Special rules for nonresident individual members and corporate members of pass-through entities

# (a)

Nonresident individual members of pass-through entities. — In determining the tax liability under Chapter 11 of this title of a nonresident individual member of a pass-through entity, there shall be included in such member’s modified Delaware source income such member’s distributive share of the items of income, gain, loss and deduction of such pass-through entity entering into such member’s federal adjusted gross income, as modified by § 1106 of this title, as is derived from sources within this State as determined by the application of § 1124 of this title to such member in the same manner as if such items had been realized directly by such member.

# (b)

Nonresident individual members’ modifications. — Any modification described in subsection § 1106(a), (b) or (c) of this title which relates to an item of pass-through entity income, gain, loss or deduction shall be made in accordance with a nonresident individual member’s distributive share, for federal income tax purposes, of the item to which the modification relates, but limited to that portion of such item as is derived from or connected with sources in this State.

# (c)

Corporate members of pass-through entities. — A corporation that is a member of a pass-through entity doing business or having real or tangible personal property in this State shall be subject to the provisions of Chapter 19 of this title; provided, however, that this subsection shall not be interpreted as precluding a corporation that is a member of a pass-through entity from qualifying for exemption from taxation under Chapter 19 pursuant to § 1902(b)(8) of this title.

# (d)

Allocation and apportionment of income. — In determining the tax liability under Chapter 19 of this title of a corporation that is a member of a pass-through entity doing business or having real or tangible personal property in this State:

Such corporation’s federal taxable income shall be increased or decreased, as the case may be, by its distributive share of such pass-through entity’s items, if any, described in § 1903(a) of this title;

Such corporation’s distributive share of any item of such pass-through entity that is described in any of § 1903(b)(1) through (5) of this title shall be included in the entire net income of such corporation only if such item is properly allocable to this State under such § 1903(b) of this title; and

In applying § 1903(b)(6) of this title to such corporation,

# (1)

The entire business of such corporation shall not be treated as having been transacted or conducted within this State if any part of the business of such pass-through entity was transacted or conducted outside this State; and

# (2)

The 3 ratios described in such § 1903(b)(6) of this title of such corporation shall be determined by including in each such ratio such corporation’s distributive share of each relevant item of such pass-through entity.

In applying § 1903(b)(7) of this title to such corporation, the ratio described in such § 1903(b)(7) of this title of such corporation shall be determined by including in such ratio the corporation’s distributive share of each relevant item of such pass-through entity.