R11. Consolidated Returns  

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  • A. A consolidated return may be filed by a group of corporations who are affiliated through stock ownership if that affiliated group filed for the same tax period a consolidated return for federal income tax purposes pursuant to Section 1501 of the Internal Revenue Code. A consolidated return must include all companies that are so affiliated and that conduct business in the Municipality.

    B. To file a consolidated return for Municipal tax purposes the consolidated return shall include information to disclose the net profit or loss of each corporate member of the group before consolidation. Only those entities doing business in the Municipality shall be included in the consolidated return.

    C. The consolidated return must include the following:

    1) Separate income and expense statements for each entity included in the consolidation.

    2) Separate Schedule X for each entity.

    3) Separate Schedule Y apportionment for each entity.

    D. Profits and losses are combined after the schedules are separately applied to each respective corporation.

    E. Losses incurred by a corporation prior to the period of the consolidation year may be carried forward to the period of consolidation and applied against the allocated profit or loss of the same corporation, but such loss may not be used to reduce the income of other corporate members of the consolidated filing.

    F. Once a consolidated return has been filed for any taxable year the consolidated group must continue to file consolidated returns in subsequent years unless:

    1) Permission in writing is granted by the tax commissioner to file separate returns;

    2) A new corporation other than a corporation created or organized by a member of the group has become a member of the group during the taxable year; or

    3) A corporation member of the group is sold or exchanged. Liquidating a corporation or merging one of the corporations of the group into another will not qualify the group for filing separate returns.

    G. If the tax commissioner finds net profits are not properly allocated to the Municipality for any reason, including those set out in Section 311-11, he may then require the filing of separate returns or make such adjustments to the consolidated return as may be necessary to produce a fair and proper allocation.