The Mississippi Business Income Apportionment Schedule is the form used to determine how much of a multistate business’s income is taxable by Mississippi. If your business operates both inside and outside Mississippi, the state usually does not tax all of your business income. Instead, it uses an apportionment formula to calculate the Mississippi share. This schedule helps you do that by comparing your Mississippi property, payroll, and sales to your total property, payroll, and sales everywhere. Depending on the type of business you operate, the final apportionment percentage may be based on sales only, a weighted combination of property, payroll, and sales, or a special industry formula. Once you calculate the correct ratio on this schedule, you carry that percentage to the related business income tax return line to determine the amount of income apportioned to Mississippi.
Who Should Use This Schedule
This schedule is generally used by businesses that earn income both within Mississippi and outside the state and need to apportion business income rather than allocate all income directly to one state. It applies to businesses such as retailers, wholesalers, service businesses, manufacturers, financial institutions, pipelines, and certain transportation or communications companies. The exact formula used depends on the business category, so it is important to choose the proper section in Part II before finalizing the percentage.
How The Form Is Organized
The schedule has two main parts. Part I calculates the apportionment factors by comparing Mississippi amounts to total amounts everywhere. Part II applies those factors using the formula that matches your business type. Most businesses will complete all of Part I first and then complete only one line group in Part II, based on the category that applies to them.
Before You Start
Gather your business records for property, payroll, and sales for both Mississippi and everywhere else. You will also need beginning and ending balances for assets, rental property information if applicable, and the related Mississippi business income tax form where the final ratio will be entered. Be sure to round all ratios to four decimal places.
How To Complete The Mississippi Business Income Apportionment Schedule
Part I, Computation Of Apportionment Factors
Part I uses three columns:
- Column A, total Mississippi
- Column B, total everywhere
- Column C, Mississippi ratio
Complete Columns A and B first. Then calculate the Mississippi ratio in Column C where the form calls for it.
Property Factor
Line 1a: Enter the beginning of year value of your property in Mississippi in Column A and the beginning of year value of all property everywhere in Column B.
Line 1b: Enter the end of year value of your property in Mississippi in Column A and the end of year value of all property everywhere in Column B.
Line 1c: Add Lines 1a and 1b for each column. This gives the total of beginning and ending property values.
Line 1d: Divide Line 1c by two for each column to calculate the average net book value of assets.
Line 1e: Enter rental property in each column. Use annual rental expense multiplied by eight to determine the amount to enter for rented property.
Line 1f: Add Lines 1d and 1e for each column. This gives total property for apportionment purposes.
Line 1g: Divide Line 1f, Column A by Line 1f, Column B to calculate the Mississippi property factor. Enter the result in Column C as a percentage or decimal ratio, following the format used on the return.
Payroll Factor
Line 2: Enter total Mississippi payroll in Column A and total payroll everywhere in Column B. Then divide Column A by Column B to calculate the Mississippi payroll factor and enter that result in Column C.
Sales Factor
Line 3: Enter total Mississippi sales in Column A and total sales everywhere in Column B. Then divide Column A by Column B to calculate the Mississippi sales factor and enter that result in Column C.
Part II, Application Of Apportionment Factors
In Part II, use only the section that matches your business type. Check the correct category and complete only that line or line group.
Retailing, Renting, Servicing, Merchandising, Or Wholesaling
Line 4: Enter the sales factor from Part I, Line 3, Column C. This is the apportionment ratio for businesses in this category. Transfer this ratio to the corresponding line on the business income tax return.
Manufacturers That Sell Principally At Retail
Line 5a: Enter the property factor from Part I, Line 1g, Column C.
Line 5b: Enter the payroll factor from Part I, Line 2, Column C.
Line 5c: Add Lines 5a and 5b.
Line 5d: Divide Line 5c by two. This gives the average of the property and payroll factors.
Line 5e: Enter the sales factor from Part I, Line 3, Column C.
Line 5f: Add Lines 5d and 5e.
Line 5g: Divide Line 5f by two. This is the weighted average apportionment ratio for manufacturers that sell mainly at retail. Transfer this ratio to the corresponding line on the business income tax return.
Financial Institutions, Pipelines, Or Manufacturers That Sell Principally At Wholesale
Line 6a: Enter the property factor from Part I, Line 1g, Column C.
Line 6b: Enter the payroll factor from Part I, Line 2, Column C.
Line 6c: Enter the sales factor from Part I, Line 3, Column C.
Line 6d: Add Lines 6a, 6b, and 6c.
Line 6e: Divide Line 6d by three. This is the average apportionment ratio for businesses in this category. Transfer this ratio to the corresponding line on the business income tax return.
Airlines, Motor Carriers, Express Companies, Telephone And Telegraph Companies
Line 7: A special apportionment formula is required for these industries. Attach a separate schedule showing your calculation and enter the resulting ratio on the corresponding business income tax return line.
How To File It
Complete the schedule and include it with the applicable Mississippi business income tax return. The final apportionment ratio from the correct Part II line is entered on the designated line of the related return. If your business falls into a category requiring a special formula, attach a separate statement showing how the ratio was calculated.
Tips For Completing The Schedule Correctly
Use consistent accounting records for Mississippi amounts and everywhere amounts. Make sure rented property is included using the annual rent times eight method. Double-check that property, payroll, and sales totals are going into the correct columns. Complete all calculations to four decimal places. Most importantly, use only the Part II method that matches your business type, because the wrong category can produce the wrong Mississippi apportionment ratio.
Common Mistakes To Avoid
Do not leave out rented property if it applies. Do not mix Mississippi-only amounts with everywhere totals. Do not complete multiple Part II categories unless specifically required. Do not forget to transfer the final ratio to the related return. For special industry taxpayers, do not use the regular formulas when a special formula is required.
Final Checklist
Before filing, make sure you have entered your FEIN, completed Part I fully, selected the correct business category in Part II, calculated the final ratio correctly, and transferred that ratio to the proper line on the business income tax return. If a special formula applies, attach the supporting schedule before submitting the return.