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State combined and consolidated returns

Plan the combined state return

  • Ensure every entity at every level is fully recomputed on the same version of the software before consolidation.
  • An elimination return is required for every consolidation but can't be used on every state return.
  • Maintain balance on a separate company basis for every entity at every level.
  • Ensure consistent levels of detail for every entity at every level.
Consistent Level of Detail
Understand how the consolidation process works to generate combined returns efficiently:
  • Federal return data flows to the tax forms.
  • Common State Organizer input takes precedence over Federal Return information.
  • Individual State Organizer input takes precedence over Common State input or Federal Return Information.
    • In other words, information entered in the Individual State Organizer screens overrides the information entered into the
      Common State Organizer,
       which in turn overrides the rederal return information. All three are important data entry fields that eventually flow to the state tax forms.
Comparing State Combined and Consolidated Returns
Each state determines the formula for its consolidated or combined return. A consolidated report extracts amounts from each entity, totals them at the top consolidation level, and applies limitations to the total amounts. A combined return calculates each entity's taxable income and applies limitations at the individual entity level, then totals all entities to reach the consolidated taxable income.

Using Overrides on the State Combined Return

Entering Overrides
In this Organizer, there are priority fields labeled (override). The system sees these fields as priority fields and takes that number above all others without adding the * symbol to the tax return. Overrides must be entered on a consistent basis. If an (override) field is used on one entity for a certain amount, it must be (overridden) for all entities.
Clearing Overrides
Always clear all overrides before processing a final return. It's a good idea to have all preparers include an Override detail printout to prove overrides have been cleared from the tax forms for their returns.
Reviewing Overrides and Diagnostics
Reviewing overrides is a good way to discover any discrepancies between manually entered and computed values. Always review and clear all overrides before processing a final return. Reviewing diagnostics is a good way to discover any inconsistencies, omissions, or errors found during computation. Always review all diagnostics before processing a final return.By following these steps and understanding the process, you can efficiently manage your state combined and consolidated returns.

This article applies to:

  • Product: ONESOURCE Income Tax Express RS
  • Return type: 1120 Corporation
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