows:
Sales by Corporation A | $20,000,000 |
Add: Corporation A's | |
interest (20%) in | |
Partnership P's sales | 2,000,000 |
Less: Corporation A's | 1,000,000 |
interest (20%) in | |
Corporation A's sales to | |
Partnership P | 1,000,000 |
____________ | ___________ |
Denominator of Sales | $21,000,000 |
Factor |
Example 2: The following facts are applicable to Examples 2(a) through (c) below. Corporation A's interest in Partnership P is 20%, and Corporation B's interest is 80%. The distributive share of partnership income is included in business income of Corporation A and Corporation B, respectively.
Corporation A | $20,000,000 | |
Corporation B | 60,000,000 | |
Partnership P: | ||
To Corporation A | $2,000,000 | |
To Corporation B | 8,000,000 | $10,000,000 |
__________ |
The denominator of Corporation A's Sales Factor is $20,000,000 determined as follows:
Sales by Corporation A | $20,000,000 | |
Add: Corporation A's | ||
interest (20%) in | ||
Partnership P's sales | $ 2,000,000 | |
Less: Partnership P's | ||
Sales to Corporation A | 2,000,000 | -0- |
____________ | ____________ | |
$20,000,000 | ||
____________ |
The denominator of Corporation B's Sales Factor is $60,000,000 determined as follows:
Sales by Corporation B | $60,000,000 | |
Add: Corporation B's | ||
interest (80%) in | ||
Partnership P's sales | $ 8,000,000 | |
Less: Partnership P's | ||
sales to Corporation B | 8,000,000 | -0- |
____________ | ____________ | |
$60,000,000 | ||
____________ |
Corporation A | $20,000,000 | |
Corporation B | $60,000,000 | |
Partnership P: | ||
To Corporation A | $ 1,000,000 | |
To Corporation B | 9,000,000 | $10,000,000 |
____________ |
The denominator of Corporation A's Sales Factor is $21,000,000 determined as follows:
Sales by Corporation A | $20,000,000 | |
Add: Corporation A's | ||
interest (20%) in | ||
Partnership P's sales | $ 2,000,000 | |
Less: Partnership P's | ||
Sales to | ||
Corporation A | 1,000,000 | 1,000,000 |
Denominator of | ____________ | ____________ |
Corporation A's Sales | ||
Factor | $21,000,000 | |
____________ |
The denominator of Corporation B's Sales Factor is $60,000,000 determined as follows:
Sales by Corporation B | $60,000,000 | |
Add: Corporation B's interest (80%) in Partnership P's sales | $ 8,000,000 | |
Less: Intercompany sales between Partnership P and Corporation B | 8,000,000* | -0- |
____________ | ____________ | |
Denominator of Corporation B's Sales Factor | $60,000,000 | |
____________ | ||
*Not to exceed taxpayer's interest in Partnership P's sales. |
Corporation A | $20,000,000 | |
Corporation B | 80,000,000 | |
Partnership P: | ||
To Corporation A | $ 3,000,000 | |
To Corporation B | 6,000,000 | $10,000,000 |
To Corporation X | 1,000,000 |
The denominator of Corporation A's Sales Factor is $20,200,000 determined as follows:
Sales by Corporation A | $20,000,000 | |
Add: Corporation A's interest in Partnership P's sales to nonpartner X Corporation (20% x $1,000,000) | 200,000 | |
Corporation A's interest in Partnership P's sales to Partners (20% x $9,000,000) | $ 1,800,000 | |
Less: Intercompany sales from Partnership P to Corporation A | $ 1,800,000* | -0- |
____________ | ____________ | |
Denominator of Corporation A's Sales Factor | $20,200,000 |
The denominator of Corporation B's Sales Factor is $82,000,000 determined as follows:
Sales by Corporation B | $80,000,000 | |
Add: Corporation B's interest in Partnership P's sales to nonpartner X Corporation (80% x $1,000,000) | 800,000 | |
Corporation B's interest in Partnership P's sales to Partners (80% x $9,000,000) | $ 7,200,000 | |
Less: Intercompany Sales from Partnership P to Corporation B | $ 6,000,000 | 1,200,000 |
____________ | ____________ | |
Denominator of Corporation B's Sales Factor | $82,000,000 |
61 Pa. Code § 153.29
The provisions of this § 153.29 issued under section 408(a) of the Tax Reform Code of 1971 (72 P. S. § 7408(a)).