IDAPA 35.01.01.344 — PRINCIPLES FOR DETERMINING THE EXISTENCE OF A UNITARY BUSINESS:

COMMONLY CONTROLLED GROUP OF BUSINESS ENTITIES (RULE 344).
Section 63-3027, Idaho Code
01.
In General. Separate corporations can be a part of a unitary business only if they are members of a
commonly controlled group.
(4-6-23)
02.
Commonly Controlled Group. A "commonly controlled group" means any of the following:
(4-6-23)
a.
A parent corporation and any one (1) or more corporations or chains of corporations, connected
through stock ownership (or constructive ownership) with the parent, but only if:
(4-6-23)
i.
The parent owns stock possessing more than fifty percent (50%) of the voting power of a least one
(1) corporation, and, if applicable,
(4-6-23)
ii.
Stock cumulatively possessing more than fifty percent (50%) of the voting power of each of the
corporations, except the parent, is owned by the parent, one (1) or more corporations described in Subparagraph
344.02.a.i., of this rule, or one (1) or more other corporations that satisfy the conditions of this subparagraph.
(4-6-23)
b.
Any two (2) or more corporations, if stock, possessing more than fifty percent (50%) of the voting
power of the corporations is owned, or constructively owned, by the same person.
(4-6-23)
c.
Any two (2) or more corporations that constitute stapled entities.
(4-6-23)
i.
For purposes of this paragraph, "stapled entities" means any group of two (2) or more corporations
if more than fifty percent (50%) of the ownership or beneficial ownership of the stock possessing voting power in
each corporation consists of stapled interests.
(4-6-23)
ii.
Two (2) or more interests are stapled interests if, by reason of form of ownership, restrictions on
transfer, or other terms or conditions, in connection with the transfer of one (1) of the interests the other interest or
interests are also transferred or required to be transferred.
(4-6-23)
d.
Any two (2) or more corporations, if stock possessing more than fifty percent (50%) of the voting
power of the corporations is cumulatively owned (without regard to the constructive ownership rules of Paragraph
344.05.a., of this rule) by, or for the benefit of, members of the same family. Members of the same family are limited
to an individual, the individual's spouse, parents, brothers, sisters, grandparents, children and grandchildren, and their
respective spouses.
(4-6-23)
03.
Elections and Terminations.
(4-6-23)
a.
If, in the application of Subsection 344.02 of this rule, a corporation is a member of more than one
(1) commonly controlled group of corporations, the corporation elects to be treated as a member of only the
commonly controlled group (or part thereof) with respect to which it has a unitary business relationship. If the
corporation has a unitary business relationship with more than one (1) of those groups, it elects to be treated as a
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.01
Idaho State Tax Commission
Income Tax Administrative Rules
Section 344
Page 58
member of only one (1) of the commonly controlled groups with respect to which it has a unitary business
relationship. This election remains in effect until the unitary business relationship between the corporation and the
rest of the members of its elected commonly controlled group is discontinued, or unless revoked with the approval of
the State Tax Commission.
(4-6-23)
b.
Membership in a commonly controlled group is to be treated as terminated in any year, or fraction
thereof, in which the conditions of Subsection 344.02 of this rule are not met, except as follows:
(4-6-23)
i.
When stock of a corporation is sold, exchanged, or otherwise disposed of, the membership of a
corporation in a commonly controlled group will not be terminated, if the requirements of Subsection 344.02 of this
rule are again met immediately after the sale, exchange, or disposition.
(4-6-23)
ii.
The State Tax Commission may treat the commonly controlled group as remaining in place if the
conditions of Subsection 344.02 of this rule are again met within a period not to exceed two (2) years.
(4-6-23)
04.
Controlled. A taxpayer may exclude some or all corporations included in a "commonly controlled
group" by reason of Paragraph 344.02.d., of this rule by showing that those members of the group are not controlled
directly or indirectly by the same interest, within the meaning of the same phrase in Section 482 of the Internal
Revenue Code. For purposes of this subsection, the term "controlled" includes any kind of control, direct or indirect,
whether legally enforceable, and however exercisable or exercised.
(4-6-23)
05.
Stock Ownership. Except as otherwise provided, stock is "owned" when title to the stock is
directly held or if the stock is constructively owned.
(4-6-23)
a.
An individual constructively owns stock that is owned by any of the following:
(4-6-23)
i.
The individual's spouse.
(4-6-23)
ii.
Children, including adopted children, of that individual or the individual's spouse, who have not
attained the age of twenty-one (21) years.
(4-6-23)
iii.
An estate or trust, of which the individual is an executor, trustee, or grantor, to the extent that the
estate or trust is for the benefit of that individual's spouse or children.
(4-6-23)
b.
Stock owned by a corporation, or a member of a controlled group of which the corporation is the
parent corporation, is constructively owned by any shareholder owning stock that represents more than fifty percent
(50%) of the voting power of the corporation.
(4-6-23)
c.
In the application of Paragraph 344.02.d., of this rule, (dealing with stock possessing voting power
held by members of the same family), if more than fifty percent (50%) of the stock possessing voting power of a
corporation is, in the aggregate, owned by or for the benefit of members of the same family, stock owned by that
corporation is to be treated as constructively owned by members of that family in the same ratio as the proportion of
their respective ownership of stock possessing voting power in that corporation to all of such stock of that
corporation.
(4-6-23)
d.
Except as otherwise provided, stock owned by a partnership is constructively owned by any
partner, other than a limited partner, in proportion to the partner's capital interest in the partnership. For this purpose,
a partnership is treated as owning proportionately the stock owned by any other partnership in which it has a tiered
interest, other than as a limited partner.
(4-6-23)
e.
In any case where a member of a commonly controlled group, or shareholders, officers, directors,
or employees of a member of a commonly controlled group, is a general partner in a limited partnership, stock held
by the limited partnership is constructively owned by a limited partner to the extent of its capital interest in the
limited partnership.
(4-6-23)
f.
In the application of Paragraph 344.02.d., of this rule (dealing with stock possessing voting power
held by members of the same family), stock held by a limited partnership is constructively owned by a limited partner
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.01
Idaho State Tax Commission
Income Tax Administrative Rules
Section 350
Page 59
to the extent of the limited partner's capital interest in the limited partnership.
(4-6-23)
06.
Terms. For purposes of the definition of a commonly controlled group, each of the following
applies:
(4-6-23)
a.
"Corporation" means a corporation as defined in Section 63-3006, Idaho Code.
(4-6-23)
b.
"Person" means a person as defined in Section 63-3005, Idaho Code.
(4-6-23)
c.
"Voting power" means the power of all classes of stock entitled to vote that possess the power to
elect the membership of the board of directors of the corporation.
(4-6-23)
d.
"More than fifty percent (50%) of the voting power" means voting power sufficient to elect a
majority of the membership of the board of directors of the corporation.
(4-6-23)
e.
"Stock possessing voting power" includes stock where ownership is retained but the actual voting
power is transferred in either of the following manners:
(4-6-23)
i.
For one (1) year or less.
(4-6-23)
ii.
By proxy, voting trust, written shareholder agreement, or by similar device, where the transfer is
revocable by the transferor.
(4-6-23)
f.
In the case of an entity treated as a corporation under Paragraph 344.06.a., of this rule, "stock
possessing voting power" refers to an instrument, contract, or similar document demonstrating an ownership interest
in that entity that confers power in the owner to cast a vote in the selection of the management of that entity. (4-6-23)