Cal. Code Regs. Tit. 18, § 25121 - Application of the Uniform Division of Income for Tax Purposes Act

(a) Definitions.

(1) "Taxpayer." The word "taxpayer" as used in these regulations is the same as defined in Section 23037 and the regulations thereunder.

(2) ";Apportionment" refers to the division of business income between states by the use of a formula containing apportionment factors.

(3) "Allocation" refers to the assignment of nonbusiness income to a particular state.

(4) "Business activity" refers to the transactions and activity occurring in the regular course of a particular trade or business of a taxpayer.

(b) Application of the Uniform Division of Income for Tax Purposes Act. Apportionment. If the business activity in respect to any trade or business of a taxpayer occurs both within and without this state, and if by reason of such business activity the taxpayer is taxable in another state, the portion of the net income (or net loss) arising from such trade or business which is derived from sources within this state shall be determined by apportionment in accordance with these regulations.

(c) Application of the Uniform Division of Income for Tax Purposes Act: Combined Report. If a particular trade or business is carried on by a taxpayer and one or more affiliated corporations, nothing in the Uniform Division of Income for Tax Purposes Act or in these regulations shall preclude the use of a "combined report" whereby the entire business income of such trade or business is apportioned in accordance with these regulations.

(d) Application of the Uniform Division of Income for Tax Purposes Act. Allocation. Any taxpayer subject to the taxing jurisdiction of this state shall allocate all of its nonbusiness income or loss within or without this state in accordance with these regulations.

(e) Consistency and Uniformity in Reporting. In filing returns with this state, if the taxpayer departs from or modifies the manner in which income has been classified as business income or nonbusiness income in returns for prior years, the taxpayer shall disclose in the return for the current year the nature and extent of the modification.

If the returns or reports filed by a taxpayer for all states to which the taxpayer reports under the Uniform Division of Income for Tax Purposes Act are not uniform in the classification of income as business or nonbusiness income, the taxpayer shall disclose in its return to this state the nature and extent of the variance.

Notes

Cal. Code Regs. Tit. 18, § 25121