42.26.312    TREATMENT OF DIVIDENDS FOR PURPOSES OF A WATER'S-EDGE COMBINED RETURN

(1) Eighty percent of the dividends apportionable under this rule are to be excluded from income subject to apportionment where:

(a) dividends received from foreign corporations, taxable for federal purposes, are considered to be income subject to apportionment;

(b) amounts included in income under sections 951 through 962 and 964 of the IRC are considered taxable foreign dividends;

(c) the after-tax net income of United States corporations excluded from eligibility as affiliated corporations under ARM 42.26.311 and possession corporations defined in sections 931 through 934 and 936 of the IRC, is considered to be a dividend for purposes of this rule;

(i) In calculating the after tax net income, where the corporation is included in a federal consolidated income tax return, the consolidated tax liability shall be apportioned among the members of the group in accord with the ratio which that portion of the consolidated taxable income attributable to each member of the group having positive taxable income, bears to the total consolidated taxable income of all companies in the consolidated group having positive taxable income. For purposes of this calculation, the consolidated tax liability shall be the tax liability calculated on the federal consolidated income tax return after application of federal tax credits.

(ii) Where such corporations have no net income for the taxable year in question, the amount to be included as dividends received from corporations outside the United States shall equal zero.

(d) dividends between members in the water's-edge combinable group are eliminated from the calculation of apportionable income;

(e) deemed dividend distributions pursuant to section 78 of the IRC are excluded from the calculation of apportionable income; and

(f) the limited inclusion of dividend income specified in this rule is in lieu of attempts to allocate expenses attributable to the generation of such dividend income. For apportionment factor purposes only the dividend income considered to be apportionable income shall be included in the receipts factor numerator or denominator as appropriate.

 

History: 15-31-501, MCA; IMP, 15-31-325, MCA; NEW, 1988 MAR p. 278, Eff. 2/12/88; TRANS, from 42.26.226 and AMD, 2001 MAR p. 2469, Eff. 12/21/01; AMD, 2011 MAR p. 2053, Eff. 9/23/11; AMD, 2017 MAR p. 2328, Eff. 1/1/18.