Preparing Virginia S Corporation returns when the state and federal groups are different

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Use this procedure to ensure the correct preparation of Virginia S Corporation consolidated income tax returns if the members of the Virginia group are not the same as those included in the federal consolidated group.

  1. Add Virginia 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.

    Note: Apportionment data entry must be completed for each member client, even if the client is 100 percent in-state. The same apportionment method must be used by the parent client and applicable subsidiary clients. Apportionment data entry is accessed through View > Apportionment.

  2. Create a new eliminations client for Virginia purposes and add Virginia to the client. Complete this client before proceeding to the next step. If an eliminations client was part of the federal S Corporation consolidated group, a new state eliminations client is needed because the eliminations client used in the federal consolidated group may include eliminations involving members that are not to be included in the Virginia S Corporation consolidated group.

    Note: Including an eliminations client as part of a consolidated group is optional.

  3. Clone the existing federal S Corporation consolidated client. Open the federal consolidated client, choose File > Save As, enter a new client ID for the client, and click the Save button. This new client has the same EIN and name as the federal S Corporation consolidated client, but is used for Virginia purposes only. UltraTax CS generates Consolidated Form 502, Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax.
  4. Select the appropriate members to be included in the Virginia S Corporation 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 Virginia to the new S Corporation consolidated client.

    Note: When adding Virginia to an S Corporation consolidated federal client, the state automatically defaults to being a consolidated S return.

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

  6. Review all Virginia 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 S Corporation consolidated client. For a list of categories and related input screens, see Categories and related Virginia 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, click 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 Virginia parent, eliminations, 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 Virginia S Corporation consolidated tax return.

Example of when a Virginia group is different from a federal consolidated group.

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