Instructions For Schedule O (Form 1120) - 2008 Page 2
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Stock owned directly by such
such group for the tax year including
Excluded Stock
person, and
such December 31 if such
The term “stock” does not include:
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Stock owned with the application of
corporation is:
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Nonvoting stock which is limited
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section 1563(e).
A member of such group for less
and preferred as to dividends,
than one-half the number of days in
Combined group. A combined
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Treasury stock, and
such tax year which precedes such
group is three or more corporations
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Stock which is treated as “excluded
each of which is a member of a
December 31;
stock” under section 1563(c)(2)(A) in
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parent-subsidiary group or a
Exempt from tax under section
the case of a parent-subsidiary
brother-sister group, and one of
501(a) (except a corporation which is
controlled group or section
which is:
subject to tax on its unrelated
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1563(c)(2)(B) in the case of a
A common parent corporation
business taxable income under
brother-sister controlled group.
included in a group of corporations in
section 511) for such tax year;
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a parent-subsidiary group, and also
A foreign corporation not subject to
Apportionment Plans
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Included in a group of corporations
tax under section 882(a) for such tax
An apportionment plan is an
in a brother-sister group.
year;
agreement adopted by the members
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Life insurance companies. Two or
An insurance company subject to
of a controlled group to apportion
more insurance companies subject to
tax under section 801 (other than an
specified tax benefits, such as the tax
tax under section 801 which are
insurance company which is a
bracket amounts, among the
members of a parent-subsidiary,
member of a controlled group
members of that group. By contrast, a
brother-sister, or combined group of a
(seeTypes of Controlled Groups on
tax sharing arrangement is a private
controlled group of corporations, will
page 1 of these instructions));
contractual arrangement, separate
be treated as a controlled group of
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A franchised corporation, as
from the tax return elections and
corporations separate from any other
defined in section 1563(b)(2)(E); or
related filing, under which the
corporations which are members of
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members of a consolidated group
An S corporation, as defined in
the controlled group of corporations
commit to compensate each other for
section 1361.
as a parent-subsidiary, brother-sister,
the interaction of their tax attributes.
or combined group. However, this
In determining how many days a
provision does not apply to any life
An apportionment plan is amended
corporation has been a member of a
insurance company that is a member
if the same members (for example,
controlled group, the group must take
(whether eligible or ineligible) of a
no component members have left or
into account the day it is sold or
life-nonlife affiliated group for which a
joined the group during the tax year)
liquidated, but does not take into
section 1504(c)(2) election is in
provide for a different apportionment
account either: (a) the day such
effect. Instead, such life insurance
of the tax benefit items among
corporation is acquired or created, or
company will be treated as a member
themselves.
(b) the December 31 of such
of the life-nonlife controlled group (a
corporation’s tax year.
Unequal Apportionment Plan.
deemed parent-subsidiary controlled
Members of a controlled group can
group).
elect an unequal apportionment plan
Additional Members
Component Member
and divide the taxable income
A corporation (other than an S
brackets as they want. If any
A corporation is a component
corporation) which (a) was a member
members are also members of a
member of a controlled group of
of a controlled group of corporations
consolidated group, the consolidated
corporations on December 31 of any
at any time during a calendar year,
group will be treated as one
tax year (and with respect to the tax
(b) is not a member of such group on
component member of the controlled
year which includes such December
December 31 of such calendar year,
group for purposes of apportionment.
31) if the corporation:
and (c) is not described, with respect
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There is no need for consistency
Is a member of such controlled
to such group, in section
among taxable income brackets. The
group of corporations on the
1563(b)(2)(B),(C),(D), or (E), will be
controlled group may apportion all,
December 31 included in the year
treated as an additional member of
some, or none of the taxable income
and is not treated as an excluded
such group for its tax year including
bracket amounts between its
member (defined below), or
such December 31 if it was a member
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members. However, the total amount
Is not a member of the controlled
of such group for one-half or more of
for all members cannot be more than
group of corporations on the
the number of days in the tax year
the total amount in each taxable
December 31 included in such year
which precedes such December 31.
income bracket.
but is treated as an additional
member (defined below).
Equal Apportionment Plan. If no
Overlapping Groups
If any component members of a
apportionment plan is adopted or in
If a corporation is a component
controlled group of corporations are
effect, members of a controlled group
member of more than one controlled
also members of a consolidated
must divide the amount in each
group of corporations with respect to
group, such members will be treated
taxable income bracket equally
any tax year, that corporation will be
as separate component members of
among themselves (regardless of
treated as a component member of
the controlled group.
whether any member is a member of
only one controlled group. The
a consolidated group). For example,
Excluded Members
determination as to the group of
Controlled Group AB consists of
which such corporation is a
A corporation which is a member of a
Corporation A and Corporation B.
component member shall be made
controlled group of corporations on
They do not elect an apportionment
under regulations prescribed by the
December 31 of any tax year will be
plan. Therefore, each corporation is
Secretary.
treated as an excluded member of
entitled to:
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