Consolidated Returns

Managing excess loss accounts

This item discusses how an ELA can occur and potential methods to minimize or eliminate these balances before they are recaptured into taxable income.

Compliance With Short-Period Return Rules Can Stave Off Penalties and Rejection of Elections as Untimely

The unextended due date of the return of a domestic corporation, Form 1120, U.S. Corporation Income Tax Return, generally is the 15th day of the third month following the close of the corporation's tax year. However, when a target corporation joins the consolidated group of a purchasing corporation on a date other than the first day of the target corporation's tax year, the due date for the target corporation's short-period final return is determined without regard to the last day of the short period.

Consolidated Income of Affiliated Group Subject to Graduated Rates

The Tax Court held that all the consolidated income of an affiliated group that consisted of a corporation that was a qualified personal service corporation and another corporation that was not a qualified personal service corporation should be taxed using the graduated tax rates of Sec. 11(b)(1).

Unexpected Consequences of Changes in Entity Classifications

When entities change their classification, several income tax issues that are not immediately apparent may come into play. When these issues are discovered, they may require amending tax returns and could result in tax penalties as well.

Opportunity to Eliminate Certain Intercompany Gain

Groups can effectively eliminate the intercompany gain in certain circumstances, thereby reducing the possibility of inadvertently triggering intercompany gain and freeing taxpayers from the need to plan transactions so as to avoid a trigger.

Newsletter Articles

TECHNOLOGY

2018 tax software survey

Among CPA tax preparers, tax return preparation software generates often extensive and ardent discussion. To get through the rigors of tax season, they depend on their tax preparation software. Here’s how they rate the leading professional products.

DEDUCTIONS

Qualified business income deduction regs. and other guidance issued

The package includes final regulations, guidance on how to calculate W-2 wages, a safe-harbor rule for rental real estate businesses, and new proposed rules on the treatment of previously suspended losses.