05 Special sourcing rules A. Allocation or apportionment required. When a nonresident earns or derives

income, including income from pass-through entities or sole proprietorships, from sources both within Maine and elsewhere, an allocation or apportionment of the income must be made to determine the amount of Maine-source income. The following provisions set forth the rules for the determination of a nonresident’s Maine-source income; for the purpose of this section, the term “income” includes, in the alternative, the term “loss.” A nonresident may submit an alternative method of allocation with respect to his or her income and explain that method in full on the return, subject to review and modification by the Assessor. An alternative basis for the apportionment of business income under subsection F below may be requested as provided under 36 M.R.S. § 5211(17). Apportionment of items of income from the rendering of purely personal services by employees, salespersons, athletes, and entertainers is addressed in this section of the Rule. B. Employees generally. When a nonresident employee can establish the exact amount of pay received for services performed in Maine, that amount is the amount of Maine-source income. When no such exact determination of amounts earned or derived in Maine is possible, the income must be apportioned to Maine. Gross income wherever earned (determined as if the nonresident were a resident) is multiplied by a fraction, the numerator of which is the number of days spent working in Maine and the denominator of which is the total working days. The result is the amount of the nonresident’s Maine-source income. Days in which the employee was not at work, such as holidays, sick days, vacations, and paid or unpaid leave, are not included when computing total working days. When a working day is spent working partly in Maine and partly elsewhere, it is treated as one-half of a day spent working in Maine. C. Salespersons. The Maine-source income of a salesperson or other employee whose compensation is based in whole or in part upon commissions is computed as follows: The gross income earned from sales everywhere (determined as if the nonresident were a resident) is multiplied by a fraction, the numerator of which is the amount of sales made within Maine and the denominator of which is the amount of sales everywhere. For the purposes of this calculation, the "amount of sales" is determined under the same method by which the amount of sales is determined for purposes of calculating the employee’s commissions. The determination of whether sales are made within Maine or elsewhere is based upon where the salesperson performs the activities in obtaining the order, not the location of the formal acceptance of the contract. D. Professional Athletes. 1. Exhibition and regular season games. Nonresident professional athletes must include in income the entire amount of compensation received for games played in Maine. In the case of a nonresident athlete not paid 18-125 Chapter 806 page 10 specifically for the game played in Maine, the following apportionment formula must be used: The income earned and subject to the Maine income tax is the total compensation earned during the taxable year, including incentive payments, bonuses, and extras, but excluding signing bonuses and league playoff money. Total compensation is multiplied by a fraction, the numerator of which is the number of exhibition and regular season games the athlete played (or was available to play for the athlete’s team, as, for example, with substitutes) in Maine during the taxable year, and the denominator of which is the total number of exhibition and regular season games that the athlete was obligated to play under contract or otherwise during the taxable year, including games in which the athlete was excused from playing because of injury or illness. 2. Playoff games. For playoff games played in Maine, the amount of league playoff money earned by the professional athlete for playing or being available to play in such games is also income subject to apportionment under the following formula: League playoff money earned and subject to the Maine income tax is the total league playoff compensation earned during the taxable year multiplied by a fraction, the numerator of which is the number of playoff games the athlete played or was available to play in Maine during the taxable year, and the denominator of which is the total number of playoff games which the athlete’s team played during the taxable year, including playoff games in which the athlete was excused from playing because of injury or illness. 3. Signing bonuses. Any amount received by a nonresident professional athlete as a signing bonus is excluded from the income subject to Maine apportionment. E. Entertainers. The Maine-source entertainment income of nonresident entertainers is the entire amount received for performances, engagements or events that occurred in Maine. In the case of a nonresident entertainer who is not paid specifically for a performance in Maine, the following apportionment formula must be used: The income earned and subject to the Maine income tax is the entertainer’s total annual compensation multiplied by a fraction, the numerator of which is the number of performances the entertainer performed (or was available to perform, as, for example, with understudies) in Maine, and the denominator of which is the total number of performances which the entertainer was obligated to perform under contract or otherwise during the taxable year. F. Self-employed nonresidents and nonresident owners of pass-through entities carrying on a trade or business in Maine and elsewhere. Self-employed nonresidents and nonresident owners of pass-through entities carrying on a trade or business both within Maine and elsewhere must apportion their income in accordance with 36 M.R.S. § 5211 and Rule 801 in order to determine the amount of Maine-source income. See 36 M.R.S. § 5192. 18-125 Chapter 806 page 11