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There is no throwback rule in Florida. For a corporation that is doing business within and without Florida, the sales are not considered to be Florida sales solely because the corporation is not subject to tax within another state.

Generally, you cannot use separate accounting in place of the standard apportionment method. However, if the usual apportionment method does not accurately reflect the proportion of your corporation’s tax base attributable to Florida, you may request that the Department of Revenue consider an alternative method, such as separate accounting. Keep in mind, though, that a different approach will not be permitted solely because it yields a different result. Approval for deviating from the standard apportionment method will only be granted in rare, specific instances where unique, nonrecurring circumstances lead to an atypical outcome under the regular method.

LLCs filing as a partnership for federal income tax purposes are treated as a partnership in Florida. Florida Form F-1065​ is filed if the partnership is doing business in Florida and has a corporate partner.

LLCs filing as a corporation for federal income tax purposes are treated as corporations in Florida and file Florida Form 1120 when doing business in Florida.

LLCs that are disregarded federally or treated as a division federally are taxed under their single-member owner.

Yes, it is necessary. If any item on the federal return is modified and that change impacts the income reported for Florida corporate income tax purposes, the taxpayer must submit an Amended Florida Corporate Income/Franchise Tax Return (Florida Form F-1120X) along with a copy of the amended federal return or the Revenue Agents Report (RAR). This amended Florida form must be filed within 60 days after the federal adjustments affecting taxable income are finalized or agreed upon.

In Florida, an affiliated group may elect to file a consolidated corporate income tax return if certain conditions are met. The election to file a consolidated return is binding for future taxable years, unless permission is granted by the Executive Director of the Florida Department of Revenue to revert to separate filings.

To qualify for a Florida consolidated filing, the following requirements must be met:

Common Parent Requirement:

• The common parent corporation must be subject to the Florida Income Tax Code (only required for the initial filing).

Federal Consolidated Filing Requirement:

• The affiliated group must file a consolidated return for federal income tax purposes.

Group Membership Consistency:

• The affiliated group filing a Florida consolidated return must be identical to the group filing the federal consolidated return, even if some members of the group would not be taxable in Florida on a separate-company basis.

Election and Consent Process:

• In the initial year of the election, each affiliated member of the group must complete and submit Florida Form F-1122 (Authorization and Consent of Subsidiary Corporation to be Included in a Consolidated Income Tax Return).
• The election must be made by the due date of the return, including any properly filed extensions.

Required Forms and Attachments:

• The common parent must file Florida Form F-1120 (Corporate Income/Franchise Tax Return) for the group.
• The consolidated return must include Florida Form F-851 (Corporate Income/Franchise Tax Affiliations Schedule) or federal Form 851.

Filing Deadline and Extensions:

• The consolidated return must be filed by the due date of the common parent’s return, including extensions.
• If an extension is needed, Florida Form F-7004 (Application for Extension of Time to File Florida Corporate Income Tax Return) should be filed for both the parent company and each subsidiary.

Binding Election:

• Once a group elects to file a Florida consolidated return, it must continue to do so in future years unless the Executive Director of the Florida Department of Revenue grants permission to revert to separate filings.
• The common parent serves as the sole agent for the group and is responsible for intercompany adjustments and compliance with federal consolidated return procedures.

In most cases, yes. The legislative intent in Florida is for all corporations and entities treated as corporations doing business or earning or receiving income in the state to file a Florida Corporate Income/Franchise​ Tax Return (Florida Form F-1120).

In Florida, net income is calculated as a corporation's adjusted federal income for the taxable year, with specific state adjustments. This includes:

Apportioned income – The portion of adjusted federal income attributed to Florida under §220.15, F.S.

Nonbusiness income – Income specifically allocated to Florida under §220.16, F.S.

Exemptions – The allowable deduction under §220.14, F.S., which reduces taxable income.

This definition ensures that only the portion of a corporation’s income connected to Florida is subject to state corporate income tax.

What is adjusted federal income for Florida income tax purposes?

Adjusted federal income is the starting point for calculating Florida corporate income tax and is derived from a corporation's federal taxable income, with specific additions and subtractions required under Section 220.13, Florida Statutes (F.S.). These modifications ensure that the Florida corporate tax base aligns with state-specific tax policies while generally conforming to federal tax law.

1. Definition and Calculation

Florida defines adjusted federal income as a corporation’s federal taxable income, as reported on its federal tax return, with state-mandated modifications. Adjustments include additions for certain deductions taken at the federal level and subtractions for income not subject to Florida tax. This calculation determines a corporation’s net taxable income for Florida corporate tax purposes.

Florida follows federal tax classification rules for S corporations and LLCs, meaning that an LLC taxed as a C corporation at the federal level is also subject to Florida corporate income tax.

1. Additions to Federal Taxable Income

Florida requires certain amounts deducted at the federal level to be added back to taxable income, including:

• State and local income taxes deducted federally.
• Interest income from tax-exempt municipal bonds, unless issued by Florida or its municipalities.
• Depreciation adjustments required for assets placed in service under different federal tax rules, including assets placed in service between 1981 and 1986 under Election A or Election B.
• Net operating loss (NOL) deductions must be recalculated using Florida’s apportionment factor for the year the loss occurred.
• Enterprise zone credits and job tax credits, where wages used to claim the credit must be added back.
• Emergency excise tax deductions, which must be reversed for Florida tax purposes.
• Federal deductions related to foreign income, including certain global intangible low-taxed income (GILTI).

1. Subtractions from Federal Taxable Income

Florida allows certain income types to be subtracted from federal taxable income, including:

• Foreign dividends and deemed foreign income under Section 862, IRC.
• Subpart F income (income from controlled foreign corporations) that is included in federal taxable income but may be removed under Florida law.
• Interest on U.S. government obligations, which is taxable at the federal level but exempt from Florida corporate income tax.
• The Florida subtraction for excess federal targeted jobs credit wages, if those wages were disallowed as deductions on the federal return.
• Deferred cancellation of indebtedness income, which is included in federal taxable income but may be excluded under Florida law.

These subtractions prevent double taxation and ensure that Florida businesses are not taxed on income unrelated to Florida-based economic activity.

1. Depreciation Adjustments

Florida follows federal depreciation rules in most cases but requires adjustments when federal and state depreciation methods differ, including:

• Bonus depreciation must be added back and then amortized over a seven-year period.
• Excess Section 179 deductions must be added back, with a similar amortization period.
• Election A and Election B adjustments apply to assets placed in service between 1981 and 1986, requiring businesses to calculate depreciation as if they were using federal rules in place as of January 1, 1980.

These adjustments ensure consistency in the timing and amount of depreciation deductions, preventing significant temporary reductions in Florida taxable income due to federal tax law changes.

1. Treatment of Mergers and Consolidated Returns

Florida follows federal consolidated return rules with modifications:

• Corporations that file a federal consolidated return must adjust their taxable income if the Florida and federal consolidated groups differ.
• A pre-1983 election to file a Florida consolidated return is binding, and businesses must maintain consistency in affiliated group membership.
• If a corporation undergoes a Section 338(h)(10) election, where stock sales are treated as asset sales for federal purposes, the gain from the deemed asset sale must also be reported on its separate Florida tax return.

These rules ensure that Florida corporate tax calculations accurately reflect only the income attributable to Florida operations.

1. Net Operating Losses (NOLs) and Carryforwards

Florida generally follows federal NOL rules but with several key differences:

• Florida does not allow NOL carrybacks, meaning losses can only be carried forward.
• The amount of Florida NOL carryforward is determined using the Florida apportionment factor for the year in which the loss occurred.
• Ownership changes and discharged indebtedness can limit NOL usage, as Florida follows Section 382 and Section 108, IRC, in restricting NOL application when ownership changes occur or when forgiven debt affects taxable income.

These modifications ensure that NOLs reflect Florida-specific business activity and cannot be used to offset income from unrelated sources.

1. Taxation of S Corporations and LLCs

S corporations are generally exempt from Florida corporate income tax, except when they:

• Have built-in gains, subject to tax under Section 1374, IRC.
• Have excess passive investment income, which may be taxed under Section 1375, IRC.

LLCs follow federal tax classification rules, meaning:

• An LLC taxed as a C corporation federally is subject to Florida corporate income tax.
• An LLC taxed as a partnership or disregarded entity is not separately taxed in Florida.

These provisions ensure that businesses structured as pass-through entities at the federal level do not become subject to corporate tax at the state level, unless they meet specific criteria.

1. Special Considerations for Alternative Minimum Tax (AMT)

For tax years beginning on or after January 1, 2018, Florida no longer imposes an AMT, aligning with the repeal of the federal corporate AMT. However, taxpayers with previously earned Florida AMT credits must still compute AMT to determine the amount of AMT credit allowable against Florida corporate income tax.

Summary of Adjusted Federal Income Adjustments in Florida

Adjusted federal income is the foundation for calculating Florida corporate income tax. It begins with federal taxable income, modified to include state-specific additions and subtractions. These modifications account for differences in depreciation, tax-exempt income, foreign-related deductions, and NOL limitations. Florida generally follows federal classification rules but imposes state-specific adjustments to maintain its corporate tax base.

These provisions ensure that only income properly attributable to Florida business activity is subject to Florida corporate income tax.

In Florida, nonbusiness income is allocated based on the type of income and its connection to the state. The allocation rules are as follows:

Rents and Royalties

• Real Property: Net rents and royalties from real property located in Florida are allocated to Florida.
• Tangible Personal Property: Net rents and royalties from tangible personal property are allocated to Florida if:
  • The property is utilized in Florida, or
  • The taxpayer's commercial domicile is in Florida, and the taxpayer is not taxable in the state where the property is used.
• If the extent of utilization is unclear, the property is deemed used in the state where the lessee first obtained possession.

Capital Gains and Losses

• Real Property: Capital gains and losses from the sale of real estate located in Florida are allocated to Florida.
• Tangible Personal Property: Gains or losses from the sale of tangible personal property are allocated to Florida if:
  • The property was located in Florida at the time of sale, or
  • The taxpayer’s commercial domicile is in Florida, and the taxpayer is not taxable in the state where the property was located.
• Intangible Personal Property: Gains or losses from the sale of intangible assets (e.g., stocks, bonds) are allocated to Florida if the taxpayer’s commercial domicile is in Florida.

Interest and Dividends

• Interest and dividends are allocated to Florida if the taxpayer’s commercial domicile is in the state.

Patent and Copyright Royalties

• Patent and copyright royalties are allocated to Florida if:
  • The patent or copyright is utilized in Florida, or
  • The taxpayer’s commercial domicile is in Florida, and the payor uses the intellectual property in a state where the taxpayer is not taxable.
• If it is unclear where the intellectual property is used, patents are allocated based on the location of manufacturing or product production, and copyrights are allocated based on the location of printing or publication.

These allocation rules ensure that nonbusiness income is taxed in the appropriate jurisdiction based on the income source and the taxpayer’s commercial domicile.

Yes, unless including such receipts would materially distort the sales factor.

Receipts from the sale of fixed assets are generally included in Florida’s sales factor for apportionment purposes. However, if their inclusion would significantly distort the sales factor, the taxpayer may petition the Florida Department of Revenue for an adjustment. Likewise, the Department is authorized to require an adjustment if it determines that the standard apportionment calculation does not fairly represent the taxpayer’s business activity in the state.

Florida provides industry-specific apportionment formulas for certain businesses that operate within the state. These industries have unique rules that deviate from the standard sales-based apportionment formula used for most corporations. The special apportionment methods apply to the following industries:

Insurance Companies

Insurance companies apportion their tax base using a premium-based formula rather than the traditional sales formula. The apportionment fraction is calculated as: Direct premiums written for insurance on properties and risks in Florida ÷ Direct premiums written for insurance on properties and risks everywhere. If the insurer’s primary source of premiums comes from reinsurance, the fraction is adjusted to include reinsurance premiums accepted for Florida risks.

Transportation Companies

Businesses providing transportation services (including air, sea, rail, trucking, and pipeline transportation) apportion income based on revenue miles rather than sales. The apportionment fraction is: Revenue miles within Florida ÷ Total revenue miles everywhere.

Special rules apply for air and sea transportation, where revenue miles include routes within Florida's designated geographic boundaries and all travel between points within Florida, even if the route extends beyond the state's landmass.

Citrus Processing Companies

Citrus processing companies are allowed to elect to use a single-factor sales apportionment method instead of the standard three-factor formula. To qualify, a citrus processing company must file a corporate income tax return using this method for the taxable year in which the election is made.

The Capital Investment Tax Credit (CITC), established under Section 220.191, Florida Statutes (F.S.), provides an annual corporate income tax credit to businesses that undertake significant capital investment projects in Florida. Designed to stimulate economic growth, the CITC incentivizes companies to expand or relocate operations within the state by offering tax relief for major infrastructure investments while also fostering the creation of high-paying jobs.

To qualify for the CITC, a business must meet several eligibility criteria. The company must invest at least $25 million in land, buildings, or equipment, and the project must create at least 100 net new full-time jobs with an average annual wage above a designated threshold, which varies based on location and industry. Additionally, businesses must receive certification from Florida Commerce (formerly the Department of Economic Opportunity) before commencing operations.

The CITC allows businesses to claim 5% of eligible capital costs as a tax credit for up to 20 years. However, the percentage of corporate income tax liability that can be offset by the credit depends on the level of investment:

• 100% credit for projects investing $100 million or more,
• 75% credit for projects investing between $50 million and $100 million, and
• 50% credit for projects investing between $25 million and $50 million.

If a company does not fully utilize the credit, unused amounts can be carried forward starting from the 21st year after the project's commencement, extending through the 30th year, provided the project meets specific criteria.

Florida’s property factor is used in the apportionment formula to determine the portion of a corporation’s income subject to Florida corporate income tax when the business operates in multiple states. The property factor represents the value of real and tangible personal property owned or rented and used in Florida relative to the total property used everywhere.

The general requirements for including property in the apportionment formula are as follows

1. Types of Property Included in the Property Factor

The property factor includes:

• Real property – land and buildings.
• Tangible personal property – machinery, equipment, furniture, tools, and inventory.
• Stocks of goods – items held for sale or processing.
• Property held as reserves or standby facilities – even if temporarily idle, it is included in the factor.
• Construction-in-progress – is excluded until the property is used to generate income, unless it is partially in use.
• Leased property – is valued at eight times its annual rental rate and included in the factor.

1. Determining Whether Property is Included in the Property Factor

Property must be:

• Used or available for use during the tax period.
• Owned or rented by the corporation and used in the regular course of business.

Specific scenarios:

• Idle property (e.g., temporarily closed factories, standby equipment, or raw material reserves) is still included in the property factor.
• Property held for sale remains in the property factor until a permanent withdrawal event occurs, such as:
  • The sale of the property.
  • Five consecutive years without use in production.
• Leased property used by the corporation is included, valued at eight times its annual rental rate.

1. Property in Transit

Property that is moving between business locations is counted at its final destination for property factor calculations.

• Goods in transit between locations of the taxpayer remain in the property factor but are allocated based on their final destination.
• Goods in transit between a buyer and a seller are included in the denominator of the factor if included in regular accounting practices and allocated to the state of final destination.

1. Mobile and Movable Property

Special rules apply for mobile or movable property such as construction equipment, trucks, and leased electronic equipment.

• Apportionment is based on total time the property was located in Florida during the tax period.
• Ships and vessels (such as cruise ships or fishing boats) use the "port day method," meaning the time spent docked at a Florida port relative to total port days determines the Florida property value.
• Automobiles assigned to employees are included in the numerator if:
  • The employee’s compensation is assigned to Florida in the payroll factor, or
  • The vehicle is registered in Florida.

1. Aircraft Leasing Companies – Special Apportionment Rules

For companies leasing aircraft to airlines, property in Florida may be apportioned using one of two methods:

1. Actual revenue miles method:
   • The original cost of the leased aircraft is multiplied by a fraction, where the numerator is the actual revenue miles flown in Florida, and the denominator is the total revenue miles flown everywhere.
2. Fleetwide revenue miles method:
   • The original cost of the leased aircraft is multiplied by a fraction, where the numerator is the lessee’s total revenue miles flown in Florida for their entire fleet of similar aircraft, and the denominator is the lessee’s total revenue miles flown everywhere for the entire fleet.

Once a company selects a valuation method, it must petition the Department of Revenue to change the method in future tax years.

1. Valuation of Owned Property

• Property owned by the corporation is valued at its original cost, which is usually the federal tax basis before depreciation.
• Depreciation is not deducted for apportionment purposes.
• Regulated industries (e.g., utilities, telecommunications) must follow cost determination methods prescribed by their regulatory agencies.

1. Valuation of Rented Property

• Rented property is valued at eight times the annual rental rate.
• If property is subleased, subrents may be deducted from the rental value, unless the subleased property is used in the corporation’s business operations.
• If rent payments do not reflect fair market value, the state may require an adjustment to properly reflect economic substance over form.

1. Special Rules for Leasehold Improvements

Leasehold improvements (such as renovations to rented buildings) are included in the property factor as if they were owned by the taxpayer, even if:

• The improvements revert to the lessor when the lease expires.
• The taxpayer does not have the right to remove the improvements.

1. Treatment of Partnership Property

If a corporation owns an interest in a partnership, a portion of the partnership’s real and tangible personal property is included in the corporation’s property factor, based on its ownership percentage in the partnership.

• Property rented between a corporation and its partnership is excluded to prevent double counting.

1. Property Factor for Financial Organizations

• Financial organizations (e.g., banks, brokerage firms) must include intangible personal property (excluding goodwill) in the property factor.
• Loans secured by real or tangible personal property located in Florida are apportioned based on the ratio of secured property value in Florida to total secured property value everywhere.

1. Averaging Property Values

To determine the average property value for the tax period, the beginning and ending values of the tax year are used.

• If there are significant fluctuations in property values, the Department of Revenue may require monthly averaging to reflect actual business conditions.
• For rented property, averaging occurs automatically using the annual rental rate formula.

Summary of Florida’s Property Factor Requirements

These rules ensure that corporate property is fairly apportioned to Florida, reflecting a business’s actual presence and economic activity in the state.

Florida’s payroll factor is one of the components used in the apportionment formula to determine the portion of a corporation’s taxable income that is subject to Florida corporate income tax when the business operates in multiple states. The payroll factor represents the proportion of compensation paid to employees in Florida relative to total compensation paid everywhere during the tax period.

1. Definition of Payroll for Apportionment

The payroll factor includes:

• Wages, salaries, commissions, and other forms of employee compensation paid during the tax period.
• Deferred compensation, housing, rent, lodging, and other benefits if they are considered taxable income under the Internal Revenue Code (IRC).
• Amounts paid to employees for personal services, regardless of whether those wages are capitalized as part of a company’s assets (e.g., wages for employees constructing a facility for the business).

1. Who is Considered an Employee for the Payroll Factor?

Only amounts paid directly to employees are included in the payroll factor. An employee is defined as:

• An officer of a corporation.
• An individual classified as an employee under common-law rules.
• Anyone included as an employee for Federal Insurance Contributions Act (FICA) payroll tax purposes.

1. Compensation Paid in Florida

If an employee performs all services within Florida, their compensation is fully assigned to the state. However, if an employee performs services both inside and outside Florida, the wages are attributed to Florida if any of the following conditions apply:

1. The employee’s base of operations is in Florida.
2. If there is no base of operations, the employee is directed or controlled from Florida.
3. If neither a base of operations nor a control center exists in a state where the employee works, Florida is the employee’s primary residence.

1. Payroll Exclusions from the Factor

Some payroll amounts must be excluded from both the numerator (Florida payroll) and denominator (total payroll), including:

• Compensation directly tied to income that is excluded from adjusted federal income (e.g., wages of employees managing investments that generate nonbusiness income).
• Compensation paid to partnership employees is included only to the extent of the corporation’s interest in the partnership.

1. Special Payroll Considerations for Partnerships

If a corporation owns an interest in a partnership, the corporation must include a portion of the partnership’s payroll in its own payroll factor based on its ownership percentage or as allocated in the partnership agreement. This ensures that partnerships are properly accounted for when apportioning income.

Summary of Florida’s Payroll Factor for Apportionment

The payroll factor is an essential component of Florida’s corporate income tax apportionment formula, ensuring that businesses allocate employee compensation fairly among different states.

Florida's sales factor is a key component of the corporate income tax apportionment formula, used to determine the portion of a corporation’s income subject to Florida taxation when operating in multiple states. The sales factor is calculated as the ratio of gross receipts from Florida-based transactions to total gross receipts from all business activities.

1. Definition of Sales for Apportionment

The term "sales" includes all gross receipts from transactions and activities conducted in the regular course of business, including:

• Sales of tangible personal property (e.g., manufactured goods, retail products).
• Sales of business assets (e.g., equipment, vehicles) if sold as part of the regular course of business.
• Installment sales (including interest earned).
• Rental income, if rental activities generate at least 10% of total business income.
• Construction contract income, based on the percentage-of-completion or completed-contract method.
• Income from services (e.g., consulting, research, advertising).
• Licensing and royalties from intangible assets (e.g., patents, trademarks, copyrights).

1. Sales of Tangible Personal Property in Florida

Sales of tangible personal property (e.g., inventory, consumer goods) are attributed to Florida if:

1. The goods are delivered or shipped to a purchaser located in Florida.
2. The sale is made to a customer with a Florida warehouse, even if the goods are later distributed elsewhere.
3. The seller diverts a shipment en route to a destination in Florida.

1. Sales of Services

Income from services is included in the Florida sales factor if:

• The service is performed entirely in Florida.
• Services are performed in multiple states, but the greatest proportion of costs incurred is in Florida.
• The customer is billed from a Florida location, or Florida is where the primary service activity occurs.

1. Sales of Intangible Property and Licensing Fees

• Trade names, trademarks, and patents are Florida sales if licensed to a Florida-based business.
• Franchise fees are Florida sales if the franchise location is in Florida.
• Investment income (e.g., dividends, royalties, and interest) is generally excluded unless the income is generated from an income-producing activity occurring in Florida.

1. Special Apportionment Rules for Certain Industries

Some industries follow special apportionment rules when calculating their sales factor:

1. Financial Organizations

• Loan interest is a Florida sale if the loan is secured by Florida property.
• Dividends and trading profits are Florida sales if the investment is managed within Florida.
• Account service fees are Florida sales if the account is maintained at a Florida branch.

1. Aircraft Leasing Companies

Aircraft leasing companies must elect one of two methods to determine Florida sales:

1. Actual revenue miles method – The lease receipts for a specific aircraft are multiplied by the Florida revenue miles divided by total revenue miles.
2. Fleetwide revenue miles method – The lease receipts for all aircraft are multiplied by the lessee’s total Florida revenue miles divided by total revenue miles worldwide.

1. Broadcasting and Print Media

• Television and radio advertising revenue is apportioned based on the ratio of the Florida audience to the total audience.
• Newspaper and magazine advertising revenue is assigned to Florida based on Florida circulation relative to total circulation.

1. Transportation & Shipping Companies

• Passenger cruises and cargo ships use the "port day method," which calculates Florida sales based on the number of days spent at Florida ports relative to total port days.
• Pipeline transportation uses barrel miles or cubic feet miles within Florida to determine sales factor inclusion.

1. Technology & Digital Services

• Software sales are Florida sales if the software is delivered to a Florida customer.
• Cloud services and data access fees are Florida sales if the customer accesses the service from Florida.
• Online advertising and digital subscriptions are Florida sales if the user is located in Florida.

1. Treatment of Partnership Sales

If a corporation owns an interest in a partnership, it must include its proportional share of the partnership’s sales in the Florida sales factor. The proportion is based on the ownership percentage in the partnership or as outlined in the partnership agreement.

1. Exclusions from the Sales Factor

Certain sales and receipts are excluded from the sales factor to prevent distortions:

• Investment income (e.g., interest, dividends, and passive royalties) unless the income-producing activity is in Florida.
• Intercompany management fees between a parent and subsidiary unless they are a primary source of revenue.
• Receipts from the mere holding of intangible assets, such as interest from bonds or dividends from passive stock investments.

Summary of Florida’s Sales Factor for Apportionment

The sales factor plays a critical role in Florida’s apportionment formula, ensuring that only income generated from business activities within the state is subject to Florida corporate income tax.