Nebraska Statutes 77-2734.06. Income tax; unitary business; apportionment of income
(1) The entire federal taxable income of a unitary business operating both within and without this state is presumed to be subject to apportionment. Other than for adjustments required to be made under the Nebraska Revenue Act of 1967, for any income that is claimed to be not subject to apportionment, a taxpayer needs to show by a preponderance of the evidence (a) that the income is not a part of the unitary business and (b) that the taxpayer has not claimed the same income is part of the unitary business and subject to apportionment in another state with substantially the same law on apportionability of income.
Terms Used In Nebraska Statutes 77-2734.06
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Business: means any activity engaged in by any person or caused to be engaged in by him or her with the object of gain, benefit, or advantage, either direct or indirect. See Nebraska Statutes 77-2701.07
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means all corporations and all other entities that are taxed as corporations under the Internal Revenue Code. See Nebraska Statutes 77-2734.04
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Federal taxable income: means the corporate taxpayer's federal taxable income as reported to the Internal Revenue Service or as subsequently changed or amended. See Nebraska Statutes 77-2734.04
- State: means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country or political subdivision thereof. See Nebraska Statutes 77-2734.04
- Tax Commissioner: means the Tax Commissioner of the State of Nebraska. See Nebraska Statutes 77-2701.40
- Taxable income: means federal taxable income as adjusted and, if appropriate, as apportioned. See Nebraska Statutes 77-2734.04
- Taxpayer: means any person subject to a tax imposed by sections 77-2701 to 77-2713. See Nebraska Statutes 77-2701.41
- Unitary business: means a business that is conducted as a single economic unit by one or more corporations with common ownership and shall include all activities in different lines of business that contribute to the single economic unit. See Nebraska Statutes 77-2734.04
- Use: means the exercise of any right or power over property incident to the ownership or possession of that property, except that use does not include the sale of that property in the regular course of business or the exercise of any right or power over property which will enter into or become an ingredient or component part of property manufactured, processed, or fabricated for ultimate sale at retail. See Nebraska Statutes 77-2701.42
- Year: shall mean calendar year. See Nebraska Statutes 49-801
(2) There shall be subtracted from federal taxable income any income that the taxpayer has shown is not subject to apportionment under subsection (1) of this section. The amount subtracted under this section shall be reduced, but not below zero, by a portion of the interest expense as determined under subsection (3) of this section and any expense incurred in the production of the income described in this section.
(3) The interest expense for the reduction required in subsection (2) of this section shall be determined by dividing the taxpayer’s average investment in the activities producing the income by the taxpayer’s average total assets and multiplying such ratio by the total interest deduction allowed in the computation of federal taxable income.
(4) For the purposes of this section, investment in activities producing the income described in this section shall mean the tax basis of the assets, both tangible and intangible, that are used in the activities or are the basis of the receipt of the described income.
(5) Whenever it is necessary to properly reflect the ratio of investment in the activities to total assets, the Tax Commissioner may permit or require the computation of the average provided for in subsection (3) of this section using amounts from interim balance sheets.
(6) The corporation may use, in lieu of the tax basis for the computation in subsection (3) of this section, the amounts from a balance sheet included with the federal return or as required to be reported to federal or state regulatory agencies if (a) such amounts are not materially different from tax basis, (b) the amounts are prepared consistently from year to year, and (c) absent a change in circumstances, the amounts are consistently used by the corporation from year to year. The Tax Commissioner may require a corporation to use the alternative amounts in order to maintain consistency or may require the corporation to show that the amounts used do not materially differ from the tax basis.