IDAPA 35.01.01.395 — TAXABLE IN ANOTHER STATE: WHEN A STATE HAS JURISDICTION TO SUBJECT A

TAXPAYER TO A NET INCOME TAX (RULE 395).
Section 63-3027(4)(b), Idaho Code
01.
In General. The test in Section 63-3027(4)(b), Idaho Code, applies if the taxpayer's business
activity is sufficient to give the state jurisdiction to impose a net income tax by reason of the business activity
pursuant to the Constitution and statutes of the United States. Jurisdiction to tax is not present if the state is prohibited
from imposing the tax due to Public Law 86-272, Title 15, Sections 381 through 385, United States Code.
(4-6-23)
a.
When determining if a state has jurisdiction to subject a taxpayer to a net income tax, the
jurisdictional standards applicable to a state of the United States is to also apply to the District of Columbia, the
Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country or political
subdivision thereof.
(4-6-23)
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.01
Idaho State Tax Commission
Income Tax Administrative Rules
Section 450
Page 63
b.
The provisions of a treaty between a state and the United States are not considered when
determining jurisdiction to tax.
(4-6-23)
02.
Example. Corporation X is engaged in manufacturing farm equipment in State A and in Foreign
Country B. Both State A and Foreign Country B impose a net income tax but Foreign Country B exempts
corporations engaged in manufacturing farm equipment. Corporation X is subject to the jurisdiction of State A and
Foreign Country B.
(4-6-23)