Code of Maine Rules › 18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES › 125 - BUREAU OF REVENUE SERVICES › Chapter 810 - MAINE UNITARY BUSINESS TAXABLE INCOME, COMBINED REPORTS, AND TAX RETURNS › Section 125-810-.03 - TAXABLE INCOME UNDER THE LAWS OF THE UNITED STATES

Current through 2024-29, July 17, 2024
The taxable income under the laws of the United States,
see
36 M.R.S. §
									5102(8), of the
				  unitary business is determined in the following manner:
A. The separate federal taxable income, as
				defined under federal consolidated regulations for each member of the unitary
				business that is a member of a single federal consolidated filing, must be
				adjusted for eliminations, deferrals, and other modifications allowed under
				federal law and regulations. In the event that the eliminations, deferrals, and
				other modifications are based on intercompany transactions, such adjustments
				must be made only for transactions between corporations included in the
				combined report. If a unitary group member did not receive the full benefit of
				an allowable tax benefit (such as a charitable contribution deduction) in the
				federal consolidated return because of the effect of income of non-unitary
				members in the consolidated return, the unitary member may take the adjustment
				that would have been allowed under federal law if only the unitary members had
				filed the consolidated return.
B.
				The federal taxable income (before special deductions and net operating loss
				deductions) from the federal returns of unitary group members that are not
				members of a federal consolidated group must be added to the income amounts
				obtained pursuant to subsection A above.
C. The taxable income referenced in
				subsections A and B above includes, for a corporation with an interest in a
				passthrough entity (e.g., partnership, LLC, S corporation), its distributive
				share of the entity income, loss, or deduction in accordance with the Code and
				36 M.R.S. §
									5102(8). The
				character of any item included in the distributive share is determined as if it
				were realized or incurred directly by the corporation. The business of the
				passthrough entity is treated as the business of the corporation.
See
MRS Rule
				801 (18-125 C.M.R., Ch.
				801).
D. The income computed in
				accordance with subsections A and B above must be adjusted by certain
				intercompany transactions that result in gains/losses between corporate members
				of the unitary business that have not already been used to adjust income under
				subsection A above. Adjustments made under this subsection include, but are not
				limited to, those for (a) dividends paid out of income subject to apportionment
				under 36 M.R.S., chapter 821 by one unitary member to another unitary member;
				(b) deferrals of gains/losses from intercompany sales of inventory; and (c)
				deferrals of gains/losses from intercompany sales of fixed assets. These
				intercompany transactions are deferred or eliminated for the purpose of
				reflecting the income of the unitary business as a separate economic unit,
				similar to the purpose that underlies the federal consolidated filing
				regulations. Intercompany transactions must therefore be treated in a manner
				consistent with federal law and regulations.
E. The amount calculated by adjusting the
				aggregate income computed under subsections A and B above in accordance with
				subsection D above constitutes the taxable income of the unitary business under
				the laws of the United States before special deductions (Code §§
									241
et seq
.) and
				net operating loss deductions (Code §
									172) .
F. The amount of the special deductions for
				the members of the unitary business must be aggregated and adjusted if
				necessary in a manner consistent with the federal consolidated filing
				regulations.
G. The federal taxable
				income computed in accordance with subsection E above must be combined with the
				special deductions computed in accordance with subsection F above. If the
				result of this computation is positive, available net operating loss deductions
				for members of the unitary business may be applied against the income of the
				unitary business. If the result of the computation is negative, it constitutes
				a net operating loss for the unitary business and may be treated as the basis
				for a net operating loss deduction that may be carried back or forward
				consistent with the Code and related regulations and with the requirements of
				section .08 below.