§ 105-134.5. North Carolina taxable income defined. - North Carolina Statutes

§ 105‑134.5.  NorthCarolina taxable income defined.

(a)        Residents. – Forresidents of this State, the term "North Carolina taxable income"means the taxpayer's taxable income as determined under the Code, adjusted asprovided in G.S. 105‑134.6 and G.S. 105‑134.7.

(b)        Nonresidents. – Fornonresident individuals, the term "North Carolina taxable income"means the taxpayer's taxable income as determined under the Code, adjusted asprovided in G.S. 105‑134.6 and G.S. 105‑134.7, multiplied by afraction the denominator of which is the taxpayer's gross income as determinedunder the Code, adjusted as provided in G.S. 105‑134.6 and G.S. 105‑134.7,and the numerator of which is the amount of that gross income, as adjusted,that is derived from North Carolina sources and is attributable to theownership of any interest in real or tangible personal property in this State,is derived from a business, trade, profession, or occupation carried on in thisState, or is derived from gambling activities in this State.

(c)        Part‑yearResidents. – If an individual was a resident of this State for only part of thetaxable year, having moved into or removed from the State during the year, theterm "North Carolina taxable income" has the same meaning as insubsection (b) except that the numerator shall include gross income, adjustedas provided in G.S. 105‑134.6 and G.S. 105‑134.7, derived from allsources during the period the individual was a resident.

(d)        S Corporations andPartnerships. – In order to calculate the numerator of the fraction provided insubsection (b), the amount of a shareholder's pro rata share of S Corporationincome that is includable in the numerator shall be the shareholder's pro ratashare of the S Corporation's income attributable to the State, as defined inG.S. 105‑131(b)(4). In order to calculate the numerator of the fractionprovided in subsection (b) for a member of a partnership or otherunincorporated business with one or more nonresident members that operates inone or more other states, the amount of the member's distributive share ofincome of the business that is includable in the numerator shall be determinedby multiplying the total net income of the business by the ratio ascertainedunder the provisions of G.S. 105‑130.4. As used in this subsection, totalnet income means the entire gross income of the business less all expenses,taxes, interest, and other deductions allowable under the Code which wereincurred in the operation of the business. (1989, c. 728, s. 1.4; 1995, c. 17, s. 4; 2005‑276,s. 31.1(aa); 2005‑344, s. 10.4.)