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2. Net Worth Base

Endnotes

A. Multiply the tax on the net worth basis (schedule A, line

An “electric company” is any person engaged in the busi-

16) by the ratio of total taxable gross receipts from pub-

ness of generating, transmitting, or distributing electricity

lic utility activity, other than as an electric company, to

within this state for use by others, but excludes a “rural

total gross receipts from all sources; and

electric company.” A “rural electric company” is defined as

any nonprofit corporation, organization, association, or co-

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

operative engaged in the business of supplying electricity

16) by the lesser of the amount computed in 2.A. above,

to its members or persons owning an interest therein in an

or the excise tax paid for the year upon which the tax-

area the major portion of which is rural. See O.R.C. sec-

able gross receipts are measured immediately preced-

tions 5733.04(P), 5727.01(D)(3), and 5727.01(C).

ing the tax year.

A “combined electric company” is any person engaged in

3. Enter on schedule A, line 17 the greatest of the following:

the activity of an electric company or rural electric compa-

ny that is also engaged in the activity of a heating company

A. The amount determined in 1.B. above;

or a natural gas company, or any combination thereof. See

B. The amount determined in 2.B. above; or

O.R.C. section 5733.04(P) and. 5727.01(L). The term “com-

C. The minimum fee.

bined company,” as used throughout these supplemental

instructions, is not to be confused with a company includ-

Combined Franchise Tax Report – Form FT 1120C

ed in an O.R.C. section 5733.052 combined franchise tax

An electric company can join in the filing of a combined fran-

return with another corporation.

chise tax report (form FT 1120C) with related corporations

Unless otherwise stated in these supplemental instructions,

whether or not those related corporations are electric compa-

the term “electric company” refers to both an electric com-

nies provided that the requirements set forth in O.R.C. sec-

pany and a combined electric company.

tion 5733.052 and on form FT 1120C are met.

The term “related member” means a person that, with re-

Although the department has not developed a combined re-

spect to the taxpayer during all or any portion of the taxable

port form or combined report schedules specifically applica-

year, is a “related entity” as defined in division (I)(12)(c) of

ble to electric companies making the book-tax differential ad-

O.R.C. section 5733.04, is a component member as de-

justments, electric companies included in a combined report

fined in I.R.C. section 1563(b), or is a person to or from

can nevertheless make those adjustments on form FT 1120C

whom there is attribution of stock ownership in accordance

Schedule B (combined) by lining out any unused addition

with I.R.C. section 1563(e) except, for purposes of deter-

and any unused deduction and substituting the book-tax dif-

mining whether a person is a related member under this

ferential adjustment.

division, “20%” shall be substituted for “5%” wherever “5%”

Please note that the franchise tax deduction, add-back, ap-

appears in I.R.C. section 1563(e). See O.R.C. section

portionment, credit and tax computation adjustments set forth

5733.042(A)(6).

in these supplemental instructions for electric companies do

For example, the year upon which the taxable gross re-

not apply to those members of a combined franchise tax re-

ceipts are measured immediately preceding franchise tax

port that are not electric companies. For example, the book-

year (privilege year) 2005 is the year May 1, 2003 to April

tax differential adjustment does not apply to any member of

30, 2004 even if the public utility has a calendar year end

the combined return that is not an electric company. (Howev-

taxable year. Thus, the franchise tax reduction for tax year

er, the effects of the electric company’s book-tax differential

2005 is limited to the excise tax that was paid for gross

adjustment are pro rated to all members of the combined

receipts measured during the period May 1, 2003 to April

report by virtue of the “proportionate share of the factors”

30, 2004.

mechanism set forth in O.R.C. section 5733.052(E)).

Instructions For Form Ft-1120 - Electric Companies And Combined Electric Companies Tax - Ohio Corporation Franchise Tax - 2005 Page 5

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