A consolidated tax return is a corporate income tax return of an affiliated group of corporations, who elect to report their combined tax liability on a single return. The purpose of the tax return allows for corporations that run their business through many legal affiliates to be viewed as one single entity.

Can you file a consolidated S corp return?

Because S corporations cannot be included in an affiliated group, an S corporation cannot join in the filing of a consolidated return. However, a C corporation subsidiary can elect to join in the filing of a consolidated return with its affiliated C corporations.

Which of the following is a disadvantage to filing a consolidated return?

the disadvantages of filing a consolidated return include: ☐ the election to file consolidated returns is binding for future years and may only be terminated by disbanding the group or seeking permission of the internal revenue service. ☐ Tax credits may be limited by operating losses of other members.

How does a company file a consolidated tax return?

Each affiliated corporation must consent to file a consolidated tax return by filing Form 1122 and returning it along with Form 1120, the tax form for U.S. corporations. After that point, any new member of the associated group must join in the consolidated tax return.

How are tax returns of an affiliated group consolidated?

The consolidation of the tax returns of an affiliated group includes consolidating the group’s regular income tax, the alternative minimum tax, the accumulated earnings tax, and any tax credits, including the foreign tax credit.

How does a corporation consent to a consolidated return?

(1) General rule. The consent of a corporation referred to in paragraph (a) (1) of this section shall be made by such corporation joining in the making of the consolidated return for such year.

Can a consolidated return of an affiliated corporation be denied?

Permission to file a consolidated return shall not be denied to a group of affiliated corporations filing a consolidated federal return solely because two or more members of such affiliated group would be required to use different apportionment factors if separate returns were filed.