Ark. Code Ann. § 26-51-701 (2026)
Definitions
As used in this Act, unless the context otherwise requires:
History. Acts 1961, No. 413, § 1; 1963, No. 529, § 1; 1979, No. 1024, § 1; A.S.A. 1947, § 84-2055; Acts 1989, No. 494, § 3.
A.C.R.C. Notes. Former subsection (d) of this section defined “financial organization”. The repeal of subsection (d) was a deviation from the official version of the Uniform Division of Income for Tax Purposes Act drafted by the National Conference of Commissioners on Uniform State Laws.
Meaning of “this Act”. Acts 1961, No. 413, codified as 26-51-701 et seq.
Research References
ALR.
Construction and Application of Uniform Division of Income for Tax Purposes Act (UDITPA) — Determination of Business Income. 74 A.L.R.6th 1.
Ark. L. Rev.
Case Note, Pledger v. Illinois Tool Works, Inc.: Arkansas Belatedly Recognizes the Unitary Business Principle as a Limitation of Its Power to Tax Capital Gains of Nondomiciliary Corporations, 45 Ark. L. Rev. 597.
U. Ark. Little Rock L.J.
Survey, Taxation, 14 U. Ark. Little Rock L.J. 401.
Case Notes
Business Income.
—In General.
The focus of subsection (a) is the nature of the taxpayer's business, and business income arising from either of two sources: (1) transactions and activity in the regular course of the taxpayer's business, or (2) income from the acquisition, management, and disposition of property that constitutes integral parts of the taxpayer's regular business. Pledger v. Getty Oil Exploration Co., 309 Ark. 257, 831 S.W.2d 121 (1992).
—Unitary Business Principle.
Under the “unitary business” rationale, the general test for determining whether a diversified group of businesses had a unitary business relationship was to determine whether the income that the state was attempting to tax resulted from functional integration, centralization of management, and economies of scale utilized by the corporate group. Pledger v. Illinois Tool Works, Inc., 306 Ark. 134, 812 S.W.2d 101, cert. denied, Pledger v. Illinois Tool Works, 502 U.S. 958, 112 S. Ct. 418, 125 L. Ed. 2d 721 (1991).
Applying the unitary business principle, the plaintiff's capital gains income from the sale of stock interest in three other companies was nonbusiness income for Arkansas's Uniform Division of Income for Tax Purposes Act purposes; for at no time did the plaintiff hold the majority of the stock in these companies, and did not have a controlling interest or part. Pledger v. Illinois Tool Works, Inc., 306 Ark. 134, 812 S.W.2d 101, cert. denied, Pledger v. Illinois Tool Works, 502 U.S. 958, 112 S. Ct. 418, 125 L. Ed. 2d 721 (1991).
Plaintiff's capital gains which were not an integral part of its regular manufacturing and leasing businesses did not fit the unitary business principle test. Pledger v. Illinois Tool Works, Inc., 306 Ark. 134, 812 S.W.2d 101, cert. denied, Pledger v. Illinois Tool Works, 502 U.S. 958, 112 S. Ct. 418, 125 L. Ed. 2d 721 (1991).
Commercial Domicile.
Taxpayers were not entitled to a “commercial domicile” for income tax purposes, since there was no evidence that they paid any income tax in the state of Texas, their place of business, or that Texas even had an income tax law. Shinn v. Heath, 259 Ark. 577, 535 S.W.2d 57 (1976).
Cited: Cheney v. St. Louis Sw. Ry., 239 Ark. 870, 394 S.W.2d 731 (1965); Collins v. Skelton, 256 Ark. 955, 512 S.W.2d 542 (1974); Land O'Frost, Inc. v. Pledger, 308 Ark. 208, 823 S.W.2d 887 (1992).