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Example A
Company A is an in-state entity reporting under the Service & Other Activities B&O tax with the following receipts:
| State/Country | Gross receipts* | Gross Service & Other Activities Income |
|---|---|---|
| State/Country Washington | Gross receipts* 157,000 | Gross Service & Other Activities Income 62,000 |
| State/Country Colorado | Gross receipts* 73,700 | Gross Service & Other Activities Income 4,700 |
| State/Country Florida | Gross receipts* 11,000 | Gross Service & Other Activities Income 6,000 |
| State/Country Idaho | Gross receipts* 105,700 | Gross Service & Other Activities Income 700 |
| State/Country Illinois | Gross receipts* 65,000 | Gross Service & Other Activities Income 3,000 |
| State/Country Nebraska | Gross receipts* 103,000 | Gross Service & Other Activities Income 2,000 |
| State/Country Oregon | Gross receipts* 89,100 | Gross Service & Other Activities Income 2,100 |
| State/Country Totals | Gross receipts* 604,500 | Gross Service & Other Activities Income 80,500 |
*Gross receipts means income from all classifications.
Based on the information above, Company A is taxable in Idaho and Nebraska because they have more than $100,000 annual gross income in those states. This means income from Idaho and Nebraska is not considered throw-out income.
Now let’s determine if the income attributable to the remaining states is considered taxable in those states or whether it is considered throw-out income. The states where Company A is already considered taxable are greyed out.
| State/Country | Subject to business activities tax? | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
|---|---|---|---|---|---|
| State/Country Washington | Subject to business activities tax? Yes | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
| State/Country Colorado | Subject to business activities tax? Yes | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
| State/Country Florida | Subject to business activities tax? NO | Taxable in the prior year? Yes | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
| State/Country Idaho | Subject to business activities tax? Yes | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
| State/Country Illinios | Subject to business activities tax? NO | Taxable in the prior year? NO | Physical presence? NO | Organized or commercially domiciled? NO | Work performed in Washington? Yes |
| State/Country Nebraska | Subject to business activities tax? Yes | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
| State/Country Oregon | Subject to business activities tax? NO | Taxable in the prior year? NO | Physical presence? Yes | Organized or commercially domiciled? | Work performed in Washington? |
Based on the information above, Company A is taxable in Colorado because they are subject to a business activities tax there and in Florida because they were taxable there in the prior year, also known as trailing nexus. We can also see that Company A is taxable in Oregon because they have a physical presence. This means income attributed to Colorado, Florida and Oregon is not considered throw-out income.
Since there was work performed in Washington, but no other criteria are met, the income attributed to Illinois is considered throw-out income.
We can now determine that Company A has a receipts factor of 80%.
| Gross Washington apportionable income (62,000) |
=80% |
| Worldwide gross apportionable income minus Throw-out (80,500-3,000 |
Example B
| State/Country | Gross receipts* | Gross Service & Other Activities Income |
|---|---|---|
| State/Country Washington | Gross receipts* 80,000 | Gross Service & Other Activities Income 77,000 |
| State/Country Colorado | Gross receipts* 115,000 | Gross Service & Other Activities Income 111,800 |
| State/Country Florida | Gross receipts* 50,800 | Gross Service & Other Activities Income 41,800 |
| State/Country Idaho | Gross receipts* 85,310 | Gross Service & Other Activities Income 74,310 |
| State/Country Illinois | Gross receipts* 40,980 | Gross Service & Other Activities Income 33,980 |
| State/Country Nebraska | Gross receipts* 20,640 | Gross Service & Other Activities Income 16,640 |
| State/Country Oregon | Gross receipts* 90,500 | Gross Service & Other Activities Income 81,500 |
| State/Country Totals | Gross receipts* 484,030 | Gross Service & Other Activities Income 437,030 |
*Gross receipts means income from all classifications.
Based on the information above, Company B is taxable in Colorado because they have more than $100,000 annual gross income in that state. This means income attributed to Colorado is not considered throw-out income.
Now let’s determine if the income attributable to the remaining states is considered taxable in those states or whether it is considered throw-out income. The states where Company B is already considered taxable are greyed out.
| State/Country | Subject to business activities tax? | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? |
|---|---|---|---|---|
| State/Country Washington | Subject to business activities tax? YES | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? |
| State/Country Colorado | Subject to business activities tax? YES | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? |
| State/Country Florida | Subject to business activities tax? NO | Taxable in the prior year? NO | Physical presence? YES | Organized or commercially domiciled? NO |
| State/Country Idaho | Subject to business activities tax? YES | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? |
| State/Country Illinios | Subject to business activities tax? NO | Taxable in the prior year? NO | Physical presence? YES | Organized or commercially domiciled? NO |
| State/Country Nebraska | Subject to business activities tax? NO | Taxable in the prior year? NO | Physical presence? YES | Organized or commercially domiciled? NO |
| State/Country Oregon | Subject to business activities tax? YES | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? |
Based on the information above, we can see that Company B is taxable in Idaho and Oregon because they are subject to a business activities tax in those states. We can also see that Company B is taxable in Florida, Illinois and Nebraska because they have a physical presence. This means income attributed to Florida, Idaho, Illinois, Nebraska and Oregon is considered taxable in these states, so this income is not considered throw-out income.
Company B has no throw-out income.
We can now determine that Company B has a receipts factor of 17.62%
| Gross Washington apportionable income (77,000) | =17.62% |
| Worldwide gross apportionable income minus Throw-out (437,030-0) |
Example C
Company C is an out-of-state entity with nexus in Washington reporting Service & Other Activities B&O tax with the following receipts:
| State/Country | Gross receipts* | Gross Service & Other Activities Income |
|---|---|---|
| State/Country Washington | Gross receipts* 121,000 | Gross Service & Other Activities Income 42,000 |
| State/Country New York | Gross receipts* 690,000 | Gross Service & Other Activities Income 112,000 |
| State/Country Rhode Island | Gross receipts* 17,400 | Gross Service & Other Activities Income 2,400 |
| State/Country Vermont | Gross receipts* 18,500 | Gross Service & Other Activities Income 1,500 |
| State/Country Virginia | Gross receipts* 51,800 | Gross Service & Other Activities Income 6,800 |
| State/Country Totals | Gross receipts* 898,700 | Gross Service & Other Activities Income 164,700 |
*Gross receipts means income from all classifications.
Based on the information above, Company C is taxable in New York because they have more than $100,000 annual gross income in that state. Income attributed to New York is not considered throw-out income.
Now let’s determine if the income attributable to the remaining states is considered taxable in those states or whether it is considered throw-out income. The states where Company C is already considered taxable are greyed out.
| State/Country | Subject to business activities tax? | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
|---|---|---|---|---|---|
| State/Country Washington | Subject to business activities tax? YES | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
| State/Country New York | Subject to business activities tax? YES | Taxable in the prior year? | Physical presence? | Organized or commercially domiciled? | Work performed in Washington? |
| State/Country Rhode Island | Subject to business activities tax? NO | Taxable in the prior year? NO | Physical presence? NO | Organized or commercially domiciled? NO | Work performed in Washington? YES |
| State/Country Vermont | Subject to business activities tax? NO | Taxable in the prior year? NO | Physical presence? NO | Organized or commercially domiciled? NO | Work performed in Washington? NO |
| State/Country Virgina | Subject to business activities tax? NO | Taxable in the prior year? NO | Physical presence? NO | Organized or commercially domiciled? NO | Work performed in Washington? NO |
Based on the information above, we can see that Company C is not taxable in Rhode Island, Vermont, or Virginia.
In this case, a Washington employee performed work related to the income earned in Rhode Island. No work was performed in Washington for income earned in Vermont or Virginia.
Income attributed to Rhode Island is considered throw-out income because it is not taxable in Rhode Island and work was performed in Washington.
Income attributable to Vermont and Virginia is not considered throw-out income because it is not taxable in those states and no work was performed in Washington.
We can now determine that Company A has a receipts factor of 25.88%
| Gross Washington apportionable income (42,000) | =25.88% |
| Worldwide gross apportionable income minus Throw-out (164,700-2,400) |
