Nebraska Administrative Code › Topic - REVENUE, DEPARTMENT OF › Title 316 - NEBRASKA DEPARTMENT OF REVENUE › Chapter 24 - CORPORATION INCOME TAX › Section 316-24-315 - SALES FACTOR; BUSINESS ENTITIES AS OWNERS IN A PARTNERSHIP OR JOINT VENTURE

Current through June 17, 2024
315.01 A business entity which is required to
				apportion income and has income from a partnership or joint venture
				(partnership), will calculate its Nebraska sales factor under this regulation.
				The entire federal taxable income of a corporate taxpayer is subject to
				apportionment in this state. Nebraska apportionable income includes any income
				or loss received due to a business entity's interest in a partnership. If
				neither the corporation nor the partnership is subject to tax in another state,
				the entire federal taxable income of the business entity is subject to Nebraska
				tax and will not be apportioned.
315.02 When a business entity is an owner in
				a partnership, the business entity's apportionment factor must be calculated
				based on whether or not the business entity and partnership are considered
				unitary. A unitary determination must be made for each business entity.
315.02A When a partnership has sufficient
				contacts with a business entity to be considered unitary if it were a
				corporation, the partnership will be considered unitary with the business
				entity regardless of the ownership share of the business entity.
315.02A(1) When a business entity and a
				partnership are considered unitary, the sales factor of the business entity
				must include the business entity's share of the partnership's sales determined
				by multiplying the partnership's sales factor numerator and denominator by the
				business entity's ownership percentage.
315.02A(2) Intercompany sales will be
				eliminated using calculations made in the following order:
315.02A(2)(a) Intercompany sales will be
				eliminated based on the percentage of the business entity's ownership of the
				partnership; except that sales from the partnership to the business entity or
				members of the unitary group will be eliminated only to the extent of the
				business entity's or unitary group's share of total sales of the partnership
				(See
				Reg-24-315.02A(4)(4));
				and
315.02A(2)(b) If all of the
				sales from the partnership to the business entity or unitary group are not
				eliminated based on
				Reg-24-315.02A(2)(a)(2)(a),
				the remaining sales in each state will be the same percentage of the sales in
				the state before any eliminations. (See
				Reg-24-315.02A(6)(6))
315.02A(2)(c) Any partnership agreements that
				identify particular activities to a specific owner will not be considered when
				determining the income of each owner subject to tax in Nebraska.
315.02A(3) Example 1- Facts. Xis a
				multi state corporation domiciled outside Nebraska and is an owner of AX, a
				multistate partnership. X has a 40 percent ownership interest in AX. X and AX
				would be considered unitary if both were corporations. Corporation X has total
				sales of $10,000,000, $2,000,000 of which were made to Partnership AX, and
				Nebraska sales of $5,000,000, $400,000 of which were made to Partnership AX.
				Partnership AX has sales of $3,000,000, $700,000 of which were to Corporation
				X, and total Nebraska sales of $40,000.
315.02A(4) Example 1 - Denominator
				Calculation. The sales factor denominator to be used in the combined report of
				income with the corporate return is calculated as follows-
Sales Factor Denominator
Sales of Corporation X
$10,000,000
Sales of Partnership AX
$1,200,000 ($3,000,000 sales X 40%
								ownership)
Total sales
$11,200,000
Minus intercompany sales
								eliminations
Corporation X sales to AX
($800,000) ($2,000,000 sales X 40%
								ownership)
Partnership AX sales to X
($700,000) (Actual sales, not limited)
Denominator
$9,700,000
315.02A(5) Example 1 - Numerator calculation.
				The sales factor numerator to be used in the combined report of income with the
				corporate return is calculated as follows-
Sales Factor Numerator
Nebraska sales of Corporation X
$5,000,000
Partnership AX
$6,500 (see computation in
								315.02A(6)
								below)
Minus intercompany sales
								eliminations
Corporation X sales to AX
($160,000) ($400,000 Nebraska sales X 40%
								ownership)
Partnership AX sales to X
0 (after eliminations)
Numerator
$4,846,500
315.02A(6) Example 1 - Numerator Calculation
				when Partnership's Sales Are Not Totally Eliminated. Since Corporation X's
				share of Partnership AX's total sales were not totally eliminated in the
				denominator, the Nebraska sales by Partnership AX are determined by multiplying
				Partnership AX's remaining sales by its percentage of Nebraska sales (before
				any eliminations) as shown below-
Numerator Calculation when Partnership's
								Sales Are Not Totally Eliminated
Corporation X's share of Partnership AX's total
								sales
$1,200,000 ($3,000,000 sales X 40%
								ownership)
Partnership AX sales to Corporation X eliminated in
								the denominator
$700,000
Partnership AX sales not eliminated
$500,000 ($1,200,000 - $700,000)
Partnership AX % of Nebraska sales
1.30% ($40,000 Nebraska sales / $3,000,000
Partnership AX Nebraska sales eliminated
$6,500 ($500,000 X 1.30%)