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Computing the Apportionment Factor

Multistate corporations are corporations that operate in more than one state and beyond the protection of 15 U.S.C. Section 381 (P.L. 86-272) of the Interstate Commerce Act. Multistate corporations operating in Maryland as a unitary business must allocate income using an apportionment formula.

Unistate corporations are those that operate in only one state, or operate in more than one state but the extent of the activity in the other states is within the protection of 15 U.S.C. Section 381 (P.L. 86-272). Unistate corporations subject to the Maryland income tax law may not apportion income.

Allocation means the assignment of income to a particular state. Apportionment means the allocation of income among the states by the use of a formula containing apportionment factors. For more information regarding the computation of apportionment factors, see Administrative Release No. 2: Interstate Commerce Act - Domestic and Foreign Corporations - Nexus Requirements - Apportionment of Corporate Net Income and Maryland Tax Regulation 03.04.03

Pass-through entities that conduct business in more than one state must allocate income if one or more of the partners or shareholders are non-residents of Maryland. Partnerships may use separate accounting or the apportionment method of allocation. S corporations must use the apportionment method unless the activity in Maryland is non-unitary. If the activity within Maryland is non-unitary, S corporations may use separate accounting.

For more information regarding the computation of apportionment factors, see the instructions for computation of the apportionment factor in the Pass-through Entity tax booklet

Links for Pass-Through Entities
Business Tax Types
Income Tax
Filing Information
Pass-Through Entities
  Apportionment Factor
  Filing Deadlines and Extensions
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