Form Ft 1120c - Corporation Franchise Tax (Combined Report) - Ohio Department Of Taxation - 2012 Page 5
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6FT 1120C
Rev. 6/11
Page 5
2012 Instructions – See Ohio Revised Code Section (R.C.) 5733.052
Caution: As a result of the Ohio corporation franchise tax phase-
Timely Election. Taxpayers that elect to combine must do so in
commissioner’s permission to fi le a combined report with corpora-
out and the commercial activity tax phase-in, most corporations
a timely fi led report. A report is timely if it is fi led within the time
tions that are not taxpayers must fi le Ohio form FT COM. Nontax-
are not subject to the franchise tax for tax years (report
prescribed by R.C. 5733.02 as extended under R.C. 5733.13.
payer corporations included in a combined report must compute
years) 2010 and thereafter. Corporations that are not subject
A combination is timely elected under R.C. 5733.052(B) if any
income in the same manner as if they were taxpayers.
to the 2012 franchise tax (based on the taxable year ending
member of the combination has complied with all of the franchise
Interest and Penalty; Estimated Payments. To avoid penalty
in 2011) have no report year 2012 franchise tax payment or
tax report deadlines even if other members have not so complied.
and interest, each member of a combined franchise tax report
fi ling obligation. For all but the companies described below, the
Thus, a taxpayer that fails to pay its estimated tax by the required
must: (1) separately and timely fi le the Declaration of Estimated
franchise tax phase-out was complete with the fi ling of the 2009
dates and fails to separately fi le its request(s) for extension by the
Tax (Ohio form FT 1120E) and the request(s) for extension (Ohio
franchise tax report (based on the taxable year ending in 2008).
required dates may nevertheless fi le in combination with other
form FT 1120ER and FT 1120EX) and (2) pay the estimated tax
corporations after the due date of the taxpayer’s report if another
Exceptions to Franchise Tax Phase-Out. The following
due by the dates stated in general instructions 10A and 10B.
corporation in the combined group has timely paid its estimated
companies remain subject to the franchise tax for tax years
tax, has timely fi led its request(s) for extension, and has timely
Payment by Electronic Funds Transfer. For purposes of
2010 and thereafter: (i) fi nancial institutions, (ii) fi nancial holding
fi led its franchise tax report in combination with the taxpayer. See
determining whether members of a combined group are required
companies, (iii) bank holding companies, (iv) savings and loan
Roxane Laboratories, Inc. v. Tracy (1996), 75 Ohio St. 3d 125.
to pay by electronic fund transfer (EFT), group members must
holding companies, (v) affi liates of entities described in (i) through
However, each member of a combined report that fails to comply
add together their tax liabilities after reduction for nonrefundable
(iv) above when such affi liates are engaged in fi nancial institution-
with the fi ling and payment deadlines is subject to the applicable
credits for the second preceding tax year. If the combined group’s
type activities, (vi) certain affi liates of insurance companies when
penalty and interest charges.
aggregate tax liability after reduction for nonrefundable credits for
such affi liates are engaged in insurance-type activities, and (vii)
the second preceding tax year exceeded $50,000, then for the
“securitization” companies described in R.C. 5751.01(E)(10). See
Changing the Election. An election to combine may not
current tax year each member must remit its payments by EFT.
R.C. 5733.01(G) and 5751.01(E).
be changed by such taxpayers either in amended reports or
reports for future years without the written consent of the tax
Completing the Form. Two or more corporations filing in
Elected Combination. If the corporation is subject to the fran-
commissioner. The addition of a new member to a previously
combination must complete Ohio form FT 1120C, Corporation
chise tax for report year 2012, and if the taxpayer on Jan. 1 of
elected combination is a change in the combined group. See
Franchise Tax (Combined Report). Complete Combined Report
the tax year owns or controls either directly or indirectly more
R.C. 5733.052(B) and The Tranzonic Companies and Subs.
Schedules B, B-3, C (everywhere) and D in columnar form
than 50% of the voting stock of one or more taxpayer corpora-
v. Tracy, BTA Case No. 90-M-1443, Dec. 4 1992. Taxpayers
showing the line item fi gures for each individual corporation and
tions may elect to combine net income with such other taxpayer
seeking to change their existing combination must fi le Ohio
the combined totals of each line item after the elimination of
corporations. A “taxpayer” is a corporation subject to the franchise
form FT COM, Request for Permission to File or to Amend a
intercorporate transactions between corporations in the
tax. Taxpayers whose voting stock on Jan. 1 of the tax year is
Combined Corporation Franchise Tax Report. The deletion from
combined group. Schedule B-3 (combined) must be completed
more than 50% owned or controlled either directly or indirectly
the combination of a member that is no longer subject to the
in accordance with the instructions below (see May 6, 1992
by another corporation or by related interests may also elect to
franchise tax because of the phase-out is not a change in the
franchise tax information release “Schedule B-3 (combined)
combine net income. That is, brother-sister taxpayer corpora-
election.
Related Entity and Related Member Adjustments for Corporations
tions owned by an individual may elect to combine net income,
Included in a Combined Franchise Tax Report”). Complete
and brother-sister taxpayer corporations owned by a parent
Required or Permitted Combination. If on Jan. 1 of the tax year
additional pages if needed to refl ect the number of members
corporation may elect to combine net income without inclusion
the combined report’s more than 50% ownership requirement
included in the combination.
of the parent corporation. However, where less than all eligible
is met (see “Elected Combination” paragraph, above), the tax
taxpayer corporations elect to combine net income, the group
commissioner may require or permit a taxpayer and another
After completing the combined report, each taxpayer must enter
must include an explanation for the nonparticipation by such
corporation to combine their net income (whether or not the other
on its own separate franchise tax report, Ohio form FT 1120, the
eligible taxpayer corporations. Net worth is not combined; each
corporation is a taxpayer and whether or not the other corporation
following: (1) the taxpayer’s apportioned income from Schedule B
member of a combined report must determine its net worth and
has income from sources within Ohio on a separate company
(combined), line 7, and (2) the taxpayer’s related entity and related
net-worth base tax on its separate franchise tax report.
basis). The department will require franchise tax combinations
member adjustment from Schedule B-3 (combined), line 21. Each
and will pursue expanded combinations where the department
taxpayer must then compute its own Ohio allocable income, Ohio
Ohio Income Requirement. Each taxpayer in an elected
ascertains that the failure to combine income distorts the amount
taxable income and net income base tax and its net worth base
combination must have income, other than dividend income, from
of income fairly apportioned and allocated to Ohio. For purposes
tax. Each member of a combined group has its own Ohio net
sources within Ohio (either positive income or negative income
of ascertaining whether such income distortion exists, the
operating loss deduction because each member computes its own
[loss]). “Income from sources within Ohio” means income that
department will consider all relevant evidence.
Ohio taxable income on its own franchise tax report, Ohio form FT
would be allocated or apportioned to Ohio if the taxpayer were not
1120. Each member of the combined group with a balance due
included in a combined report. Those taxpayer groups that elected
See the department’s information release entitled “I.R.C. Section
must make payment with its franchise tax report. Each member
to combine in prior tax years must amend their combinations to
482 Study: Taxpayers Seeking To Avoid Ohio Corporate Franchise
with an overpayment will receive a refund or, if the corporation
delete taxpayers that during the taxable year did not have income,
Tax Report Required or Expanded Combinations,” issued June
requests, a credit toward the corporation’s estimated tax for the
other than dividend income, from sources within Ohio.
2000 and revised January 2005. Taxpayers requesting the tax
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