About state combined and consolidated returns
When you're done with your federal return and ready to tackle unitary combined returns for states, it's time to decide on the number of unitary groups you need. A corporation is generally required to file a combined report if it's subject to corporate income tax and engaged in a unitary business with other corporations that need to be included in a combined report. A unitary business is a group of two or more corporations related by common ownership and sufficiently interdependent, integrated, or interrelated through their activities to file as one group. Each separate group requires its own top consolidation and elimination.
Combined report/return:
A filing method that combines the business income of all members of a unitary corporate group, eliminates intercompany transactions, apportions the results to the state, and then calculates combined taxable income by aggregating entity amounts and applying limitations at the group level.Consolidated return:
A single filing that includes only affiliates taxable by the state, calculates taxable income and applies limitations for each entity individually, and then totals those amounts to determine consolidated taxable income.Returns
- Determine Unitary Groups: Identify the number of unitary groups needed for filing.
- Verify Common Ownership: Ensure corporations are related by common ownership and interdependent activities.
- Top Consolidation: Each group requires its own top consolidation and elimination.
State activation
For both combined and consolidated returns, activate states on the member level. For example, if you have a subsidiary that is not showing on a unitary return, verify that the state is added or activated on the subsidiary so it is included.
In Organizer, select
States
, then State and City Activation/Consolidation
, then State and City Activation/Consolidation
to open the State Activation screen. Select the check boxes for the states you want to combine or consolidate.
