Rhode Island Code of Regulations
Title 280 - Department of Revenue
Chapter 20 - Division of Taxation
Subchapter 25 - Business Corporation Tax
Part 10 - Combined Reporting (280-RICR-20-25-10)
Section 280-RICR-20-25-10.12 - Corporate Minimum Tax

Universal Citation: 280 RI Code of Rules 20 25 10.12

Current through September 18, 2024

A. The annual corporate minimum tax payable is the amount provided under R.I. Gen. Laws § 44-11-2(e). The combined group pays either the tax due based on the amount of its net income apportioned to Rhode Island, using the applicable rate, or the minimum tax, whichever amount is higher.

B. To compute the minimum tax, the combined group must determine the number of its members that have nexus in Rhode Island and multiply that number by the amount of the minimum tax as listed in R.I. Gen. Laws § 44-11-2(e). The sum must be compared to the actual tax due for the entire combined group. The combined group shall pay whichever amount is higher.

1. Taxpayers and their advisers should review R.I. Gen. Laws § 44-11-2 to determine the current tax rate and the current minimum tax, as well as other applicable provisions of Rhode Island General Laws, and the Division of Taxation regulation on nexus.

C. The following examples illustrate the application of this § 10.12 of this Part. The examples are for tax year 2015, when Rhode Island's mandatory unitary combined reporting regime took effect, and assume that the minimum tax is $500 and the corporate income tax rate is seven percent (7%).

1. Example: Bryant Corp., Bentley Corp., Brandeis Corp., and Babson Corp. are all C corporations that together comprise a combined group which is engaged in a unitary business and is subject to Rhode Island combined reporting. Each has a current-year net operating loss.

Application of Corporate Minimum Tax

Name

Rhode Island Nexus

NOL

Minimum Tax

Bryant Corporation

Yes

($5,000)

$500

Bentley Corporation

Yes

($10,000)

$500

Brandeis Corporation

Yes

($15,000)

$500

Babson Corporation

No

($20,000)

N/A

Tax Total:

$1,500
a. The combined group determines that three of its members have Rhode Island nexus and multiplies that number by the $500 minimum tax, for a total of $1,500. The group compares that sum to its tax liability calculated under the standard formula, which is seven percent (7%) of the income apportioned to Rhode Island). Because the group has a current-year NOL of $50,000, the group owes no tax under the standard formula, so it must pay the minimum tax of $1,500. (The NOL is carried forward.)

2. Example: Bryant Corp., Bentley Corp., Brandeis Corp., and Babson Corp. are all C corporations that together comprise a combined group which is engaged in a unitary business and is subject to Rhode Island combined reporting.

Application of Corporate Minimum Tax

Name

Rhode Island Nexus

Rhode Island Apportioned Income

Minimum Tax

Bryant Corporation

Yes

$10,000

$500

Bentley Corporation

Yes

$5,000

$500

Brandeis Corporation

Yes

$0

$500

Babson Corporation

No

$5,000

N/A

Totals:

$20,000

$1,500

Total Tax:

$1,400

$1,500

Note: Because minimum tax of $1,500 is greater than tax of $1,400 determined under standard formula, group pays $1,500 in minimum tax.
a. The combined group determines that three of its members have Rhode Island nexus and multiplies that number by the $500 minimum tax, for a total of $1,500. The group compares that sum to the $1,400 in tax it owes using the standard formula (7% of $20,000 in income apportioned to Rhode Island). Because the minimum tax is higher, the group pays the minimum tax.

3. Example: Bryant Corp., Bentley Corp., Brandeis Corp., Babson Corp., and Tuck Corp. are all C corporations that together comprise a combined group which is engaged in a unitary business and is subject to Rhode Island combined reporting.

Application of Corporate Minimum Tax

Name

Rhode Island Nexus

Rhode Island Apportioned Income

Minimum Tax

Bryant Corporation

Yes

$10,000

$500

Bentley Corporation

Yes

$5,000

$500

Brandeis Corporation

Yes

$0

$500

Babson Corporation

No

$0

N/A

Tuck Corporation

No

$3,000

N/A

Totals:

$23,000

$1,500

Total Tax:

$1,610

$1,500

Note: Group pays $1,610 in tax, as determined under standard formula, because it is higher than minimum tax of $1,500.
a. The combined group determines that three of its members have Rhode Island nexus and multiples that number by the $500 minimum tax, for a total of $1,500. The group compares that sum to the $1,610 in tax it owes using the standard formula (7% of $23,000 in income apportioned to Rhode Island). The group has $1,610 in Rhode Island tax liability and must pay that amount because it is higher than the minimum tax of $1500.

D. The provisions of § 10.12 of this Part shall also apply to affiliated groups making the federal consolidated group election for Rhode Island combined reporting purposes (as described § 10.9 of this Part).

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