Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report

establishing that a transaction or series of transactions between

Tracy, BTA No. 98-N-401 (3-12-01), and refer to general instruction

members of the controlled group was not a sham transaction. If

#20.

the tax commissioner disregards a sham transaction, the as-

Schedule B – Balance Sheet

sessment statute of limitations period is doubled.

Attach to the franchise tax report a balance sheet that reﬂ ects

For purposes of this provision, the term “controlled group” means

the books of the taxpayer as of the beginning and the end of the

two or more persons related in such a way that one person directly

taxpayer’s taxable year.

or indirectly owns or controls the business operations of another

member of the group. In the case of persons with stock or equity, one

Schedule C – Exempted Assets (Net Book Value)

person owns or controls another if it directly or indirectly owns more

than 50% of the other person’s common stock with voting rights or

Exempted assets are determined from the books of the taxpayer

other equity with voting rights. The term “sham transaction” means

as of the beginning of the taxpayer’s annual accounting period

a transaction or series of transactions without economic substance

that includes the ﬁ rst day of January of the tax year. See R.C.

because there is no business purpose or expectation of proﬁ t other

5733.056(B). For example, if an Ohio franchise taxpayer has a

than obtaining tax beneﬁ ts. See R.C. 5733.111 and R.C. 5703.56.

taxable year beginning July 1, 2010 and ending June 30, 2011, the

taxpayer’s exempted assets for tax year 2012 are determined as

23. Tax Commissioner’s Right to Offset Refund

of July 1, 2011, the beginning of the taxpayer’s annual accounting

The tax commissioner may apply a taxpayer’s franchise tax refund

period that includes the ﬁ rst day of January 2012. Generally, the

against the taxpayer’s indebtedness to the state of Ohio for any

ﬁ gures at the beginning of the taxpayer’s annual accounting period

tax or fee and any charge, penalty or interest arising from such a

that includes the ﬁ rst day of January of the tax year (in this example,

tax or fee that is administered by the tax commissioner and paid to

July 1, 2011) will be the same as the ﬁ gures at the end of the taxable

the state or to the clerk of courts. In addition, the tax commissioner

year that concludes prior to Jan. 1 of the tax year (in this example,

may apply a taxpayer’s franchise tax refund in satisfaction of the

June 30, 2011).

corporation’s indebtedness to Ohio for workers’ compensation

premiums, unemployment compensation contributions or

Line 1 – Goodwill. Enter the amounts that reﬂ ect goodwill as

unemployment compensation payments in lieu of contributions and

shown in the annual report to shareholders. “Goodwill” is the cost

interest on such amounts. The offset can be made only if those

in excess of fair value of net assets acquired. An intangible asset

debts have become “ﬁ nal.” See R.C. 5733.121.

is not goodwill if it can be separately purchased and sold and has a

separate, identiﬁ able value (see GCC Beverages, Inc. v. Limbach,

Line Instructions

B.T.A. Case Nos. 87-H-1278 and 87-B-1279, Aug. 25, 1989). A

Schedule A – Computation of Franchise Tax

taxpayer’s “core deposit intangible” is not goodwill (see Savings

Bank v. Limbach, BTA No. 87-C-733 (11-2-90).

Line 7 – Overpayment Carryforward from 2011. Enter the

overpayment shown on the originally ﬁ led 2011 report that was

Line 2 – Abandoned Property. Enter the amounts that reﬂ ect

credited to estimated tax payments for tax year 2012.

abandoned property as shown in the annual report to shareholders.

Note: An overpayment shown on an amended report may not be

Line 3 – Appreciation. Enter the amounts that reﬂ ect appreciation

credited toward a payment for another year. If an amended report

as shown in the annual report to shareholders. Appreciation is an

reﬂ ects an overpayment, the taxpayer must also submit Ohio

increase in asset value that occurs after acquisition. A taxpayer who

form FT REF, Application for Corporation Franchise Tax Refund,

accounts for its investment in subsidiaries under the equity method

or a statement that sets forth the full and complete reason for the

of accounting and maintains on its books a separate investment

overpayment (see Abitibi-Price Corporation and Subsidiaries v.

account for each individual investee may exclude as exempt

Tracy, BTA No. 98-N-401 (3-12-01), and refer to general instruction

appreciation the sum of the positive appreciation amounts and is

#20.

not required to net positive and negative appreciation amounts. SHV

North America Corp. v. Tracy (1994), 70 Ohio St.3d 395. (Under

Line 8 – Estimated payments made in 2012. Enter the estimated

the equity method of accounting the investor initially records an

payment paid with Ohio form FT 1120E, Declaration of Estimated

investment in stock of an investee at cost and increases the carrying

Franchise Tax; Ohio form FT 1120ER, Application for Automatic

amount of the investment to recognize the investor’s share of the

Extension; and Ohio form FT 1120EX, Request for Additional

earnings of the investee after the date of acquisition. Likewise, the

Extension.

investor reduces the carrying amount of an investment by its share of

Line 12 – Interest and Penalty. Enter any interest and penalty due

the investee’s losses and by dividends received from the investee.)

as explained in general instructions #10, 11 and 12.

Following a reorganization and merger in which there has been no

On lines 15 and 16 enter the amount of overpayment to be refunded

substantial change of ownership, a taxpayer may deduct as exempt

and/or to be credited against next year’s tax liability.

appreciation the undistributed earnings of the merged corporation

that it previously deducted before the reorganization and merger

Line 15 – Amount of line 14 to be credited to year 2013 estimated

and that after the reorganization and merger are reﬂ ected in the

tax and/or

taxpayer’s investment in the new corporation. See Sun Reﬁ ning and

Marketing Co. v. Limbach. B.T.A. Case No. 90-R-464, June 30, 1993.

Line 16 – Amount of line 14 to be refunded.

A holding company may not deduct as exempt appreciation the

Note: An overpayment shown on an amended report cannot be

amount of retained earnings of an operating company at the time

credited against the tax liability for any other year. If an amended

the shareholders of the operating company contributed their shares

report reﬂ ects an overpayment, the taxpayer must also submit Ohio

of the operating company to the holding company in return for an

form FT REF, Application for Corporation Franchise Tax Refund,

equal number of shares of the holding company pursuant to an

or a statement that sets forth the full and complete reason for the

I.R.C. section 351 tax free exchange. See Edwards Industries, Inc.

overpayment (see Abitibi-Price Corporation and Subsidiaries v.

v. Tracy (1996), 74 Ohio St.3d 643.

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Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report - 2012 Page 11

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