Guidelines for preparing member clients for an 1120 consolidated return

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To correctly prepare the return for a consolidated client, you first may need to adjust the data for each member in the following areas.

Mid-quarter convention

If the consolidated client is subject to the mid-quarter convention for depreciation, and asset information is entered in the asset module through the Asset tab, do the following for each member.

  1. With the Asset tab open, choose Setup > Treatments.
  2. Select the appropriate treatment.
  3. Click the Options button.
  4. Click the Force application option in the Mid-quarter application for current-year acquisitions group box.

Schedule M-3

If the total assets for the consolidated return are $10 million or more, filing Schedule M-3 is required. Screens M3-2 and M3-3 in the Balance folder need to be completed for each member. Screen M3 is only required to be completed in the consolidated return.

If total assets for the consolidated return are less than $50 million, the corporation can choose to file Schedule M-1 in lieu of Schedule M-3. To do so, enter the applicable data in Screen Mc in the Balance Sheet folder and enter 1 in the Complete Schedule M-1 in lieu of Schedule M-3, Parts II and III field on Screen M3 in the C Corporation consolidated return and all member returns.

Section 179 deduction

The section 179 deduction across all members in total should not exceed $500,000.

If the section 179 expense calculated for the consolidated return is different than the sum of the members' section 179 expense due to the business income limitation, enter an amount in the Section 179: Business income limitation (Force) field in Screen OthAsset in the General folder for each member so that the calculated section 179 deduction for all group members together equals that of the consolidated return.

If the section 179 deduction is limited for the consolidated return due to the cost of section 179 property placed in service, enter an amount in the Section 179: Total cost of Section 179 property placed in service this year (Force) field in Screen OthAsset for each member so that the calculated section 179 deduction for all group members together equals that of the consolidated return.

State return processing

State return processing for states other than Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York / New York City, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia, or Wisconsin

State information entered in any member client is not available to the consolidated return. To enter state information that pertains to the consolidated return, attach the state to the consolidated return.

See State consolidated / combined return processing.


Related topic: State consolidated / combined return processing information

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