Taxation of Nonresident's Entire Net Income Derived From Activities Within State; Separate Accounting Possible; Applicability; Allowed Deductions; Applicability of Provisions for Corporations to Nonresidents

  1. Law
  2. Georgia Code
  3. Revenue and Taxation
  4. Income Taxes
  5. Imposition, Rate, and Computation; Exemptions
  6. Taxation of Nonresident's Entire Net Income Derived From Activities Within State; Separate Accounting Possible; Applicability; Allowed Deductions; Applicability of Provisions for Corporations to Nonresidents

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  1. The tax imposed by this chapter shall apply to the entire net income of a taxable nonresident derived from employment, trade, business, professional, or other activity for financial gain or profit performed or carried on within this state, including, but not limited to, the rental of real or personal property located within this state or for use within this state, the sale, exchange, or other disposition of tangible or intangible property having a situs in this state, the receipt of proceeds of any lottery prize awarded by the Georgia Lottery Corporation, and withdrawals of contributions to a savings trust account under Article 11 of Chapter 3 of Title 20 which are required to be included in taxable net income as provided in subparagraph (b)(10)(C) of Code Section 48-7-27.
  2. A taxable nonresident whose income is derived from employment, trade, business, professional, or other activity performed or carried on within and outside this state shall be taxed only upon the income derived from carrying on the activity within this state. The amount of taxable income may be determined by a separate accounting of the income if the commissioner is satisfied that the separate accounting reflects correctly the income fairly attributable to this state. Otherwise, the amount of taxable income shall be determined in the manner prescribed by this chapter for the allocation and apportionment of income of corporations engaged in business within and outside this state.
  3. Except as otherwise provided by law, all provisions of this chapter with respect to the definitions, determination, and computation of taxable net income of residents of this state and with respect to the assessment, levy, and collection of the tax imposed by this chapter on the net income of residents of this state shall apply equally to the taxation of the net income of taxable nonresidents.
    1. A taxable nonresident shall be allowed to deduct allowable expenses, interest, taxes, losses, bad debts, depreciation, and similar business expenses when the income of the taxable nonresident is derived from:
      1. Employment, trade, business, professional, or other activity performed or carried on:
        1. Entirely within this state; or
        2. Within and outside this state when the nonresident is permitted by the commissioner to use separate accounting;
      2. The rental of real or personal property located within this state or for use within this state;
      3. The sale, exchange, or other disposition of tangible or intangible property having a situs in this state.
    2. Expenses allowable to a taxable nonresident as provided in paragraph (1) of this subsection shall be allowable only to the extent that the expenses are attributable to the production of income allocable to and taxable by this state. As to allowable deductions essentially personal in nature, such as contributions to charitable organizations, alimony, medical expenses, the optional standard deduction, personal exemptions, and credits for dependents, the taxable nonresident shall be allowed deductions for such deductions essentially personal in nature in the ratio that the gross income allocated to this state bears to the total gross income of the taxable nonresident computed as if the taxable nonresident were a resident of this state. The commissioner may accept total federal gross income as the equivalent of total Georgia gross income for purposes of this allocation.
  5. A taxable nonresident whose income is derived from the activities specified in subsection (d) of this Code section performed or carried on within and outside this state and who is required to allocate and apportion his income in the manner of corporations engaged in business within and outside this state shall compute his net taxable income as if he were a resident of this state. The net taxable income so computed shall be apportioned in the manner of corporations engaged in business within and outside this state.

(Ga. L. 1931, Ex. Sess., p. 24, § 15; Ga. L. 1931, p. 7, § 85; Code 1933, § 92-3112; Ga. L. 1957, p. 397, § 3; Code 1933, § 91A-3610, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1987, p. 191, § 2; Ga. L. 1994, p. 597, § 3; Ga. L. 2002, p. 372, § 4; Ga. L. 2008, p. 159, § 9/HB 1014; Ga. L. 2017, p. 774, § 48/HB 323.)

The 2017 amendment, effective May 9, 2017, part of an Act to revise, modernize, and correct the Code, revised punctuation in the middle of subsection (a).

Editor's notes.

- Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, provides that this Act is applicable to taxable years ending on or after March 11, 1987, and that a taxpayer with a taxable year ending on or after January 1, 1987, and before March 11, 1987, may elect to have the provisions of that Act apply.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that tax, penalty, and interest liabilities and refund eligibility for prior taxable years shall not be affected by that Act.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that provisions of the federal Tax Reform Act of 1986 and of the Internal Revenue Code of 1986 which as of January 1, 1987, were not yet effective become effective for purposes of Georgia taxation on the same dates as they become effective for federal purposes.

Ga. L. 2002, p. 372, § 15(b), not codified by the General Assembly, provides that §§ 1-4, 6, and 8-14 of this Act shall be applicable to all taxable years beginning on or after January 1, 2002.

Ga. L. 2008, p. 159, § 10/HB 1014, not codified by the General Assembly, provides, in part, that the 2008 amendment shall be applicable to all taxable years beginning on or after January 1, 2008.

Law reviews.

- For article, "Revenue and Taxation: Amend Titles 48, 2, 28, 33, 36, 46, and 50 of the Official Code of Georgia Annotated, Relating Respectively to Revenue and Taxation, Agriculture, the General Assembly, Insurance, Local Government, Public Utilities, and State Government," see 28 Georgia St. U.L. Rev. 217 (2011). For comment on Forrester v. Culpepper, 194 Ga. 744, 22 S.E.2d 595 (1942), see 6 Ga. B. J. 155 (1943).

JUDICIAL DECISIONS

Legislative intent as to income earned outside state before becoming resident.

- Former Code 1933, §§ 92-3002, 92-3101, and 92-3112 (see now O.C.G.A. §§ 48-7-1,48-7-20 and48-7-30) when construed together, authorize if the statutes do not compel the interpretation that the legislature did not intend to impose a tax upon such portion of the income of a resident as was derived by the resident from sources without the state before the date on which the individual became a resident of this state. Forrester v. Culpepper, 194 Ga. 744, 22 S.E.2d 595 (1942); commented on in, 6 Ga. B.J. 155 (1943).

OPINIONS OF THE ATTORNEY GENERAL

Scope of term "business."

- Word "business" as used in this section is not meant to include sole proprietorships or partnerships whose entire income is from professional or personal services. 1954-56 Op. Att'y Gen. p. 760.

When income received by nonresident from certificate of deposit issued by Georgia bank taxable.

- Income received by a nonresident from a certificate of deposit issued by a Georgia bank would not be subject to income tax in this state unless the certificate of deposit had been acquired as income from property otherwise held in this state or as the result of regular conduct by a nonresident of a business dealing in such intangibles within the State of Georgia. 1967 Op. Att'y Gen. No. 67-250.

RESEARCH REFERENCES

Am. Jur. 2d.

- 71 Am. Jur. 2d, State and Local Taxation, §§ 354, 358.

C.J.S.

- 85 C.J.S., Taxation, §§ 1971 et seq., 1979 et seq., 1998 et seq., 2026, 2027, 2042 et seq.

ALR.

- "Business situs" for purposes of property taxation of intangibles in state other than domicile of owner, 76 A.L.R. 806; 143 A.L.R. 361.

Power of state to extend its taxing power by its definition of residence or its declared policy of domesticating foreign corporations, 100 A.L.R. 1216.

What constitutes doing business, business done, or the like, outside the state for purposes of allocation of income under tax laws, 167 A.L.R. 943.


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