Arizona Revised Statutes

Ariz. Rev. Stat. § 43-1148 (2026)

Apportionment by department

✓ current as of May 2026

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A. If the allocation and apportionment provisions of this article do not fairly represent the extent of the taxpayer's business activity in this state, the taxpayer may petition for or the department may require, in respect to all or any part of the taxpayer's business activity, if reasonable, any of the following:

1. Separate accounting, except with respect to an Arizona affiliated group, as defined in section 43-947.

2. The exclusion of any one or more of the factors.

3. The inclusion of one or more additional factors which will fairly represent the taxpayer's business activity in this state.

4. The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's income, other than disallowing a properly elected consolidated return.

B. If the department, in the exercise of its discretion, determines that an adjustment is necessary pursuant to subsection A of this section, it may, in its discretion, authorize such an adjustment for a period of not less than one taxable year.

Notes of Decisions

Cited in 3 cases, 1986–2009 · leading case: Walgreen Arizona Drug Co. v. Arizona Dep't of Revenue, 97 P.3d 896 (Ariz. Ct. App. 2004).

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Walgreen Arizona Drug Co. v. Arizona Dep't of Revenue, 97 P.3d 896 (Ariz. Ct. App. 2004). · cites it 2× “…of one or more additional factors which will fairly represent the taxpayer’s business activity in this state. A.R.S. § 43-1148.”

M.D.C. Holdings, Inc. v. State Ex Rel. Arizona Dep't of Revenue, 216 P.3d 1208 (Ariz. Ct. App. 2009). · cites it 4× “Alternatively, it claimed that even if gross receipts from sales of mortgages on the secondary market constituted a sale, they should be excluded from the denominator under A.R.S. § 43-1148 because they did not fairly represent the extent of MDC’s business in Arizona.”

Walter E. Heller W., Inc. v. Arizona Dep't of Revenue, 775 P.2d 1109 (Ariz. Ct. App. 1986). · cites it 2× “This problem may have been alleviated by A.R.S. § 43-1148 and A.C.R.R. R15-2-1141(b)(5)(b), enacted too late to apply here, which permit a re-computation of tax liability when the three factor formula causes a skewed result.”

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