Preparing Mississippi 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 Mississippi combined income tax returns if the members of the Mississippi 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.
  2. Add Mississippi to the parent and 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.

    Notes

    • 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.
    • For combined returns, do not create a new eliminations client since eliminations are not allowed for Mississippi combined returns.
  3. Create a new consolidated client using the Consolidated type in File > Client Properties.
  4. Select the appropriate members to be included in the Mississippi combined 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. Click OK to close the Advanced Properties dialog. Click OK again to close the Client Properties dialog.
  5. Add Mississippi to the new consolidated client.

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

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

  6. Review all Mississippi combined 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 Mississippi input screens.

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

  7. To make manual adjustments in other areas of the return, access the Group View button or press F7 in the input screen field you want to adjust, and then enter the adjustment amount in the Group View dialog.
  8. To change amounts entered in the Mississippi 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 combined client and reopen the first subsidiary. Choose View > Apportionment for that client and correct the data. Close the subsidiary client and reopen the combined client. The correct amount is now a part of the combined group return.
  9. Print and review the Mississippi combined tax return.

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

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