Title 15 . Revenue

Chapter 19 . (Repealed)

Section 21. Two or more businesses of a single taxpayer

15 AAC 19.021. Two or more businesses of a single taxpayer

(a) A taxpayer may have more than one "trade or business." In such cases, it is necessary to determine the business income attributable to each separate trade or business. The income of each business is then apportioned by an apportionment formula which takes into consideration the instate and outstate factors which relate to the trade or business the income of which is being apportioned. Accordingly, the amount of business income attributable to the taxpayer's trade or business activities in the state is determined by applying an appropriate apportionment formula to the business income of each business.

(b) The determination of whether the activities of the taxpayer constitute a single trade or business or more than one trade or business will turn on the facts in each case. In general, the activities of the taxpayer will be considered a single business if there is evidence to indicate that the segments under consideration are integrated with, dependent upon or contribute to each other and the operations of the taxpayer as a whole. The following factors are considered to be good indicia of a single trade or business, and the presence of any of these factors creates a strong presumption that the activities of the taxpayer constitute a single trade or business:

(1) Same Type of Business. A taxpayer is generally engaged in a single trade or business when all of its activities are in the same general line.

(2) Steps in a Vertical Process. A taxpayer is almost always engaged in a single trade or business when its various divisions or segments are engaged in different steps in a large, vertically structured enterprise.

(3) Strong Centralized Management. A taxpayer which might otherwise be considered as engaged in more than one trade or business is properly considered as engaged in one trade or business when there is a strong central management, coupled with the existence of centralized departments for such functions as financing, advertising, research, or purchasing. Thus, some conglomerates may properly be considered as engaged in only one trade or business when the central executive officers are normally involved in the operations of the various divisions and there are centralized offices which perform for the divisions the normal matters which a truly independent business would perform for itself, such as accounting, personnel, insurance, legal, purchasing, advertising, or financing.

History: Eff. 5/24/78, Register 66; am 3/31/82, Register 81

Authority: AS 43.05.080

AS 43.19.010