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Tax Management Portfolio Income Taxes: Consolidated Returns and Combined Reporting, No. 1130, compares state combined reports and state consolidated returns in detail and discusses the mechanics and implications of filing combined reports and the different types of state consolidated returns.
Feb 24, 2017 · There are broadly two ways of doing this: combined reporting, which requires a multi-state corporation to add together profits of all of its subsidiaries, regardless of their location, into one report, and separate accounting, which allows companies to report the profit of each of its subsidiaries independently.
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- State Net Operating Losses and Tax Credits
- Changes to State Tax Laws and Income Tax Rates
- Pass-Through Entity Taxes
State net operating losses(NOLs) are accounted for as deferred tax assets, similar to federal NOLs. However, they often differ in the carryforward or carryback (if any) period and whether the carryforward is based on modified state income prior to apportionment or after apportionment. Due to budget issues, some states have enacted laws suspending o...
Companies may encounter state tax law changes that impact the income tax provision. ASC 740 requires companies to account for changes to state income tax rates or laws during the period in which the law is enacted. A state tax rate change will often require a company to “reprice” its deferred tax assets and liabilities, resulting in a deferred impa...
Historically, pass-through entities are not subject to state income tax because the tax consequences of transactions within the pass-through entity “flow through” to its owners. However, an increasing number of states have started embracing an entity-level income tax on pass-through entities. Pass-through entities that issue GAAP-based financial st...
These differences can arise for various reasons, such as a state’s adoption of an earlier version of the IRC, decoupling from specific federal provisions, differences in the treatment of noncorporate entities, or the application of the federal consolidated return regulations.
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Nov 29, 2022 · A majority of states that impose a corporate income tax have adopted the use of mandatory worldwide, or water’s-edge, combined reporting methods for unitary businesses. At the same time, historically separate-filing states are seeking to adopt combined reporting tax regimes for corporate taxpayers.
Feb 1, 2019 · To maximize the use of corporate state NOLs, companies should consider sharing NOLs among members of a combined return, if the state allows or requires combined filing, and consider each state's applicable income apportionment factors and whether an NOL is calculated on a preapportionment or post-apportionment basis.
to use the filing method (separate, combined, or consolidated) that best reflects their business operations and activity in a state. Combined Reporting States • Mandatory Unitary Combined Reporting: States should not impose mandatory unitary combined reporting (MUCR) as provided in the COST Policy Statement opposing MUCR.
