IDAPA 35.01.01.640 — WATER'S EDGE: MAKING THE ELECTION (RULE 640)

Section 63-3027B, Idaho Code
01.
In General. Rules 640 through 649 of these rules apply to taxpayers electing to use the water's
edge filing method. To the extent that these rules conflict with any other rules pursuant to this Act, Rules 640 through
649 of these rules control.
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02.
The Election. The water's edge election is made for purposes of determining which corporations
are included in a combined group for Idaho income tax purposes. If a corporation is not part of a unitary group for
which a combined report is required, the corporation cannot make the water's edge election. The election must be
made in accordance with Sections 63-3027B through 63-3027E, Idaho Code, and Rules 640 through 649 of these
rules.
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a.
The election may be made for a year beginning on or after January 1, 1993. The election must be
filed with the original tax return for the first year of the election. If the water's edge group changes in a subsequent
year through the acquisition or disposition of a corporation with an Idaho filing requirement, a copy of the election is
to be attached to the tax return for such taxable year and the changes to the water's edge group is to be noted on the
form. See Rule 643 of these rules for Change of Election.
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b.
Any corporation included in the unitary group that files with Idaho a consent to the reasonable
production of documents may make the election on behalf of the group. An election made by any member of a unitary
group binds all other members regardless of any changes in the unitary group in later taxable years.
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c.
The election must be made on a form provided by the Tax Commission and include a list of each
corporation required to file an Idaho income tax return. The election must be signed by an individual authorized to
bind all companies to the election.
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d.
Idaho taxpayers having a valid water's edge election is to compute Idaho taxable income in
accordance with Sections 63-3027 and 63-3022, Idaho Code, except as modified by Sections 63-3027B through 63-
3027E, Idaho Code, and Rules 640 through 649 of these rules.
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03.
Failure to Include Election. Failure to include the election with the first return to which the
election applies results in Idaho taxable income being determined in accordance with Sections 63-3027 and 63-3022,
Idaho Code.
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