Ohio Administrative Code › Title 5703 - Department of Taxation › Chapter 5703-29 - Commercial Activity Tax › Section 5703-29-02 - Application of common owners and joint ventures

Current through all regulations passed and filed through July 1, 2024
(A) Consolidated elected and combined
			 taxpayer groups under sections 5751.011 and 5751.012 of the Revised Code are
			 required to file as one taxpayer if persons in the group meet certain
			 requirements. One of those requirements is that the persons have a specified
			 portion of the value of their ownership interest owned and controlled by
			 "common owners" included in the group. In addition to an ownership interest,
			 the higher-tiered entity must have the ability through its voting rights to
			 control the operations of the lower-tiered entities at each level of the
			 vertical chain. There is a different "control test" for combined groups than
			 for consolidated elected groups. For combined groups, the "control test" is
			 that the higher-tiered entity must own more than fifty per cent of the
			 lower-tiered entity at each level of the vertical chain and effectively,
			 through its ownership, possess the voting rights to be able to control the
			 lower-tiered entity. For consolidated elected groups, the "control test" is
			 that the higher-tiered entity must own at least fifty per cent or at least
			 eighty per cent of the lower-tiered entity at each level of the vertical chain
			 and effectively, through its ownership, possess the voting rights to be able to
			 control the lower-tiered entity. For purposes of this paragraph, "effectively"
			 means that the entity has the ability to actually control the operations of the
			 lower-tiered entity and is not required to be part of another combined or
			 consolidated group.
(B)
(1) Subject to paragraphs (B)(2), (C), and
			 (D) of this rule, if a person owns and controls, directly or constructively
			 through related interests, more than fifty per cent of the value of the
			 ownership interest of another person, the first person is a common owner of the
			 second person, and those persons must be members of a combined taxpayer group
			 unless they elect to be members of a consolidated elected taxpayer group.
			 Consolidated elected taxpayers may choose to
			 consolidate based on a
									 fifty per
			 cent or more ownership test or an eighty per cent or more ownership test, and choose
			 to either include or exclude all foreign entities. Common owners are not
			 limited to business organizations but also include individuals, trusts, and
			 estates. Further, "common owner" includes an entity that is not a "person" as
			 that termed is defined in division (A) of section 5751.01 of the Revised Code.
			 Not being a "person" will not prevent such an entity from making an election to
			 be in a consolidated elected group. If a person
			 is a
			 common owner of persons who report as a consolidated elected
			 taxpayer group as well as persons who are in a combined taxpayer group, the
			 common owner is to register as part of both groups but must report its taxable
			 gross receipts as part of the consolidated elected taxpayer group.
(2) A de minimis test applies in determining
			 whether an individual, a trust, or an estate must be included as a common owner
			 in a combined or consolidated elected taxpayer group. If the individual, trust,
			 or estate has less than four thousand five hundred dollars in taxable gross
			 receipts for the calendar year, the individual, trust, or estate will not be
			 required to be registered as part of a combined or consolidated elected
			 taxpayer group for that year. However, the individual, trust, or estate is
			 still a common owner for all purposes of the commercial activity tax.