Alaska Administrative Code › Title 15 - Revenue › Chapter 20 - Alaska Net Income Tax › Article 3 - Corporate Net Income Tax; Combination and Apportionment Rules › 15 AAC 20.300 - Combination and apportionment

Current through May 31, 2024
(a) A taxpayer that
				is not part of a unitary business and that has income from business activity or
				other sources taxable both inside and outside the state shall allocate and
				apportion its worldwide net income as provided in
				AS
				43.20.142.
(b) A taxpayer that is part of a unitary
				business that has income from business activity or other sources both inside
				and outside the state shall use the worldwide combined method of reporting and
				apportionment as provided in
				AS
				43.20.031(i) and
				AS
				43.20.142, except as specified in
				AS
				43.20.145.
(c) A taxpayer that is engaged in a unitary
				business with another corporation that is subject to
				AS
				43.20.144 is also subject to
				AS
				43.20.144 and may not file a water's edge
				report or return under
				AS
				43.20.145.
(d) Federal taxable income subject to
				apportionment for a domestic corporation that is a taxpayer or is included in
				the taxpayer's combined report is taxable income before net operating loss
				determined under the Internal Revenue Code as excepted to or modified by AS
				43.20.
(e) Except as provided in
				(f) of this section, federal taxable income subject to apportionment for a
				foreign corporation that is a taxpayer or is included in the taxpayer's
				combined report is taxable income before net operating loss determined under
				the Internal Revenue Code as excepted to or modified by AS 43.20 and this
				section as if the corporation were a domestic corporation. The taxpayer shall
				determine taxable income before net operating loss by adjusting financial
				statement income according to generally accepted accounting principles that are
				used in the United States to conform to the provisions of the Internal Revenue
				Code.
(f) A taxpayer may elect to
				report financial statement income, modified by AS 43.20 and this section, as
				federal taxable income under (e) of this section for foreign corporations
				included in its combined report. A taxpayer may elect to report earnings and
				profits required to be reported on the "Information Return of U.S. Person With
				Respect to Certain Foreign Corporations," as modified by AS 43.20 and this
				section, as federal taxable income under (e) of this section for all controlled
				foreign corporations included in its combined report. The basis of reporting
				income under (e) of this section, including the methods allowed under this
				subsection, is the taxpayer's overall method of reporting federal taxable
				income. The taxpayer shall make an election on a return filed under AS 43.20
				and disclose the overall method of reporting federal taxable income of each
				group of foreign corporations.
(g)
				A taxpayer shall consistently apply a single overall method of reporting
				federal taxable income in its combined report for controlled foreign
				corporations and a single overall method of reporting federal taxable income
				for foreign corporations that are not controlled foreign corporations. The
				members of a consolidated group of Alaska taxpayers shall use the same overall
				methods of reporting federal taxable income for all controlled foreign
				corporations and for all foreign corporations that are not controlled foreign
				corporations included in the combined report. Taxpayers joining in the making
				of an Alaska consolidated return for the first time shall apply the method of
				reporting federal taxable income established by the parent taxpayer, if any. If
				there is no parent taxpayer, the consolidated group shall use the method of
				reporting federal taxable income in place for the taxpayer having the largest
				presence in this state during the initial year of consolidation, as measured by
				the property numerator. A taxpayer entering an existing Alaska consolidated
				group shall conform to the existing group's methods of reporting federal
				taxable income. A corporation that ceases to be subject to AS 43.20 and in a
				subsequent tax year again becomes subject to AS 43.20 shall apply the methods
				of reporting federal taxable income that applied during the last previous tax
				period in which it was subject to AS 43.20 unless it is required by this
				subsection to use other methods established by a pre-existing consolidated
				group of Alaska taxpayers.
(h)
				Notwithstanding the portion of (i) of this section barring a taxpayer from
				changing an overall method of reporting federal taxable income without the
				prior approval of the department, a taxpayer may change its overall method of
				reporting federal taxable income in its return for its first taxable year
				beginning on or after January 1, 1998, to conform to this section without the
				prior approval of the department. The taxpayer shall include in its return:
(1) a declaration that the taxpayer is
				changing its method of reporting federal taxable income to conform to this
				section;
(2) a disclosure of the
				taxpayer's new and old methods of reporting federal taxable income by group or
				by company if all members of the group did not apply the same method;
				and
(3) a calculation of the
				adjustment required under (i) of this section for each member of the combined
				group.