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2. Sales revenue from the transmission of electricity is sitused

unit after April 30, 2001 during the taxable year ending

within and without Ohio based on the ratio of wire miles of

immediately preceding the tax year. The credit is allowed

the taxpayer’s transmission lines within Ohio to wire miles

only if both of the following conditions are met during such

of the taxpayer’s transmission lines everywhere. Trans-

taxable year:

mission wire miles are weighted for the voltage capacity of

1. The coal-fired electric generating unit is owned and used

each line.

by the company claiming the credit or leased and used

3. Sales revenue from the distribution of electricity is sitused

by that company under a sale and leaseback transac-

within and without Ohio based on the ratio of wire miles of

tion.

the taxpayer’s distribution lines within Ohio to wire miles

2. A compliance facility, as defined in O.R.C. section

of the taxpayer’s distribution lines everywhere. However,

5733.39(A), is attached to, incorporated in or used in

unlike transmission line wire miles, distribution line wire

conjunction with the coal-fired generating unit.

miles are not weighted for the voltage capacity of each

line.

Enter the credit on supplemental schedule A-1, line 17.

4. If a contract for the sale of electricity includes the seller’s

Second Credit for Purchases of New Manufacturing

•

or the seller’s related member’s obligation to transmit or

Machinery and Equipment (the 7.5%–13.5% manufac-

distribute the electricity and the sales contract separately

turer’s credit) – See O.R.C. section 5733.33). The 7.5%

identifies the price charged for the transmission or distri-

– 13.5% manufacturer’s credit does not apply to transmis-

bution services, the price charged for the transmission and

sion and distribution equipment, and the credit does not

distribution of electricity is sitused within and without Ohio

apply to generating equipment if fifty percent or more of

in accordance with the provisions for situsing transmis-

the electricity that the property generates is consumed,

sion and distribution revenue set forth in #2 and #3, above.

during the one-hundred-twenty-month period commencing

The remaining portion of the sales price, that is, the sale of

with the date the property is placed in service, by persons

the electricity itself is sitused within and without Ohio in

that are not related members to the person who generates

accordance with electricity sales provision set forth in #1,

the electricity.

above.

Enter the credit on supplemental schedule A-1, line 6.

5. If a contract for the sale of electricity includes the seller’s

or the seller’s related member’s obligation to transmit or

Schedule A – Computation of Total Tax

distribute the electricity and the sales contract does not

Although the supplemental schedules for electric com-

separately identify the price charged for the transmission

panies do not include a supplemental Schedule A, com-

or distribution services, the entire price charged is sitused

bined electric companies are entitled to tax computa-

within and without Ohio in accordance with electricity sales

tion reductions that do not apply to other taxpayers.

provision set forth in #1, above.

Schedule A, Line 17. Tax due. If the electric company is

Sales, other than sales of electricity and transmission and

not a combined company, enter on schedule A, line 17 the

distribution services, are sitused within and without Ohio in

greater of the amount shown on schedule A, line 14 or the

accordance with O.R.C. section 5733.05(B)(2)(c) and the

amount shown on schedule A, line 16, but not less than the

sales factor instructions in the franchise tax instruction book-

minimum fee.

let.

If the electric company is a combined company that paid

Supplemental Schedule A-1 – Nonrefundable Credits

Ohio public utility excise tax on its gross receipts as a natu-

With two notable exceptions, an electric company is entitled

ral gas company or as a heating company, then the taxpayer

to the same franchise tax credits as other taxpayers: (1) an

is entitled to a franchise tax reduction (see O.R.C. section

electric company is entitled to a credit for using Ohio coal at

5733.06(J)). The reduction applies to the tax on the net in-

its coal-fired electric generating units (this credit is not avail-

come base and to the tax on the worth base as follows:

able to taxpayers that are not electric companies), and (2)

1. Net Income Base

the second credit for purchases of new manufacturing ma-

chinery and equipment (the 7.5% – 13.5% manufacturer’s

A. Multiply the tax on the net income basis (schedule A,

credit) has limited applicability to electric companies.

line 14) by the ratio of total taxable gross receipts from

public utility activity, other than as an electric company,

Electric Company Credit for Using Ohio Coal (O.R.C.

•

to total gross receipts from all sources; and

section 5733.39). Beginning in tax year 2002, an electric

company may claim against the franchise tax a nonre-

B. Reduce the tax on the net income basis (schedule A,

fundable credit for Ohio coal used in any of its coal-fired

line 14) by the lesser of the amount computed in 1.A.

electric generating units after April 30, 2001 but before Jan-

above, or the excise tax paid for the year upon which

uary 1, 2005. The credit is computed at the rate of $3 per

the taxable gross receipts are measured immediately

ton of Ohio coal burned in a coal-fired electric generating

preceding the tax year.

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Instructions For Form Ft-1120 - Electric Companies And Combined Electric Companies Tax - Ohio Corporation Franchise Tax - 2005 Page 4

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