42: Apportionment and Combined Reporting Adjustments and Instructions 2025 (2025)
Idaho · Idaho Tax Commission · Used for tax years 2025
Idaho Form 42 calculates the Idaho apportionment factor using business property, sales, and payroll information. It also reports worldwide and water’s-edge additions and subtractions used to compute combined income. The form is included with the Idaho income tax return.
Who files this form
- Part I is for taxpayers with income from business activity taxable in Idaho and another state or country. It calculates the Idaho apportionment factor.
- Partners in partnerships and shareholders in S corporations must consider the pass-through entity’s activity when determining whether they have business income taxable in Idaho and another state or country. Include your share of its property, payroll, and sales from Form ID K-1.
- Part II is for corporations with ownership in at least one foreign affiliate. It provides worldwide and water’s-edge adjustments to combined income. Partnerships do not use Part II.
What you'll need
Have the information and supporting schedules that apply to your filing:
- Your name as shown on the return and federal Employer Identification Number (EIN).
- Total and Idaho property, sales, and payroll figures. Property information includes beginning- and end-of-year amounts and rents paid.
- Form ID K-1 information for your share of a pass-through entity’s property, payroll, and sales.
- A schedule showing apportionment detail by company if filing for a unitary group.
- A list of companies using three-factor apportionment, if applicable.
- A detailed schedule for other business gross receipts on Part I, line 14.
For Part II, include the applicable schedules identifying income, adjustments, intercompany transactions, dividends, additions, and subtractions. Foreign affiliate income calculations may require profit and loss statements and book-to-tax adjustment schedules. Line 3 also calls for copies of the applicable foreign corporations’ federal income tax returns.
How to file
Include Form 42 with your Idaho income tax return as Page 3.
- Complete all three sections of Part I: property, sales, and payroll. Single-sales apportionment is the default method.
- If using three-factor apportionment, check the box and provide a list of the companies using it.
- Compute all percentages to four decimal places.
- If completing Part II, enter total additions from line 6 on Form 41, line 17. Enter total subtractions from line 12 on Form 41, line 29.
- Include the supporting schedules required for the lines you complete.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Leaving property or payroll blank because you use single-sales apportionment. All taxpayers must complete all three sections of Part I, even though only three-factor taxpayers use all three factors in the calculation.
- Missing the three-factor checkbox or company list. Both are required when using three-factor apportionment.
- Using too few decimal places. Compute percentages to four places to the right of the decimal point.
- Using Part II as a partnership. Partnerships do not use Part II.
- Claiming the dividend exclusion as a worldwide filer. Part II, line 8 dividend exclusions apply only to water’s-edge filers.
- Subtracting an amount twice. Line 9 is for intercompany dividends not already subtracted elsewhere on Form 42 or Form 41. Line 11 excludes subtractions already taken on Form 42, lines 7 through 10, or Form 41, lines 19 through 28.
Questions people ask
What is the default apportionment method?
Single-sales apportionment is the default. Use the Idaho sales percentage from Part I, line 16, on line 20, then use that percentage on line 21.
Who can elect three-factor apportionment?
Electrical, telephone, and communications corporations as defined in Idaho Code can elect it. So can the listed Multistate Tax Commission special industries: construction contractors, airlines, railroads, trucking companies, television and radio broadcasting, publishing, and financial institutions.
What if one of the three factors does not apply to my business?
For three-factor apportionment, divide the total on line 20 by the number of factors used. The instructions give the example of a business with no employees anywhere, which reduces the number of factors by one.
What is an Idaho throwback sale?
A sale made in a state with no jurisdiction to tax the seller is a throwback sale. Report Idaho throwback sales on Part I, line 12.
What percentage applies to the water’s-edge foreign dividend exclusion?
Enter 80% on Part II, line 8b, if you elected to forgo filing the water’s-edge spreadsheets as shown on Form 41, line 8b. Enter 85% if you are filing the water’s-edge domestic disclosure spreadsheets.