Mississippi Administrative Code
Title 35 - Department of Revenue
Part 3 - Income and Franchise
Subpart 08 - Corporations
Chapter 07 - Consolidated or Combined Returns
Section 35-3-08-07-102 - In General

1. The term "affiliated group" means one or more corporations connected through stock ownership with a common parent corporation where at least eighty percent (80%) of the voting power of all classes of stock and at least eighty percent (80%) of each class of the nonvoting stock of each of the member corporations, except the common parent corporation, is directly owned by one or more of the other member corporations; and the common parent corporation directly owns stock possessing at least eighty percent (80%) of the voting power of all classes of stock and at least eighty percent (80%) of each class of the nonvoting stock of at least one (1) of the other member corporations. As used in this Regulation, the term "stock" does not include nonvoting stock which is limited and preferred as to dividends.

2. When an affiliated group of corporations is eligible to and elects, or is required to file returns on a combined or consolidated basis, all subsequent returns shall be made upon the same basis unless permission to change the basis is granted by the Commissioner, or unless the Commissioner requires a change in the basis. If a consolidated or combined return is filed, all members of the affiliated group who are "doing business" in Mississippi must be included in the return. If the affiliated group filed separate returns, they cannot amend their returns and file a consolidated or combined return unless such return was filed in the previous year. An election will be considered exercised by the filing of an annual income tax return reflecting consolidated reporting therein.

3. The consolidated or combined return of eligible and included members of an affiliated group relates only to its consolidated or combined income tax liability. Liability for applicable franchise taxes, annual reports of corporations, withholding taxes and other payroll, privilege and other excise taxes may not be computed on a consolidated or combined return basis. A separate report, return or schedule, as otherwise required by Mississippi Law, shall be filed by each applicable individual member of the affiliated group. In the case of franchise taxes and the annual reports of corporations, a separate schedule is required for each member of the affiliated group subject to the measure of the franchise tax and subject to the requirement of filing an annual report of corporations.

4. An includable corporation for the purpose of filing a consolidated or combined income tax return, within the limitations imposed by Mississippi Law, is any eligible corporation except corporations exempt under Section 27-7-29(a), Mississippi Code of 1972. Mississippi has not adopted Federal tax treatment of a Domestic International Sales Corporation (DISC) and a DISC is treated under Mississippi Law as an ordinary corporate entity; therefore, a DISC is an eligible corporation for consolidated or combined return purposes where such entity is a member of an affiliated group of corporations. S Corporations having an election in effect under Section 27-7-29(b) which choose to have their corporate income taxed directly to shareholders lose their status of S Corporations if they become members of an affiliated group electing to file a consolidated or combined return.

5. Each member of the affiliated group is severally liable for the tax on a consolidated or combined return and for any subsequently determined deficiency thereon. No intercompany agreement can change this rule.

6. There shall be attached to the consolidated return supporting schedules in columnar form to show separately and in combination, the profit and loss statement, balance sheet, analysis of unappropriated retained earnings and reconciliation of book income to income per return of each affiliated corporate member included in the elected combination.

7. The consolidated or combined return of an affiliated group must be filed on the basis of the common parent's taxable year and each subsidiary must adopt the common parent's annual accounting period for the first consolidated or combined return year for which the subsidiary's income is includable in the consolidated or combined return.