Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › 1998-1 - Comprehensive Corporation Income Tax Regulations › Rule 26-51-701 - MULTISTATE BUSINESS INCOME › Rule 2.26-51-701 - Business versus Nonbusiness Income

Current through Register Vol. 49, No. 6, June, 2024
"Business income" means income arising from transactions
					 and activities in the regular course of a taxpayer's trade or business.
					 Business income also includes income from tangible and intangible property if
					 the acquisition, management and disposition (sale, exchange, etc.) of such
					 property is an integral part of the taxpayer's regular trade or business
					 operations.
"Nonbusiness income" means all income other than business
					 income.
The classification of income by labels, such as
					 manufacturing income, compensation for services, sales income, interest,
					 dividends, rents, royalties, gains, operating income, nonoperating income,
					 etc., should not be the sole factor used in determining whether income is
					 business or nonbusiness income. Income of any type or class and from any source
					 is business income if it arises from transactions and activity occurring in the
					 regular course of a trade or business. Accordingly, the critical element in
					 determining whether income is "business income" or "nonbusiness income" is the
					 identification of the transactions and activity which are the elements of a
					 particular trade or business. In general, all transactions and activities of
					 the taxpayer which are dependent upon or contribute to the operations of the
					 taxpayer's economic enterprise as a whole constitute the taxpayer's trade or
					 business and will be transactions and activity arising in the regular course
					 of, and will constitute integral parts of, a trade or business.
Rental income from real and tangible property is business
					 income if the property generating the rental income is used in the taxpayer's
					 trade or business and is includable in the property factor.
Gain or loss from the sale, exchange or other disposition
					 of real property or of tangible or intangible personal property constitutes
					 business income if the property, while owned by the taxpayer, was used in the
					 taxpayer's trade or business. However, if the property was utilized for the
					 production of nonbusiness income before its sale, exchange or other
					 disposition, the gain or loss will constitute nonbusiness income.
Interest income is business income where the intangible
					 receiving the interest arises out of or was created in the regular course of
					 the taxpayer's trade or business operations or where the purpose for acquiring
					 and holding the intangible is related to or incidental to such trade or
					 business operations.
Dividends are business income where the stock earning such
					 dividends arises out of or was acquired in the regular course of the taxpayer's
					 trade or business operations or where the purpose of acquiring and holding the
					 stock is related to or incidental to such trade or business operations.
Patent and copyright royalties are business income where
					 the patent or copyright receiving the royalties arises out of or was created in
					 the regular course of the taxpayer's trade or business operations or where the
					 purpose for acquiring and holding the patent or copyright is related to or
					 incidental to such trade or business operations. For intangible income from
					 related parties, see Income Tax Regulation 1996-3.