Form Ct-1120u - Unitary Corporation Business Tax Return Instructions

Department of Revenue Services

2013

State of Connecticut

Form CT-1120U

PO Box 2974

Hartford CT 06104

Unitary Corporation Business Tax Return

(Rev. 12/13)

Instructions

Calculation of the Unitary Tax

Who May File Form CT-1120U

If the taxpayer, in computing net income under Conn. Gen. Stat. §12-

The unitary return is subject to the following:

217, is required to add back otherwise deductible interest expenses

•

The unitary group must meet the definition of a unitary business

and costs directly or indirectly paid, accrued, or incurred to one or

as stated above;

more related members, the taxpayer may elect to calculate its tax on

•

The unitary tax is calculated using water’s edge combined

a unitary basis using Form CT-1120U, Unitary Corporation Business

reporting;

Tax Return, including all members of the unitary group provided

•

The unitary group must use an apportionment formula consisting

there are substantial intercorporate business transactions among

of property, payroll, and double weighted gross receipts under

such included corporations.

Conn. Gen. Stat. §12-218(c);

Who Must File Form CT-1120CR

•

Each corporation included in the unitary group is subject to the

minimum tax under Conn. Gen. Stat. §12-219; and

If the taxpayer petitions the Commissioner of Revenue Services

to file a combined corporation business tax return on a unitary

•

The unitary group must calculate the capital base tax under

basis, because the statutory method of determining the taxpayer’s

Conn. Gen. Stat. §12-219 on a unitary basis. In calculating

combined measure of the tax is deemed by the taxpayer to unfairly

the capital base tax, intercompany stock holdings should be

attribute an undue proportion of its taxable income or minimum tax

eliminated.

base to Connecticut, and the petition is granted by the Commissioner,

Special Instructions for First Year Unitary Filers

the taxpayer must calculate its tax as stated in the Commissioner’s

letter, filing Form CT-1120CR, Combined Corporation Business

•

The unitary group cannot use net operating losses that have

been carried forward from returns filed prior to the establishment

Tax Return.

of the Connecticut unitary group. Only losses incurred by the

Definition of a Unitary Business

unitary group in the first year of the unitary return, and thereafter,

A Unitary Business is characterized by significant flows of value

can be taken on the unitary return;

evidenced by factors such as those described in Mobil Oil Corp. v.

•

The unitary group cannot use tax credits that were earned prior

Vermont, 445 U.S. 425 (1980): functional integration, centralization

to the establishment of the Connecticut unitary group. Only tax

of management, and economies of scale. These factors provide

credits earned by the unitary group in the first year of the unitary

evidence of whether the business activities operate as an integrated

return, and thereafter, can be claimed on the unitary return; and

whole or exhibit substantial mutual interdependence. Facts

•

If the taxpayer elects to file on a unitary basis, the election is

suggesting the presence of the factors mentioned above should

irrevocable for five successive income years.

be analyzed in combination for their cumulative effect and not in

isolation.

General Computation

A Real Estate Investment Trust (REIT) cannot be included in a

The unitary tax shall be measured by the combined entire net income

unitary group. See Informational Publication 2010(21), Corporation

of all the corporations included in the return as if they were one

Business Tax Application to Real Estate Investment Trusts (REITs)

corporation. In computing combined entire net income, intercorporate

and Owners of REITs.

dividends shall be eliminated.

Consent and Notice of Election

Attachments Required

Each corporation that consents to be included in a Unitary

Attach to Form CT-1120U a complete copy of the federal consolidated

Corporation Business Tax Return must submit Form CT-1120CC,

return, including income statements and balance sheets, federal

Combined Return Consent, for the initial income year for which the

M-1/M-3 adjustments, and a schedule of intercompany eliminations

election is being made. The election to file a unitary return must be

as filed with the Internal Revenue Service (IRS).

made by the electing corporations not later than the due date or the

Form CT-1120, Corporation Business Tax Return, must be completed

extended due date of the returns for which the election is made.

The election to file a unitary return must be in effect for at least five

and attached to Form CT-1120U, for each corporation with nexus to

Connecticut included in the unitary group.

income years, and will continue in effect thereafter until it is revoked.

Form CT-1120AB, Summary of Add Back and Exceptions to Add

Change of Election

Back of Interest and Intangible Expenses, must be completed and

Any corporation that has elected to file a unitary return may

attached to Form CT-1120U if applicable.

subsequently revoke its election; however, the revocation will not

be effective before the fifth income year immediately following

All applicable tax credit forms, schedules, and any other required

the initial income year in which the corporation elected to file a

forms must be attached to and made part of this tax return for each

unitary return. The election to discontinue the unitary filing must be

corporation included in the unitary group.

submitted in writing on Form CT-1120CC-R, Revocation of Election

and Consent to File Combined Corporation Business Tax Return,

by each corporation included in the unitary return. The election

must be made by the electing corporations by the due date or the

extended due date of the return for the initial income year for which

the election is made.

Form Ct-1120u - Unitary Corporation Business Tax Return Instructions - 2013

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