California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 2.5 - Personal Income Tax (Taxable Years Beginning After 12-31-54) › Subchapter 11 - Gross Income of Nonresidents › Section 17951-4 - *** Income from a Business, Trade or Profession

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) If a nonresident's business, trade or
				  profession is carried on entirely without the state, no portion of the net
				  income therefrom is derived from sources within this state. If, on the other
				  hand, the nonresident's business, trade or profession is conducted wholly
				  within the state, the entire net income therefrom is derived from sources
				  within this state.
(b) If a
				  nonresident's business, trade or profession is conducted partly within and
				  partly without the state, and the part within the state is so separate and
				  distinct from and unconnected with the part without the state such that the
				  respective business activities are not part of a unitary business, trade or
				  profession, only the net income from the business, trade or profession within
				  the state is derived from sources within this state. Thus, if a nonresident
				  owns a hotel in California and an unrelated manufacturing business elsewhere,
				  and is not significantly involved in the management of the hotel, only the net
				  income from the hotel in California is derived from sources within this
				  state.
(c) If a nonresident's
				  business, trade or profession is a sole proprietorship which carries on a
				  unitary business, trade, or profession within and without the state, the amount
				  of net income derived from sources within this state shall be determined in the
				  manner described below.
(1) The total
				  business income of the unitary business shall be determined by subtracting from
				  the gross income of the unitary business those deductions allowed by the law
				  (See Articles 6 and 9 of Chapter 3 (Section
				  17201,
				  Revenue and Taxation Code, and following)) which are attributable to that
				  unitary business. If expenses relate to both business income and other income,
				  the expenses shall be assigned to the respective income amounts as provided in
				  Title 18, Cal. Code Regs., §
											25120(d).
(2) The amount of such business income
				  derived from sources within this state shall be determined in accordance with
				  the provisions of the apportionment rules of the Uniform Division of Income for
				  Tax Purposes Act, Sections
				  25120 to
				  25139,
				  inclusive, Revenue and Taxation Code, and the regulations thereunder, except as
				  otherwise provided in subsection (g), below, relating to professional service
				  organizations.
(3) The source of
				  net income which is not business income shall be determined in accordance with
				  the sourcing rules of Sections
				  17951
				  through
				  17955,
				  Revenue and Taxation Code, and the regulations thereunder, and not by reference
				  to the nonbusiness allocation rules of the Uniform Division of Income for Tax
				  Purposes Act, Sections
				  25120
				  to
				  25139,
				  inclusive, Revenue and Taxation Code, and the regulations
				  thereunder.