1120-US: Allocating member losses and income provided for consolidated returns (FAQ)

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Question

Is an allocation of member losses and income provided for consolidated returns?

Answer

Yes, UltraTax/1120 provides statements that detail the amount of prior-year NOL utilized amounts allocated to each member, as well as the current-year NOL utilized or income offset allocated to each member for both regular tax and AMT purposes.

The statements are collated with the return's Not Required Statements for the Consolidated NOL (and AMT) Carryover Worksheets and are titled "PY Allocation of Net Operating Loss Utilized" and "CY Allocation of NOL Utilized and Income Offset." The following table is a summary of the columns contained in each statement.

PY Allocation of Net Operating Loss Utilized

Column heading Information in column
Taxable Year The prior year to which an NOL was incurred by a member.
Corporation Name The name of the consolidated corporation or the member corporation name associated to the net operating loss in the Member NOL After SRLY Limit column.
Remaining CY Consolidated Income to be Offset The consolidated income in the current year that is available to be offset. The first amount in this column equals the amount of consolidated income from Form 1120, Page 1, line 28. The amounts subsequently listed represent the remaining income after each prior-year's net operating loss is absorbed by the current year income.
Member NOL After SRLY Limit This column displays by taxable year and then, by member, the amount of net operating loss the member has contributed after SRLY limitations.
Total NOL After SRLY Limit This column displays by year for each member the total amount of net operating loss for the consolidated return after SRLY limitations.
PY NOL Utilized Allocated to Member

The amount of net operating loss utilized allocated to each member by taxable year. These amounts should be entered in the member's Prior Year (Income Offset) NOL Utilized column for Screens NOL and NOLAMT for each respective year after the returns are proforma'd to the next year.

Note: The amounts listed for the last taxable year are allocated to members based on a ratio. The ratio is determined by dividing the member's net operating loss by the total net operating loss. This ratio is then multiplied by the amount of remaining current-year consolidated income to be offset for the tax year.

CY Allocation of NOL Utilized and Income Offset

Column heading Information in column
Taxable Year The current taxable year.
Corporation Name The name of the member corporation associated to the amount of income or loss in the Current Year Member Income/(Loss) column.
Total NOL Utilized in Current Year The amount of net operating loss utilized in the current year including any losses that are immediately used against another member's current-year income.
Current Year Member Income/(Loss) This column displays by member the amount of income or loss contributed to the consolidated corporation in the current year.
Total Amount of Income from Members The total amount of consolidated income contributed to the consolidated corporation (loss amounts from members are ignored). This amount displays for each member of the consolidated corporation as a total amount.
CY NOL Utilized (Inc Offset) Allocated to Member The amount of net operating loss utilized or income offset by the member in the current year. These amounts should be entered in the member client's Prior Year (Income Offset) NOL Utilized column for Screens NOL and NOLAMT for the first preceding year after the clients are proforma'd to the next year.

Related topic: 1120 frequently asked questions

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