Preparing Georgia returns when the state and federal groups are different and there are members with at-risk or passive activities

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IRS filing deadline update

The IRS MeF system is now processing returns, and the filing deadline has been extended to 11:59 PM on Wednesday, April 18, 2018. For the latest details, see UltraTax CS alerts and notices.

Use this procedure to ensure the correct preparation of Georgia consolidated income tax returns if the members of the Georgia unitary business group are not the same as those included in the federal consolidated group and the federal group contains members with at-risk or passive activities.

  1. Clone the parent and subsidiary clients. Open each member one at a time, choose File > Save As, enter a new client ID for the client, and click the Save button. The new client will have the same EIN and name as the original client. Creating new clients is necessary so that the federal at-risk and passive calculations for the original consolidated and member clients are not changed when the group members are changed.

    Notes

    • According to GA Substantive Regulations, Chapter 560-7-3, intercompany transactions are not eliminated in determining separate company Georgia taxable income or loss.
    • Apportionment data entry must be completed for each member client, even if the client is 100 percent in-state. Apportionment data entry is accessed through View > Apportionment. Use amounts net of eliminations.
    • The parent company reports net worth on the consolidated Group Form 600. Each subsidiary reports net worth on a separate Form 600.
  2. Add Georgia to the parent client and the applicable subsidiary clients. Complete all data entry for these member clients. Each member's state return should be complete and correct before proceeding to the next step.
  3. Create a new consolidated client using the Consolidated entity type in File > Client Properties.
  4. Select the appropriate members to be included in the Georgia consolidated group. Choose File > Client Properties and click the Advanced Properties button. In the Group tab, remove or add subsidiary clients as necessary. If applicable, remove the current eliminations client that was used by the federal client and then add the eliminations client created in step 2. Click OK to close the Advanced Properties dialog. Click OK again to close the New Client or Client Properties dialog.
  5. Add Georgia to the new consolidated client.

    Note: When adding Georgia to a consolidated federal client, the state automatically defaults to being a consolidated return.

    If the state is added as a C Corporation to a federal consolidated group, the consolidated functionality does not take place. The amounts from each member are not consolidated, and the consolidated reports are not available.

  6. Review all Georgia consolidated client input screens and complete any necessary remaining data entry. For each category not marked in the File > Client Properties > Advanced Properties > Options dialog, enter the necessary data in the applicable input screens.

    Note: If a category is not marked, enter the data on the applicable input screens in the consolidated client. For a list of categories and related input screens, see Categories and related Georgia input screens.

    Any changes made to the File > Client Properties > Advanced Properties > Options dialog affect both the federal and state return.

  7. Click the Consolidated folder in the Georgia folders block. Complete the necessary information in Screens GAAffil and GACAdj.
  8. To change amounts entered in the Georgia parent or subsidiary clients, go back to the original source of data entry. For instance, if you made a mistake when you entered the apportionment of the first subsidiary, close the consolidated client and reopen the first subsidiary. Choose View > Apportionment for that client and correct the data. Close the subsidiary client and reopen the consolidated client. The correct amount is now a part of the consolidated group return.
  9. Print and review the Georgia consolidated tax return.

Example of when a Georgia group is different from a federal consolidated group and the federal group contains members with at-risk or passive activities.

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