Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › 1998-1 - Comprehensive Corporation Income Tax Regulations › Rule 26-51-805 - CONSOLIDATED CORPORATE RETURNS › Rule 1.26-51-805(f) - Separate Computation of Taxable Income or Loss

Current through Register Vol. 49, No. 6, June, 2024
Corporations filing a consolidated return and which select
					 Filing Status "4" must complete a separate Form AR1100CT for each member with
					 gross income from sources within Arkansas (including an Arkansas Schedule A if
					 multistate). These separate returns should reflect taxable income before any
					 allowable inter-company eliminations and adjustments. Each member's separate
					 Form AR1100CT must be consolidated on a group Form AR1100CT which should also
					 reflect taxable income before any allowable inter-company eliminations and
					 adjustments. In addition, a complete copy of the federal return must be
					 attached. A schedule listing each allowable inter-company elimination and
					 adjustment, identifying the entity by FEIN to which it applies, must be
					 submitted if this information is not clearly shown in the federal
					 return.
Income tax will be computed on the Arkansas consolidated
					 taxable income reported on the group Form AR1100CT.
Contribution limitations are computed on a separate
					 corporation basis. In the case of multistate corporations, the contribution
					 limitation is computed based on the total apportionable income as shown on
					 Arkansas Schedule A, Part A of Form AR1100CT.
In place of a separate Form AR1100CT for each member of the
					 consolidated group, the taxpayer may submit a schedule showing the separate
					 calculation of income. However, each corporation shown on the schedule must be
					 identified by a FEIN and corporate name.
EXAMPLE 1: The taxpayer uses the cash basis of reporting
					 income.
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*$105,000 - $1,000 Ark. Income Tax + $-0-
					 contributions
**$125,000 - $500 Ark. Income Tax + $7,550
					 contributions
Corporation A and B file a consolidated return for federal
					 and state tax purposes. The contribution deduction is calculated on a
					 consolidated basis for federal income tax purposes and would be $7,000.
The contribution deduction is calculated on an individual
					 corporation basis for state income tax purposes and would be $7,550 as
					 calculated above. The calculation is computed prior to apportioning. Any
					 nondeductible amount can be carried forward for up to five (5) years.
EXAMPLE 2:
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Corporation X and its subsidiaries file an Arkansas
					 consolidated return. For federal income tax purposes, the group had taxable
					 income and deducted all contributions in the current year.
However, for Arkansas income tax purposes, the two members
					 with losses were unable to deduct contributions because each member must
					 calculate its taxable income separately. Corporation Y is able to deduct
					 contributions because it had income, even though the group has a loss for
					 Arkansas purposes. The unused contributions may be carried forward for up to
					 five (5) years.