Combined Reporting

This guide was created to help businesses understand how to compute their Idaho income tax. It applies to unitary businesses, as explained below, that operate in Idaho and in other states or countries.

Unitary business

If your business is conducted through more than one division or commonly-controlled corporation, it may be considered to be a “unitary business.” A business is unitary if the activities or operations conducted by one division or corporation benefit, or are integrated with, depend on, or contribute to operations conducted by another division or commonly controlled corporation. This connection produces a sharing or exchange of value among the businesses and a significant flow of value to the separate parts. If part of this value flows to or from the business being conducted in Idaho, the separate parts will be considered one unitary business for determining Idaho taxable income and all the incomes of the entities in the unitary business will be added together.

The unitary business principle was first developed in the 1870s when local governments were imposing a property tax on railroads operating within their jurisdictions. The courts during that time recognized that the value of the railroad system was more than the cost of rails and ties located within a particular state. The system connected two distant points and represented an integrated economic unit, of which each state could claim its appropriate share. All of the railroad’s property was valued as a single unit and a portion of the unit’s value was assigned to each state by a mathematical formula. The application of the unitary approach evolved when states started to impose a tax measured by the income of corporations.

There are several tests for determining unity, many developed from court decisions. Some of these are listed in the Laws and Rules section. Idaho applies the unitary business principle to the fullest extent allowed by the U.S. Constitution. This allows Idaho to apportion the business income of a unitary business as long as there is some flow of value with the business conducted in Idaho.

Combined report

We use the terms combined report or combined reporting method to refer to the series of calculations a unitary business uses to determine the amount of business income attributable to each member of the unitary group that is required to file in Idaho. Combined report doesn’t mean the return filed in Idaho, so we’ll use the term combined reporting method throughout this guide.

The combined reporting method can only be used by C corporations. It can’t be used by an S corporation.


We use apportionment to prorate business income or loss to Idaho based on its activities in Idaho compared to its activity everywhere. Single sales factor is the default apportionment method. You can elect to use a three-factor method if you are an electrical corporation, telephone corporation or communications corporation as defined by Idaho Code, or in a special industry defined by the Multistate Tax Commission special industry rules that Idaho adopted. An Idaho factor is computed for each activity. The factors are then used to compute the Idaho apportionment factor, which is applied to the business income of the unitary business to determine the portion earned in Idaho.


We use allocation to assign nonapportionable income to the state or other country where it was earned. In some cases this may be a corporation’s commercial domicile, which is the principal place where the taxpayer’s trade or business is directed or managed.