15-31-322. Water’s-edge election. Notwithstanding any other provisions of law, a taxpayer subject to the taxes imposed under this chapter may apportion its income under this section. A return under a water’s-edge election must include the income and apportionment factors of the following affiliated corporations only:

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(1)a corporation incorporated in the United States in a unitary relationship with the taxpayer and eligible to be included in a federal consolidated return as described in 26 U.S.C. § 1501 through 1505 that has more than 20% of its payroll and property assignable to locations inside the United States. For purposes of determining eligibility for inclusion in a federal consolidated return under this subsection (1), the 80% stock ownership requirements of 26 U.S.C. § 1504 must be reduced to ownership of over 50% of the voting stock directly or indirectly owned or controlled by an includable corporation.

(2)domestic international sales corporations, as described in 26 U.S.C. § 991 through 994, and foreign sales corporations, as described in 26 U.S.C. § 921 through 927;

(3)export trade corporations, as described in 26 U.S.C. § 970 and 971;

(4)foreign corporations deriving gain or loss from disposition of a United States real property interest to the extent recognized under 26 U.S.C. § 897; or

(5)a corporation incorporated outside the United States if over 50% of its voting stock is owned directly or indirectly by the taxpayer and if more than 20% of the average of its payroll and property is assignable to a location inside the United States.