consolidated reporting

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The Kentucky Court of Appeals held in an unpublished opinion that an out-of-state parent company was not an “includible corporation” as defined by Kentucky law and could not file a consolidated return with its in-state subsidiary. The Department argued that the parent company taxpayer was not an includible corporation because it fell within two exceptions…

By Jonathan Maddison and Timothy Gustafson

The Indiana Department of Revenue determined that forced combination of an Indiana taxpayer, its wholly owned disregarded entity and its out-of-state parent company was appropriate where the disregarded entity generated 92% of the federal consolidated group’s sales but only 0.14% of the consolidated taxable income for the taxpayer. The…

By Sahang-Hee Hahn and Prentiss Willson
The Florida Department of Revenue permitted a taxpayer to discontinue filing Florida consolidated corporate income tax returns because the taxpayer established that its affiliated group’s business focus had changed significantly since making its election. In Florida, a parent corporation may elect to file a consolidated corporate income tax return.

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By Kathryn Pittman and Andrew Appleby

In a post-audit challenge by a taxpayer, the Virginia Tax Commissioner addressed entity classification, nexus and royalty add-back issues. The Commissioner found that the taxpayer did not provide sufficient evidence that its single member LLC was a disregarded entity or that certain entities were financial institutions. Turning to nexus,…

By Suzanne Palms and Pilar Mata

The Florida Department of Revenue determined that sufficient reasonable cause had been established to allow a taxpayer to discontinue filing a consolidated Florida corporate income tax return because the taxpayer had experienced “substantial growth.” The Department noted that the taxpayer’s employees, assets and income had increased, and the taxpayer…

By Christopher Chang and Timothy Gustafson

The Massachusetts Department of Revenue issued a Letter Ruling stating that, for purposes of determining common control with regard to a combined report, the Department looks to actual voting control as opposed to voting power, which is the test for federal consolidated reporting. Under the Massachusetts combined reporting rules…