Example: Corporation A’s distributive share of income in partnership P is 20 per cent

Corporation A manufactures and sells toys in the seven western states. Partnership P operates farms within and without this State. Both corporation A and partnership P earn exclusively business income, except for distributions from Partnership P. Corporation A’s business income for the year is $1,000,000 and partnership P’s income is $800,000 for the same year. Because corporation A and partnership P are engaged in two different trades or businesses, corporation A shall apportion its $1,000,000 income on the basis of its own apportionment formula. Partnership P shall apportion its business income of $800,000 on the basis of its own apportionment formula. Corporation A’s apportionment factors are determined without regard to Partnership P’s apportionment factors, and vice versa. Assume that corporation A’s apportionment percentage determined under section 18-235-29-01 is 35 per cent, and that partnership P’s apportionment percentage is 10 per cent. Partnership P’s Hawaii income is 10 per cent of the income from its farming business ($80,000 = 10 per cent x $800,000). Corporation A is taxable in this State upon 35 per cent of the income from its toy manufacturing business ($350,000 = 35 per cent x $1,000,000) plus its full distributive share of the partnership income attributed to this State ($16,000 = 20 per cent x $80,000), or $366,000.