North Dakota Administrative Code › Title 81 - Tax Commissioner › Article 81-03 - Income Taxes and Privilege Taxes Based on Income › Chapter 81-03-09 - Division of Income › Section 81-03-09-04 - Two or more businesses of a single taxpayer

Current through Supplement No. 393, July, 2024
A taxpayer may have more than one "trade or business". In
				  such cases, it is necessary to determine the business income attributable to
				  each separate trade or business.
The income of each business is then apportioned by an
				  apportionment formula which takes into consideration the instate and outstate
				  factors which relate to the trade or business the income of which is being
				  apportioned.
The determination of whether the activities of the taxpayer
				  constitute a single trade or business or more than one trade or business will
				  turn on the facts in each case. In general, the activities of the taxpayer will
				  be considered a single business if there is evidence to indicate that the
				  segments under consideration are integrated with, dependent upon, or contribute
				  to each other and the operations of the taxpayer as a whole. The following
				  factors are considered to be good indicia of a single trade or business, and
				  the presence of any of these factors creates a strong presumption that the
				  activities of the taxpayer constitute a single trade or business:
1.
Same type of business.
A
				taxpayer is generally engaged in a single trade or business when all of its
				activities are in the same general line. For example, a taxpayer which operates
				a chain of retail grocery stores will almost always be engaged in a single
				trade or business.
2.
Steps
				in a vertical process.
A taxpayer is almost always engaged in a single
				trade or business when its various divisions or segments are engaged in
				different steps in a large, vertically structured enterprise. For example, a
				taxpayer which explores for and mines copper ores; concentrates, smelts, and
				refines the copper ores; and fabricates the refined copper into consumer
				products is engaged in a single trade or business, regardless of the fact that
				the various steps in the process are operated substantially independent of each
				other with only general supervision from the taxpayer's executive offices.
3.
Strong centralized
				management.
A taxpayer which might otherwise be considered as engaged in
				more than one trade or business is properly considered as engaged in one trade
				or business when there is a strong central management, coupled with the
				existence of centralized departments for such functions as financing,
				advertising, research, or purchasing. Thus, a corporation may properly be
				considered as engaged in only one trade or business when the central executive
				officers are normally involved in the operations of the various divisions and
				there are centralized offices which perform for the divisions the normal
				matters which a truly independent business would perform for itself, such as
				accounting, personnel, insurance, legal, purchasing, advertising, or financing.
General Authority: NDCC
					 57-38-56
Law Implemented: NDCC
					 57-38.1-01(1),
					 57-59-01
					 (art.IV(1)(a))