Amends the definition of state net income in GS 105-130.2(5c) to clarify that a corporation’s net income includes the following: (1) the share of any income apportionable to this state for each of the combined groups of which it is a member, (2) the share of any income apportionable to this state of a distinct business activity conducted inside or outside the state wholly by the taxpayer, (3) the income from a business conducted wholly by the taxpayer entirely within this state, (4) the nonapportionable income or loss allocable to this state. Amends GS 105-130.4 to provide additional defined terms. Amends GS 105-130.4(i), adding that the apportionable income of a corporation that is part of a combined group engaged in a unitary business is apportioned to this state. Rewrites GS 105-130.4(l)(2) to clarify that sales of tangible personal property are in the state if the property is received in the state by a purchaser other than the US government. Provides additionally that a sale of tangible personal property is in the state if the property is shipped from a place in this state and the purchaser is in the US government or the taxpayer is not taxable in the state of the purchaser.
Enacts new GS 105-130.4A to provide for the apportionment of income of a combined group. Provides that a member’s share of the apportionable income of a combined group’s unitary business apportioned to this state is the product of two specified items. Provides that members of a combined group may elect to determine the combined group’s apportionable income pursuant to water’s edge election under GS 105-130.4B.
Enacts new GS 105-130.4B, allowing members of a combined group to elect to disregard the income and apportionment factors of a member of a combined group that is a foreign corporation that conducts 80% or more of its business activity outside the United States and outside of a tax haven country. Includes additional details about the election.
Rewrites GS 105-130.14 by adding an additional subsection providing that a corporation, which is part of an affiliated group engaged in a unitary business, must file a report for the combined group containing the combined net income of the combined group and any other information the Secretary may require. Provides that the use of a combined report does not disregard the separate identities of the members of the combined group. Provides that each member of the combined group is responsible for tax based on taxable income or loss apportioned or allocated to the state.
Makes other technical and conforming changes. Effective for taxable years beginning on or after January 1, 2012.