S Corporation consolidated returns overview

Alerts and notices

General principles

  • If an S Corporation has a Qualified Subchapter S Subsidiary (QSSS or QSub), all of the QSSS's assets, liabilities, and items of income, deduction, and credit are treated as belonging to the parent S Corporation.
  • To combine the information from the parent S Corporation, and the QSSS members in UltraTax/1120, you can set up an S Corporation consolidated group, similar to how a C Corporation consolidated group is set up.
  • Each member of the S Corporation consolidated group is made up of a parent member, subsidiary members (QSSS), and an optional eliminations member. Only S Corporations are eligible members of a consolidated group.
  • UltraTax CS assumes the subsidiary members meet the requirements for QSSS treatment and the parent S Corporation has elected to treat the subsidiary as a QSSS.
  • If you have a C Corporation that is a QSSS, you need to clone the return, change the return to an S Corporation, and make any necessary data entry on the S Corporation input screens. Separate returns are required for each entity including the eliminations member.
  • If a consolidated group were comprised of a parent and one QSSS member, you would create a total of either three or four returns in UltraTax CS depending on whether or not you want to have an eliminations member. If you do not want to have an eliminations member, set up a parent, a subsidiary, and a consolidated return. If you do want an eliminations member, set up a parent, a subsidiary, an eliminations client, and a consolidated return.
  • The parent return is the first company listed in the S Corporation consolidation reports. Some pieces of information entered in the parent return, such as name, address, date of incorporation, method of accounting, product or service, etc. are used to complete parts of the consolidated Form 1120S.
  • The eliminations return is used to enter inter-company transactions. Enter as positive values those amounts that are to be added, and enter as negative values those amounts that are to be subtracted. The eliminations return information is listed under the Eliminations column of the consolidation reports. Note that including an eliminations member as part of a consolidated group is optional.
  • The subsidiary returns are any 1120 S Corporations being processed in UltraTax CS for the current year. These returns do not need to be prepared differently than any other return; however, consistency among the group members' separate returns ensures a successful consolidated return. Any overrides entered in one of the separate returns appear in the Adjustments column of the consolidated group reports. In certain cases, form overrides cause the detail not to match the information in the consolidated group reports.
  • Most data from the parent, eliminations, and subsidiary returns is combined and appears on the input screens of the consolidated return. A small amount of data needs to be entered in the consolidated return.
  • Shareholder information may be entered in either the parent S Corporation or the consolidated return. If the shareholders are entered in the parent S Corporation and the consolidated return is then created, the shareholders are automatically listed in the consolidated return. If the shareholders are entered in the parent S Corporation after the consolidated return is created or proforma'd, you need to add the shareholders to the consolidated return. Any shareholder basis information should be entered in the consolidated return.
  • UltraTax CS makes automatic adjustments for Section 179, built-in gains tax, and passive income tax.
  • For information on entering state apportionment data for 1120 consolidated return, see Apportionment Information window.

When backing up or restoring a consolidated return, also back up or restore all member returns as well.