§235-5  Allocation of income of persons nottaxable upon entire income.  (a)  This section applies to income notsubject to part II of this chapter, including nonbusiness income and certainsection 235-22 income.

(b)  Income (including gains), also losses,from property owned in the State and from any other source in the State shallbe determined by an allocation and separate accounting so far as practicable. Losses from property owned outside the State and from other sources outside theState shall not be deducted.

(c)  Deductions connected with income taxableunder this chapter shall be allowed, but deductions connected with income nottaxable under this chapter shall not be allowed.  Deductions from adjustedgross income that are not connected with particular property or income, such asmedical expenses, shall be allowed only to the extent of the ratio of theadjusted gross income attributed to this State to the entire adjusted grossincome computed without regard to source in the State.

Deductions by individual taxpayers from grossincome for alimony and separate maintenance payments under section 215 of theInternal Revenue Code shall be allowed only to the extent of the ratio of grossincome attributed to this State to the entire gross income computed withoutregard to source in this State; provided that as used in this sentence"gross income" means gross income as defined in the Internal RevenueCode, minus the deductions allowed by section 62 of the Internal Revenue Code,other than the deductions for alimony and separate maintenance payments undersection 215 of the Internal Revenue Code.

Deductions by individual taxpayers from grossincome for pension, profit-sharing, stock bonus plans, and other plansqualified under sections 401 to 409 of the Internal Revenue Code, as suchsections are operative for the purposes of this chapter, shall be allowed onlyto the extent that such deductions are attributed to compensation earned inthis State.

(d)  The standard deduction as provided insection 235-2.4 and personal exemptions as provided in section 235-54 shall beallowed only to the extent of the ratio of the adjusted gross income attributedto this State to the entire adjusted gross income computed without regard tosource in the State.

(e)  If in the opinion of the department theallocations hereinabove provided do not clearly and accurately reflect theactual amount of the adjusted gross income and taxable income received orderived from all property owned and any and every other source in the State, orif any person shows that the allocations hereinabove provided result inadjusted gross income or taxable income being attributed to the State in alarger amount than is just and equitable, then the same shall be determined,allocated, and apportioned under such rules, processes, and formulas as thedepartment prescribes as being just and equitable. [L Sp 1957, c 1, pt of §2;am L Sp 1959 2d, c 1, §16; Supp, §121-4; HRS §235-5; am L 1978, c 173, §2(6);am L 1983, c 88, §2; gen ch 1985; am L 1989, c 11, §1; am L 1999, c 253, §3]