HRS §235-122 apply to this section

A resident shareholder of an S corporation is subject to tax on the shareholder’s pro rata share of the (b) S corporation’s income from whatever source derived. A nonresident shareholder of an S corporation is subject to tax on the shareholder’s pro rata share of (c) the S corporation’s Hawaii source income. Shareholders of an S corporation shall be subject to tax on their pro rata shares of S corporation (d) income whether or not the S corporation is required to file a return. An S corporation shall determine Hawaii source income by allocation and apportionment under the (e) Uniform Division of Income for Tax Purposes Act, sections 235-21 to 235-39, HRS, if and to the extent that: The S corporation derives income from business activity both within and without this State, (1) The S corporation’s business activity is taxable in both this State and another jurisdiction, (2) and The income is not derived from the rendering of purely personal services. (3) Otherwise, an S corporation shall determine Hawaii source income by allocation and separate accounting pursuant to section 235-5, HRS, and section 18-235-5-02. For an S corporation incorporated in Hawaii, Hawaii source income includes income that is allocated or apportioned to any jurisdiction in which the S corporation is not taxable. An S corporation return made pursuant to section 235-128, HRS, shall report the gross income, (f) gains, losses, deductions, and credits from whatever source derived, and each shareholder’s pro rata share of those items. The S corporation also shall report each shareholder’s pro rata share of income, gains, losses, deductions, and credits from sources within the State.