Guidelines for preparing member clients for an S Corporation consolidated return

Alerts and notices

To correctly prepare the return for an S Corporation consolidated return, 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 S Corporation consolidated return are $10 million or more, Schedule M-3 is required to be filed. Screens M3S-2 and M3S-3 in the Balance folder must be completed for each member. Screen M3S is only required to be completed in the S Corporation 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 Ms 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 MS in the S Corporation consolidated return and all member returns.

Section 179 deduction

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, UltraTax/1120 calculates the section 179 expense on the consolidated business income.

Enter an amount in the Section 179: Business income limitation (Force) field in Screen OthAsset in the General folder for the members in which the Section 179 was limited due to business income. When you enter an amount in this field, the correct amount of disallowed section 179 for the member will proforma to the next year.

State return processing

State return processing for states other than Alabama, Arkansas, California, Georgia, Illinois, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Virginia, or Wisconsin

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

See State consolidated return processing (S Corporation).