Looking for a Ohio Tax Forms And Templates? Download it for free!

equals the asset’s adjusted basis, the book-tax differential

Line 2(i) – Deduction for book-tax differential (for quali-

adjustment nevertheless applies (see O.R.C. section

fying assets whose book-tax differential is positive and

5733.0510(B)(4)). Furthermore, if for federal income tax pur-

apportionable). If the recognized gain or loss with respect

poses an electric company uses the installment method of

to a qualifying asset sold or disposed of during the taxable

accounting in recognizing gain from the sale of a qualifying

year in a qualifying taxable event is apportionable business

asset, the franchise tax book-tax differential adjustment for

income or loss and the asset’s book-tax differential is posi-

that asset must be made in proportion to the gain recognized

tive (that is, if the asset’s book value as of December 31,

for federal income tax purposes in each corresponding tax-

2000 determined in accordance with GAAP exceeds the as-

able year in which the gain is recognized.

set’s adjusted basis as of that date), then the electric com-

pany must reduce its income by the amount of the book-tax

The book-tax differential adjustment applies only if either (1)

differential for that qualifying asset. The adjustment applies

the electric company was subject to and paid the Ohio ex-

regardless of the asset’s location at the time of the qualifying

cise tax for gross receipts received during the period May 1,

taxable event and regardless of the asset’s location on De-

2000 through April 30, 2001, or (2) the electric company re-

cember 31, 2000. Enter on line 2(i) as a positive number the

ceived the asset in a tax free reorganization from an electric

sum of the positive book-tax differential amounts for those

company that was subject to and paid the excise tax for

qualifying assets for which the gain or loss from the sale or

gross receipts received during the period May 1, 2000 through

other taxable disposition during the taxable year is

April 30, 2001. Assets acquired by the taxpayer from another

apportionable.

electric company that was a party to the reorganization and

that was subject to and paid the excise tax for gross receipts

Supplemental Schedule C – Allocable Income

received during the period May 1, 2000 through April 30, 2001

Line 2 – Allocable negative book-tax differential. If the

have a carryover book-tax differential and are deemed to have

recognized gain or loss with respect to a qualifying asset

been acquired by the taxpayer on the same date as actually

sold or disposed of during the taxable year in a qualifying

acquired by the other electric company.

taxable event is nonbusiness gain or loss allocable to Ohio

Caution: For taxable years ending on or after June 26, 2003,

and the asset’s book-tax differential is negative, then the elec-

all income, gain, loss and expense is presumed to be

tric company must increase its net income allocable to Ohio

apportionable business income. Accordingly, for taxable years

by the absolute value of the book-tax differential for that qual-

ending on or after June 26, 2003 an electric company’s gains

ifying asset. Enter on line 2 as a positive number in column

and losses from the sale of capital assets and I.R.C. section

1 (within Ohio) the sum of the negative book-tax differential

1231 assets, along with the asset’s book-tax differential ad-

amounts for those qualifying assets the gain or loss from

justment, will generally be apportioned as business income.

whose sale or other taxable disposition during the taxable

A taxpayer reporting any allocable income (other than the

year is allocable to Ohio. Make no entry in column 2 (total

amounts from Schedule B-4) must attach to the report (i) a

everywhere).

detailed statement setting forth support that rebuts the pre-

Line 3 – Allocable positive book-tax differential. If the

sumption; (ii) a list of the states for which the taxpayer treats

recognized gain or loss with respect to a qualifying asset

the income as business income; and (iii) the reasons for such

sold or disposed of during the taxable year in a qualifying

treatment in other state(s).

taxable event is nonbusiness gain or loss allocable to Ohio

Supplemental Schedule B – Adjustments to Federal

and the asset’s book-tax differential is positive, then the elec-

Taxable Income

tric company must decrease its net income allocable to Ohio

by the book-tax differential for that qualifying asset. Enter on

Line 1(e) – Addition for book-tax differential (for qualify-

line 3 as a negative number in column 1 (within Ohio) the

ing assets whose book-tax differential is negative and

sum of the positive book-tax differential amounts for those

apportionable). If the recognized gain or loss with respect

qualifying assets the gain or loss from whose sale or other

to a qualifying asset sold or disposed of during the taxable

taxable disposition during the taxable year is allocable to

year in a qualifying taxable event is apportionable business

Ohio. Make no entry in column 2 (total everywhere).

income or loss and the asset’s book-tax differential is nega-

tive (that is, if the asset’s book value as of December 31,

Note: If gain or loss with respect to the sale or other taxable

2000 determined in accordance with GAAP is less than the

disposition of a qualifying asset is nonbusiness gain or loss

asset’s adjusted basis as of that date), then the electric com-

allocated outside Ohio, the book-tax differential adjustment

pany must increase its income by the absolute value of the

does not apply with respect to that asset.

amount of the book-tax differential for that qualifying asset.

Definitions applicable to book-tax differential adjust-

The adjustment applies regardless of the asset’s location at

ment (O.R.C. section 5733.0510(A))

the time of the qualifying taxable event and regardless of the

asset’s location on December 31, 2000. Enter on line 1(e) as

“Qualifying taxpayer” means either of the following:

a positive number the sum of the negative book-tax differen-

tial amounts for those qualifying assets for which the gain or

(a) a person that is an electric company or a combined elec-

loss from the sale or other taxable disposition during the tax-

tric company, but only if the person was subject to and

able year is apportionable.

paid the tax imposed by O.R.C. section 5727.30 for gross

- 2 -

Instructions For Form Ft-1120 - Electric Companies And Combined Electric Companies Tax - Ohio Corporation Franchise Tax - 2005 Page 2

Related Articles

Related forms

Related Categories