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State combined and consolidated returns

Consolidated returns

Changing Entity Type for Subconsolidation
  • State-Specific Rules
    : Some states like California, Florida, Illinois, Kansas, Massachusetts, Minnesota, and Mississippi don't allow consolidations in a subsidiary listing. You need to mark the entity as either a parent or subsidiary.
  • Georgia and New York Specifics
    :
    • In Georgia, if you have a subconsolidation return included as a subsidiary in a top consolidation, mark it as a subsidiary.
    • In New York, if it's included as a parent company, mark it as a parent company.
Maintaining Consistent Level of Detail
  • Detail Consistency
    : Ensure you enter details consistently across all returns to avoid adjustments. For example, use consistent overrides in the State Adjustments area for depreciation. Enter all overrides under Federal Depreciation > 4562 Overrides > States Adopting 179, and reconsolidate.
  • Work Opportunity Credit
    : Consistency is key. If you enter an amount in State Adjustments for one company but let it generate automatically for others, it will cause adjustments.
Consolidation Process
Single User Access
: Only one person can be in the top consolidation company at a time since it locks all subsidiaries. You can work on different states simultaneously as long as no one is in the top consolidation company
Divisional Rollups
Automatic Consolidation
: Divisional Rollups automatically consolidate into a parent or subsidiary return. Ensure the Divisional Consolidation members are marked as divisions, with its own elimination company. States activate at the member level and consolidate in the top return.
Mixed Group Consolidations
Insurance Companies
: You can enter an 1120-PC or 1120-L insurance company as a subsidiary in a nonlife top consolidation for state combined purposes. Create a separate nonlife top consolidation for this, as federal returns require subgroups.
Water’s Edge Filings
  • Worldwide Combined Reporting
    : This includes all unitary group members, regardless of their country of incorporation or business activity.
  • Water’s Edge Combined Reporting
    : Excludes certain foreign-incorporated members or those conducting most business outside the US.
Mixed Group State Consolidation Structures
  • Multitier Structure
    : Similar to federal consolidation, includes topmost 1120, 1120-PC, and if applicable, 1120-L subgroups. Consolidate the 1120 with 1120-PC onto a nonlife topcon, and if applicable, consolidate with 1120-L into a life-nonlife consolidation.
  • Single-Tier or Flat Structure
    : Use this for mixed group state consolidation returns. It includes one nonlife top consolidation, one nonlife elimination, and all underlying companies (1120, 1120-PC, 1120-L). No mid-level subgroups here. This is ideal for states like Illinois and California that require all underlying companies to be shown on the top return.
Tips
  • State Specifics
    : Always check the specific requirements for each state to ensure compliance.
  • Consistency
    : Maintain a consistent level of detail across all returns to avoid unnecessary adjustments.

This article applies to:

  • PRODUCT: ONESOURCE Income Tax Express RS
  • Return type: 1120 Corporation
  • Subject: Consolidations

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