Missouri Code of State Regulations › Title 12 - DEPARTMENT OF REVENUE › Division 10 - Director of Revenue › Chapter 10 - Financial Institutions › Section 12 CSR 10-10.135 - Federal Income Tax Deduction

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This rule establishes a method for computing
				  the federal income tax deduction under section
				  148.045,
				  RSMo. The allowed deduction for federal income tax shall be computed using the
				  method of accounting elected by the taxpayer for federal
				  purposes.
(1) Separate Basis
				Taxpayer. A taxpayer that files a separate federal return shall be allowed a
				deduction equal to the actual tax paid or accrued during the income period to
				the United States. Cash basis taxpayers shall report prior year refunds as
				income in the year received. Accrual basis taxpayer shall report a change to a
				prior year by filing an amended return and adjust the federal tax
				liability.
(2) Consolidated Group.
				A taxpayer that is a member of an affiliated group of corporations, which files
				a consolidated federal income tax return, shall be allowed a deduction for
				federal income taxes paid or accrued during the income period, as follows:
(A) Cash basis. The allowed deduction for the
				current year shall equal the cash payments made by members of the affiliated
				group minus a previous year adjustment. The previous year adjustment shall
				equal the difference of the previous year cash payments less the total tax
				liability computed on federal form, Schedule J, for the taxpayer, as if a
				separate federal return had been filed. For example:
1986
Separate Basis Schedule J $100,000
Taxpayer cash payments $250,000
Taxpayer gets a FIT deduction of $250,000
1987
Taxpayer cash payments $300,000
Previous year adjustment ($150,000)
Taxpayer gets a FIT deduction of $150,000;
(B) Accrual Basis. The deduction shall equal
				the federal form, Schedule J, total tax liability as if a separate federal
				return had been filed. The taxpayer who is a member of an affiliated group of
				corporations shall include in gross income benefits received for a net
				operating loss or unused credits generated in the current period. In the event
				an affiliated group incurs a net operating loss carryback or a carryback of
				unused credits, income shall be increased by an amount equal to the member's
				separately computed share of the federal refund received from any carryback to
				consolidated return years, plus the amount of any federal refund received which
				results from a carryback to any member's separate return years. Income shall be
				increased by an amount equal to the federal refunds that would have been
				received if amended federal returns would have been filed by the taxpayer on a
				separate return basis. This refund could result from an net operating loss
				(NOL) carryback or a carryback of unused credits. For example:
Company
Taxable Income
FIT (Based on a 50% tax rate)
X
$40,000
$20,000
Y
$40,000
$20,000
Z
($20,000)
($10,000)
Cons. Group
$60,000
$30,000
Company X would get a $20,000 Federal Income Tax (FIT)
				  deduction.
Company Y would get a $20,000 Federal Income Tax (FIT)
				  deduction.
Company Z would add $10,000 to its taxable income; and
(C) For income periods involving a
				change from the cash basis of accounting to the accrual basis of accounting,
				the allowed accrual deduction for the year shall be decreased by any refund or
				credit from the previous year or increased for any tax payment in the current
				year for the previous year. Overpayments to a member of an affiliated group
				shall be treated as a refund.