§ 1124 — Income derived from sources in Delaware

Delaware § 1124

• Jurisdiction: Delaware
• Title: 30
• Part: Income, Inheritance and Estate Taxes
• Ch. 11: PERSONAL INCOME TAX
• Subch.: Nonresident Individuals

Text

(a)General. —That part of a nonresident individual’s federal adjusted gross income derived from sources within this State shall be the sum of the following:

(1) The amount of items of income, gain, loss and deduction entering into the federal adjusted gross income which is derived from sources in this State, including:

a. The individual’s distributive share of partnership income and deductions determined under § 1623 of this title,

b. The individual’s share of estate or trust income and deductions determined under § 1640 of this title, and

c. The individual’s distributive share of the income and deductions of an S corporation; and

(2) The portion of the modifications described in § 1106(a)-(c) of this title which relate to income derived from sources in this State, including any modifications attributable to the individual as a partner or as a shareholder of an S corporation.

(b)Income and deductions having source within this State. —Items of income, gain, loss and deduction derived from, or connected with, sources within this State are those items attributable to:

(1) Compensation, other than pensions, as an employee in the conduct of the business of an employer, for personal services:

a. Rendered in this State, or

b. Attributable to employment in this State and not required to be performed elsewhere;

(2) The ownership or disposition of any interest in real or tangible personal property in this State (including that percentage of ordinary and capital gain dividends received from a real estate investment trust, as defined in § 856 of the Internal Revenue Code (26 U.S.C § 856), that is attributable to rents from real property located in Delaware or gain from the disposition of real property located in Delaware);

(3) A business, trade, commerce, profession or vocation carried on in this State; or

(4) Winnings from pari-mutuel wagering derived from the conduct of pari-mutuel activities within this State.

(c)Intangibles. —Income from intangible personal property, including annuities, dividends, interest and gains from the disposition of intangible personal property, shall constitute income derived from sources within this State only to the extent that such income is from property employed by the taxpayer in a business, trade, commerce, profession or vocation carried on in this State.

For purposes of this subsection, intangible assets of the taxpayer which are treated as held for investment for federal income tax purposes (or would be so treated if such assets were held by an individual) shall not be considered as property employed by the taxpayer in a business, trade, commerce, profession or vocation carried on in this State. Notwithstanding the foregoing and for purposes of this subsection, assets whose acquisition, management and disposition constitute integral parts of the taxpayer’s regular trade or business operations (other than the operations of a taxpayer whose trade or business is that of investing) shall not be considered held for investment.

(d)Deduction for losses. —Deductions for capital losses, net capital gains and net operating losses shall be based solely on income, gains, losses and deductions derived from, or connected with, sources in this State, but otherwise shall be determined in the same manner as the corresponding federal deductions.

(e)Nonresident shareholders of S corporation. —For purposes of subsection (a) of this section, in the case of a nonresident individual who is a shareholder of an S corporation, the rules provided in subsections (a) and (c) of § 1145 [repealed] of this title shall apply in the same manner as if such S corporation were a partnership and such nonresident individual were a nonresident partner.

(f)Apportionment and allocation. —If a business, trade, commerce, profession or vocation is carried on partly within this State and partly without this State, the items of income and deduction derived from, or connected with, sources within this State shall be determined by apportionment and allocation under rules prescribed by the Director of the Division of Revenue.

(g)Service in armed forces. —Compensation paid by the United States for service in the armed forces of the United States performed by a nonresident shall not constitute income derived from sources within this State.