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
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.
*$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:
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.
