12 CSR 10-2.050 - Elective Division of Income
(1)
Authority for Rule. This rule is being issued under the general regulatory
powers granted to the director of revenue in section
143.961, RSMo which became
effective on January 1, 1973.
(2)
Applicability and Scope of Rule. This rule is intended as an interpretive
guideline in the application of section
143.461, RSMo and it sets forth
the fundamental requirements for a petition for permission to use a special
method of allocation under section 143.461.2., RSMo. This rule applies to all
taxable years beginning on or after January 1, 1973, and it also applies with
respect to all fiscal year taxable periods which contained parts of each of the
years 1972 and 1973 for those corporate taxpayers which had properly elected to
determine their tax and taxable income under the provisions of sections
143.011-143.996, RSMo. Chapter 143, RSMo and the corresponding regulations
shall continue in force and effect with respect to all other taxable
years.
(3) Definitions. As used in
this rule-
(A) The term director, except as
specifically otherwise provided in this rule, shall mean the director of
revenue or his/her duly authorized agent or designee; and
(B) The term Missouri taxable income from all
sources shall mean so much of the federal taxable income of the corporation for
the taxable year increased or decreased, as the case may be, by the
modifications provided for in sections
143.121 and
143.141, RSMo. There shall be
subtracted, to the extent included in federal taxable income, corporate
dividends from sources within Missouri and there also shall be subtracted the
federal income tax deduction provided for in section 143.171.1., RSMo. The
amount of dividends deducted shall depend on the apportionment method selected.
If single factor apportionment is selected, the corporation shall deduct
dividends based on whether they are Missouri source dividends or non-Missouri
source dividends. This also applies to special methods selected.
1. If the three (3)-factor apportionment
method is selected, the dividend deduction shall be based on the apportionment
percentage calculated before taking into account any allowable nonbusiness
income. Business dividends, as defined by the Multistate Tax Compact, are to be
multiplied by the apportionment factor in order to calculate the deduction.
Also, a corporation with a commercial domicile in Missouri can deduct any
nonbusiness dividends as defined by the compact.
2. The director of revenue may adopt
procedures for verifying the actual amount of dividends deducted and may
prescribe what documents are necessary for verification.
(4) Required Use of Statutory
Methods. A corporate taxpayer shall determine income applicable to this state
for the taxable year by either-a) multiplying the total Missouri taxable income
from all sources for the taxable year by the fraction determined under section
143.451, RSMo, or b) allocating
and apportioning the total Missouri taxable income from all sources for the
year in the manner determined under section
32.200 article IV. 1.-17., RSMo
and by subtracting from the amount so determined, its deduction, if any, for a
prior year's federal income tax under section 143.171.2., RSMo. The preceding
sentence shall not apply to those corporations which have received written
permission from the director of revenue him/herself to-a) use another method of
allocation pursuant to section
143.461, RSMo for the taxable
year, or b) use another method of allocation and apportionment pursuant to
section 32.200 article IV.18., RSMo if
the other approved method is applicable to the taxpayer year and the corporate
taxpayer actually uses the other approved method for the taxable year. A
corporate taxpayer which uses an authorized method of determining income
applicable to this state for the taxable year shall not be entitled to
subsequently change to another method with respect to that same taxable
year.
(5) Request for Permission to
Use Other Method. A corporation may make a written petition to the director for
permission to determine income applicable to this state for the taxable year by
use of its own allocation method if the books and records of the taxpayer are
kept in a manner as to show such other method of allocation between this state
and other states involved, of income from transactions partly within and partly
without this state, including gross income and deductions applicable to gross
income, and the method does show the income applicable to this state, including
gross income and deductions applicable to gross income.
(6) Petition for Use of Other Approved
Method. A petition for permission to use a method of allocation disclosed in
the taxpayer's books and records shall be typewritten, delivered to the
director of revenue in Jefferson City, Missouri at least sixty (60) days before
the end of the taxable year with respect to which the permission is sought,
shall be made on the best information, knowledge and belief of the petitioner
and shall be subscribed under a declaration that it is made under penalties of
perjury. The petition shall contain the name, federal identification number and
address of the principal place of business of the petitioner; the address of
each location at which the taxpayer conducts business and the nature of the
business conducted at each location; the place(s) at which the books and
records of the taxpayer are located; the beginning and ending dates of the
first taxable year with respect to which permission to use another method is
sought; a detailed explanation of the allocation method disclosed in the
corporation's books and records; a clear demonstration of the application of
the method by showing each item of income and expense for the taxable year
immediately preceding the taxable year with respect to which permission is
sought, the states to which income and expense are allocated, and the amounts
of each item of income and expense allocated to each state; and other data and
information which the corporate taxpayer would urge upon the director in
his/her consideration of the petition.
(7) Granting of Permission to Use Other
Approved Method. If, upon the basis of the facts contained in the petition,
other facts which may come to the attention of the director of revenue and all
hearings, if any, held with respect to the petition, the director of revenue
shall find that the allocation method disclosed in the books and records of the
corporate taxpayer does show the income applicable to this state including
gross income and deductions applicable to gross income, the director of revenue
him/herself or his/her specifically designated representative shall send
written notification over his/her personal signature to the corporation at
least thirty (30) days prior to the last day on which the corporation's return
for that taxable year is required to be filed (determined with regard to
extensions of time for filing) that it may use that method as long as the
method shows the income applicable to this state, including gross income and
deductions applicable to gross income. No permission shall be deemed to have
been granted unless it is granted by the director of revenue him/herself or
his/her specifically designated representative in writing over his/her personal
signature. The mere use or continued use by the corporate taxpayer of a special
method without specific disapproval by the director of revenue or his/her
specifically designated representative shall not constitute the granting of
permission. A corporate taxpayer which does not receive explicit written
permission from the director of revenue him/herself or his/her specifically
designated representative as provided shall be required to determine income
applicable to this state under section (4) of this rule.
(8) Revocation of Prior Approved Method. A
corporation having previously received explicit written permission from the
director of revenue him/herself of his/her specifically designated
representative to use a special method of allocation shall cease using that
method whenever that method ceases to show income applicable to this state,
including gross income and deductions applicable to gross income and shall
further cease using that method whenever the director of revenue him/herself or
his/her specifically designated representative finds and notifies the
corporation in writing on or before ninety (90) days before the end of the
taxable year that the method does not so show. The revocation of a prior
approved method shall not preclude the taxpayer from petitioning to the
director of revenue, as prescribed, for permission to use some other method of
allocation determined under its books and records.
(9) Failure to Timely Acquire Permission for
Other Approved Method or to Continue Use of a Prior Approved Method. The
failure, after a prior approved method has been revoked, to timely submit a
petition for permission to use another method or the failure to make a return
on a basis which has been approved by the director of revenue and which stands
unrevoked shall constitute an election by the taxpayer to determine income
applicable to this state by use of the method provided for in section (4) of
this rule. A corporation may use a method which had been approved by the
director of revenue for the taxable year only if the prior approved method was
applicable to the immediately preceding taxable year and the corporate taxpayer
used that other approved method in the immediately preceding taxable
year.
(10) Information Required to
be Submitted With Missouri Income Tax Return. For each taxable year with
respect to which a corporation files a Missouri income tax return determining
income applicable to this state by use of a special method approved by the
director of revenue, there shall be submitted with the return for that taxable
year the following items: a copy of the written notice bearing the signature of
the director of revenue him/herself where permission to use the other approved
method was granted and a statement indicating whether or not there has been a
material change in the business operations or accounting procedures from those
in existence in the first taxable year with respect to which the permission was
originally granted. The failure, refusal or inability of a corporation to
submit the items mentioned in the preceding sentence shall constitute an
election by the corporation to determine income applicable to this state by use
of the methods described in section (4) of this rule.
Notes
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