Discussion:Brother-Sister Controlled Group / fiscal YE (Schedule O & Apportionment Plan)
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Discussion Forum Index --> Tax Questions --> Brother-Sister Controlled Group / fiscal YE (Schedule O & Apportionment Plan)
MarathonMom (talk|edits) said: | 9 February 2007 |
| Facts: 2 corporations w/ same ownership (brother-sister controlled group), one w/ calendar year-end & 1 w/ 11/30 fiscal year end. Calendar year-end corp had NOL of $280 @ 12/31/05, will have ~ $350,000 income @ 12/31/06. Fiscal year corp had income of $1,600 @ 11/30/05 and $50,000 @ 11/30/06.
Question: Do I combine the 12/31/06 income of the calendar year corp (filing a 2006 Form 1120) w/ the 11/30/06 income of the fiscal year corp (filing a 2005 Form 1120) in order to "share" the lower level tax benefits? Or do I have to combine the 2 2005 From 1120s to "share" the lower level tax benefits? | |
| 9 February 2007 | |
| Look at the Consolidated Return rules beginning in Sec. 1501 and continuing for a few more sections (1502, 1503, etc). | |
| 10 February 2007 | |
| To make a consolidated return election, the members must have the same fiscal or calendar year as the common parent. Consequently, each sub must adopt the parent’s fiscal year end. | |
| 14 March 2007 | |
| Does anyone have the code/reg reference that states that all memebers of the controlled group (brother/sister members) should have the same tax year, as suggested by Riley2? The instructions for Schedule O says that the year ending of the members 'should include December 31, 2006'. So if member has September 30, 2006 year end, that member would be excluded for 2006, I think. When that member files 1120 for tax year ending on Septemeber 30, 2007 should they reference or amend Schedule O already filed by the parent. Does this sound right? | |
| 14 March 2007 | |
| This isn't a parent -sub situation. It's a brother-sister situation.
Each files their own return along with a statement or form stating that it's part of a controlled group, giving the name, address and ein of each business. | |
| March 14, 2007 | |
| Blrgcpa is right. It is not a consolidated return. It's a controlled group.
They split the brackets, Sec 179, AMT exemption, ... for the tax year that includes 12/31/xx for all entities. My Lacerte just kicked out the Schedule O last week on a 3-way Controlled Group. Is this a new form? I always just had that Controlled Group Apportionment Consent statement in the past. I hate when new forms come out and you guys don't tell me. | |
| 14 March 2007 | |
| Well I asked about that schedule O a few weeks ago, it through me too, especially because it was still in draft from then. | |
| 14 March 2007 | |
| Schedule O is a new Form/Schedule. We have a brother/sister situation. Only problem is one brother(?)'s year ends on September 30, 2007 and we cannot include tax year ending on Sep.30, 2006 on Schedule O as that year does not include December 31, 2006. Our UltraTax software looks for y/e 09/30/07 numbers to place on Schedule O. We are trying to talk to IRS (Technical), if they know better. Thanks everyone. | |
| June 15, 2007 | |
| Schedule O is now in final form. Does anyone know what to put in col. (e) "Penalty for failure to pay estimated tax" under Other Apportionments? The instructions do not address this column at all. And for anyone who uses Lacerte, how do I input amounts in column (d), also under Other Apportionments? | |
| June 19, 2007 | |
| Natalie, I looked at that, too. I have no idea. You may have to e-mail Lacerte.
On another note, in 2005 Lacerte, there was a Controlled Group Apportionment Consent schedule that showed how all of the different tax components were allocated among the members. I believe this is the "Apportionment Plan" that the new Schedule O is referring to. Lacerte no longer produces this schedule. I think Lacerte thought that the new Schedule O replaced the need for this Consent form. But I do not believe this is true. See Schedule O instructions, "Part I. Apportionment Plan Information" Page 2-3. The instructions refer to a separate signed "Apportionment Plan." My reading of the instructions leads me to believe that the Schedule O is NOT the "Apportionment Plan". I think the Schedule O merely provides the IRS with the status of the Group's Apportionment Plan, and shows how the actual taxable income (& other components) of each member was actually allocated based on this apportionment plan.
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| June 19, 2007 | |
| Well, I ended up preparing the return with a couple of blank columns. I just could not figure out how to do it, and the deadline was Friday.
Oh boy, I see what you're saying. My client didn't even have final figures for the other entities ready. In fact, another tax preparer works on the other returns, so I have no idea what the actual amounts are (although it just happens the amounts are zero across the board for my client). So, in my case, Schedule O does look like the plan because that's how I used it. | |
| June 25, 2007 | |
| IRC 1561(a) states: "[The tax benefit items] shall be divided equally among the component members of such group on such December 31 unless all of such component members consent (at such time and in such manner as the Secretary shall by regulations prescribe) to an apportionment plan providing for an unequal allocation of such amounts"
I have been looking into whether or not this 'consent' should be sent in with the return, but I have hit a road block. I believe the old Reg 1.1561-3 used to state that the consent must be sent in with the return. However, there is a new Temp Reg 1.1561-3T that replaces 1.1561-3. Temp Reg 1.1561-3T does not state that this consent must be sent in with the return. It is silent on this question. I would like to compare the text of the old reg and the temp reg. Does anyone know where I can find the full text of the old Reg 1.1561-3? Both of my research subscriptions have removed it. | |
| 25 June 2007 | |
| If you subscribe to RIA you could give them a call. Editorial assistance is 1-800-742-3348. They have responded to my occasional odd requests by emailing information to me. | |
| June 26, 2007 | |
| Thank you, Jessica. I spoke with a person on the PPC Editorial staff. She stated that one of the reasons the IRS issued Temp Reg 1.1561-3T was to remove the requirement to attach the Apportionment Consent. The IRS purposely removed this so as to avoid problems with e-filing.
Her opinion is that some day the IRS may require this as an attachment, but for now it would be wise to retain the signed consent form in your client's file. It's too bad Lacerte removed this form. I guess I am going to have to make up my own. | |
| June 26, 2007 | |
| Thanks for letting us know, Paul. Depending on your software, you may be able to take the form from prior years and use that. | |
