Combined Income Approach

053.01 Any unitary business having income from business activity that is taxable both within and without Nebraska shall determine its taxable income by multiplying its federal taxable income, as adjusted, by a fraction which is the sales factor. 053.02 The combined income approach is the computation of combining the taxable income of a business conducted as a single economic unit. The Nebraska net income of a corporate taxpayer will be determined by applying the taxpayer's apportionment formula against the combined income of the unitary group. 053.02A Income attributable to Nebraska is determined by multiplying the income of the unitary group by the apportionment factor. 053.02B The apportionment factor is the sales factor of the corporate taxpayer. 053.03 When a unitary group includes two or more corporations engaged in a unitary business, a part of which is conducted in Nebraska by one or more members of the unitary group, the income of the corporate taxpayer apportioned to Nebraska is determined by calculating the ratio of the corporate taxpayer's sales in Nebraska compared to the total sales of the entire unitary group and by applying the computed ratio to the unitary groups federal taxable income, as adjusted. 053.03A In the computation of the factors, only the part of the unitary group that is subject to the Internal Revenue Code shall be included. 053.03B. Only those corporations subject to federal income tax under 243 of the Internal Revenue Code are included in a corporate taxpayers filing. 053.03C Only the sales of those corporations with nexus in Nebraska are included in the numerator of the computed apportionment factor. 053.04 Each corporate taxpayer must file only one income tax return for the group for each taxable year, even if more than one member of the unitary business is taxable in Nebraska. 053.05 Any corporation that is required or has received permission to use an alternative apportionment formula cannot be included in the unitary group. 053.05A If more than one affiliated or related company of a unitary group is properly using the same special apportionment formula, such companies must use the combined income approach and must file a single Nebraska Corporation Income Tax Return, Form 1120N. 053.06 Inactive corporations may not be included in the unitary group. 053.07 A corporate taxpayer which is a part of a unitary group that includes a partner in a joint venture or partnership with which a member of a unitary group is unitary except for the ownership requirement will compute its Nebraska taxable income in accordance with Reg-24-056. (Section 77-2734.05 and 77-2734.14, R.R.S. 1996. November 11, 1998.)