Oklahoma Administrative Code › Title 710 - Oklahoma Tax Commission › Chapter 50 - Income › Subchapter 17 - Oklahoma Taxable Income for Corporations › Part 3 - CONSOLIDATED RETURNS › Section 710:50-17-34 - Computation of Oklahoma taxable income on consolidated return

Current through Vol. 41, No. 20, July 1, 2024
(a) To arrive at
				  Oklahoma taxable income on a Consolidated Return, the group's consolidated
				  income, loss or deductions shall be determined in accordance with the
				  provisions of 68 O.S. 2358 and 68 O.S. 2362. Therefore, each member of the
				  group shall determine its Oklahoma net taxable income by whatever method is
				  proper (direct accounting, unitary, etc.) and then, the net taxable income of
				  each member shall be aggregated into a taxable total.
Example: The Federal Net Income reported for the following
					 groups of corporations was as follows:
Corporation A
$10,000.00
Corporation B
5,000.00
Corporation C
(14,000.00)
Corporation D
1,000.00
Corporation E
6,000.00
Consolidated Federal Net Income
$8,000.00
Assume only corporations (A), (B) and (C) operate in
					 Oklahoma. Also assume corporation (A) and (C) are unitary business while
					 corporation (B) is not of a unitary nature and is on direct accounting. If, in
					 this example, Oklahoma's portion, using the three factor formula, was 10% and
					 5% for corporations (A) and (C) respectively, and $2,500.00 of Corporation (B)
					 income was earned from sources in Oklahoma, the computation of Oklahoma's
					 taxable income is as follows:
Corporation A (10% of 10,000.00)
$1,000.00
Corporation B Direct
2,500.00
Corporation C (5% of (14,000.00))
(700.00)
Oklahoma Taxable Income
$2,800.00
(On a Consolidated Basis)
(b) The correct procedure for filing a
				  combined return is as follows:
(1) Only one
				  (1) "page 1" of Form 512 will be used as the tax computation and transmittal
				  page for the combined group.
(2)
				  Immediately behind page 1 will be a summary schedule reflecting each member of
				  the combined group's name, Federal Employer's Identification Number (EIN) and
				  net Oklahoma taxable income or loss as computed on separate schedule A or B for
				  each company as applicable. The net income or loss from the summary sheet will
				  be the amount shown on line 1 page 1 of Form 512. The accrual of Oklahoma
				  Income Tax, if any, will be computed on the combined net income as shown on the
				  summary sheet.
(3) Supporting
				  schedules such as Investment/New Jobs Credit and Gas Used In Manufacturing will
				  follow the summary sheet. There will be a separate schedule for each company in
				  the group with identifying name and EIN number. The total credit amounts, if
				  any, will be combined and brought forward to the proper line on page 1 of the
				  Form 512.
(4) Behind the supporting
				  schedules will be a separate Schedule A or B, as applicable for each company in
				  the group, for the Oklahoma Form 512. The amounts shown on the separate
				  schedules A or B will be the amounts brought forward to the summary sheet. Each
				  company's name and EIN number will be shown on each respective schedule A or
				  13.
(5) Behind the Schedules A or B
				  will be all other forms and schedules such as the Federal Form 1120 and
				  supporting schedules for each company in the group.