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(1) When a taxpayer elects to use the percentage of completion method of accounting, or the completed contract method of accounting for long-term contracts (construction contracts covering a period in excess of one year from the date of execution of the contract to the date on which the contract is finally completed and accepted), and has income from sources both within and without this state from a trade or business, (for purposes of determining whether a taxpayer's operations are within or without, the test shall be for each separate entity in a combined group electing the completed contract method, rather than the combined group as a whole), the amount of apportionable income derived from such long-term contracts from sources within this state shall be determined pursuant to this regulation. In such cases, the first step is to determine which portion of the taxpayer's income constitutes "apportionable income" and which portion constitutes "nonapportionable income" pursuant to ARM 42.26.206 and 42.26.207. Nonapportionable income is directly allocated to specific states pursuant to the provisions of ARM 42.26.221 inclusive. Apportionable income is apportioned among the states in which the business is conducted pursuant to the property, payroll, and receipts apportionment factors set forth in this regulation. The sum of the items of nonapportionable income directly allocated to this state, plus the amount of apportionable income attributable to this state constitutes the amount of the taxpayer's entire net income which is subject to tax by this state.


History: 15-31-313, 15-31-501, MCA; IMP, 15-31-301, 15-31-312, MCA; NEW, 1988 MAR p. 1818, Eff. 8/12/88; TRANS, from 42.26.290, 2001 MAR p. 2469, Eff. 12/21/01; AMD, 2017 MAR p. 2328, Eff. 1/1/18.

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