Current through Register Vol. 35, No. 18, September 24, 2024
A. Members of a combined group: A group of
unitary corporations may include both domestic corporations and foreign
corporations other than foreign corporations which are incorporated in a
foreign country and are not engaged in trade or business in the United States
during the taxable year. Such a group may file a state corporate income and
franchise tax return using the combination of unitary corporations method if it
otherwise meets the requirements of the Corporate Income and Franchise Tax Act
and regulations thereunder.
B. Base
income for members of a combined group.
(1)
When a group of unitary corporations files a New Mexico corporate income and
franchise tax return using the combination of unitary corporations method, the
base income for the combined group of unitary corporations shall be determined
by completing a simulated federal corporate income tax return. In completing
the simulated federal return, only the income and expenses of the combined
corporations will be allowed. The simulated return shall be prepared as if the
combined group was filing a federal consolidated return including only the
corporations in the unitary (combined) group.
(2) When completing the simulated federal
return for New Mexico income tax purposes, all procedures and adjustments
allowed by the Internal Revenue Code which apply to the filing of a federal
consolidated return concerning the elimination of intercompany transactions or
the sale or dissolution of one of the corporations within the federal
consolidated group shall be allowed, but only for those transactions between
members of the combined group of unitary corporations. No adjustments shall be
made or allowed for transactions with any corporation that is not a member of
the combined group of unitary corporations. Otherwise, all provisions of the
Internal Revenue Code which would apply to the filing of a consolidated return
shall apply to the completion of the simulated return for the combined group of
unitary corporations.
C.
This Regulation 3.4.10.11 NMAC is retroactively applicable to taxable years
beginning on or after January 1, 1992 but before January 1, 2020. For returns
for taxable years beginning on or after January 1, 2020, see 3.4.10.14
NMAC.
