Receipts factor calculation examples

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
Washington	157,000	62,000
Colorado	73,700	4,700
Florida	11,000	6,000
Idaho	105,700	700
Illinois	65,000	3,000
Nebraska	103,000	2,000
Oregon	89,100	2,100
Totals	604,500	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?
Washington	Yes
Colorado	Yes
Florida	NO	Yes
Idaho	Yes
Illinios	NO	NO	NO	NO	Yes
Nebraska	Yes
Oregon	NO	NO	Yes

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
Washington	80,000	77,000
Colorado	115,000	111,800
Florida	50,800	41,800
Idaho	85,310	74,310
Illinois	40,980	33,980
Nebraska	20,640	16,640
Oregon	90,500	81,500
Totals	484,030	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?
Washington	YES
Colorado	YES
Florida	NO	NO	YES	NO
Idaho	YES
Illinios	NO	NO	YES	NO
Nebraska	NO	NO	YES	NO
Oregon	YES

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
Washington	121,000	42,000
New York	690,000	112,000
Rhode Island	17,400	2,400
Vermont	18,500	1,500
Virginia	51,800	6,800
Totals	898,700	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?
Washington	YES
New York	YES
Rhode Island	NO	NO	NO	NO	YES
Vermont	NO	NO	NO	NO	NO
Virgina	NO	NO	NO	NO	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)