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

entity separate from its owner pursuant to 26 C.F.R. 301.7701-3. Any

In addition, the law gives the tax commissioner authority to write

entity that is treated as a “disregarded entity” for federal income tax

rules prescribing an appropriate period as the taxable year for the

purposes is also treated as a disregarded entity for Ohio franchise

following circumstances: (a) a corporation that has changed its

tax purposes. See R.C. 5733.01(F). Accordingly, a single-member

taxable year for federal income tax purposes, (b) a corporation

LLC treated as a division of the corporate member for federal income

that as a result of a change of ownership has two or more short

tax purposes is treated as a division of the corporate member for

federal taxable years and (c) a new taxpayer that would otherwise

franchise tax purposes. The corporate owner-member is subject

not have a taxable year.

to the franchise tax as if the LLC were a division of the corporation

The Department of Taxation has adopted the following rules

for both federal income tax and franchise tax purposes. That is, for

regarding franchise taxpayers’ taxable years and change of

franchise tax purposes:

accounting period:

• If the disregarded entity has nexus with Ohio, then the owner has

• 5703-5-01 – Deﬁ nitions Applicable to Rules 5703-5-01 to 5703-

nexus with Ohio.

5-05 of the Administrative Code

• An interest in a disregarded entity is treated as ownership of the

• 5703-5-02 – Date as of Which the Value of a Taxpayer's Issued

assets and liabilities of the disregarded entity itself.

and Outstanding Shares of Stock is Determined

• A disregarded entity’s income, including gains or loss is included

• 5703-5-03 – Dates on Which a Taxpayer's Taxable Year Begins

in the owner’s R.C. Chapter 5733 net income.

and Ends

• Any sale or other disposition of an interest in a disregarded entity

• 5703-5-04 – Changes of a Taxpayer's Annual Accounting Period

is treated as a sale or other disposition of the disregarded entity’s

underlying assets.

Note: Effective for taxable years ending after Dec. 31, 2003, Rule

• A disregarded entity’s property, payroll and sales are included in

5703-5-04 eliminates income proration for taxable years that exceed

the owner’s property, payroll and sales factor.

one year in length. (Because ﬁ nancial institutions are not subject to

the net income base of the franchise tax, the elimination of income

6. Dissolution or Surrender of License

proration has no effect on the tax paid by ﬁ nancial institutions.) In

Each corporation seeking dissolution of its charter or surrender of

addition, the amended rule clariﬁ es that

if, as the result of a change

its license to transact business in Ohio must submit to the Secretary

of ownership, a taxpayer has two short-period federal taxable years

of State a ﬁ ling fee along with various afﬁ davits or documents

because of the taxpayer’s inclusion in one or more consolidated

evidencing that the corporation has paid or adequately guaranteed

federal income tax returns, and if the year-end of the taxpayer’s

various taxes and fees. For further information regarding the

annual accounting period remains the same after the change of

requirements of dissolving a corporation’s charter or surrendering

ownership as it was before the change, then for purposes of this rule

a corporation’s license to conduct business in Ohio, please contact

there is not a change of the taxpayer’s annual accounting period.

the ofﬁ ce of the Secretary of State, 180 East Broad Street, 16th

Floor, Columbus, Ohio 43215 or call that ofﬁ ce at (614) 466-3910

Important features of these rules are as follows:

or toll free 1-877-767-3453. For speciﬁ c information regarding

• Generally, a taxpayer's taxable year begins on the date

obtaining a tax release from the Ohio Department of Taxation,

immediately following the end of the taxpayer's prior taxable year

please contact the Ohio Department of Taxation, Dissolution Unit,

and ends on the date immediately preceding the beginning of the

P.O. Box 182382, Columbus, Ohio 43218-2382 or call (614) 995-

taxpayer's annual accounting period that includes the ﬁ rst day of

4422 or (888) 405-4039.

January of the tax year.

• If a taxpayer changes its annual accounting period, there is (i) no

The mere termination of business activities or voluntary dissolution

period that is not subject to tax, and (ii) no period that is subject

does not exempt a corporation from the franchise tax. A corporation

to tax in more than one tax year.

that on Jan. 1 of the tax year holds a charter or license to transact

• A franchise tax “taxable year” under certain circumstances may

business in Ohio is subject to the Ohio franchise tax for that tax

be more than or less than one year in length.

year even if prior to the beginning of the tax year it has ceased all

business activities in Ohio and has applied for certiﬁ cates showing

Except for taxpayers that have changed their accounting period and

the payment or adequate guarantee of all required taxes. See R.C.

taxpayers that have more than one federal taxable year ending in

5733.17.

calendar year 2011, taxpayers must determine the value of their

issued and outstanding shares of stock as follows:

7. Accounting Period – Taxable Year

− For report year 2012 calendar year end taxpayers must use

For franchise tax purposes a corporation’s taxable year is a

the period ending December 31, 2011.

period ending on the date immediately preceding the date of

− For report year 2012 ﬁ scal year end taxpayers must use the

commencement of the corporation’s annual accounting period

ﬁ scal period ending in 2011. However, taxpayers ﬁ ling their ﬁ rst

that includes the ﬁ rst day of January of the tax year. Generally, a

report must use the applicable period set out below.

corporation’s taxable year for franchise tax purposes is the same

as the corporation’s taxable year for federal income tax purposes.

A. If a taxpayer incorporated in Ohio during 2011 and adopted

If a corporation’s taxable year is changed for federal income tax

a ﬁ scal year ending in 2011, then the taxpayer’s taxable year

purposes, the corporation’s franchise tax taxable year is changed

begins on the date of incorporation and ends on the last day

accordingly.

of its ﬁ scal period ending in 2011.

B. If the taxpayer is a foreign corporation and ﬁ rst became an

A franchise tax taxable year may consist of an aggregation of more

Ohio taxpayer during 2011 (that is, during 2011 the corporation

than one federal taxable year and can exceed 12 months in length.

began doing business in Ohio, began owning or using part or all

For example, a franchise tax taxable year may consist of two (or

of its capital or property in Ohio, obtained a license authorizing

more) federal taxable years and can exceed 12 months in length

it to do business in Ohio or otherwise established nexus with

in instances where the taxpayer changes its federal taxable year or

Ohio under the Constitution of the United States) and after it

the taxpayer is acquired by another corporation and then changes

became an Ohio taxpayer its ﬁ scal year ended in 2011, then

its taxable year.

the taxpayer must use the accounting period commencing on

- 4 -

Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report - 2012 Page 5

Related Articles

Related forms

Related Categories