§ 26-51-805
LexisNexis Practice Insights
1. Understanding Arkansas Consolidated Income Tax Returns for "C" Corporations
2. Implementing FIN 48: Uncertain Tax Positions and Related Party Expense Add-Back Provisions
3. Implementing FIN 48: Intercompany Transactions, Economic Presence, and Affiliate Nexus
4. Deciphering the Financial Accounting Standards Board Interpretation (FIN) 48
26-51-805. Consolidated corporate returns.
(a) (1) All corporations which are eligible members of an affiliated group as that term is defined in 26 U.S.C. 1504(a) and (b) as of January 1, 1989, which affiliated group files a federal consolidated corporate income tax return pursuant to 26 U.S.C. 1501-1505 as of January 1, 1989, may elect to file a consolidated Arkansas corporate income tax return.
(2) However, only corporations in the affiliated group that have gross income from sources within the State of Arkansas that is subject to taxation under the provisions of the Arkansas Income Tax Act, as amended, 26-51-101 et seq., shall be eligible to file consolidated corporate income tax returns in Arkansas.
(b) (1) All corporations in the affiliated group which are eligible to file an Arkansas consolidated income tax return must consent to, and join in, the filing of the consolidated return prior to the last day for filing the return, as may be extended.
(2) The making of the consolidated income tax return shall be deemed as consent of each eligible corporation in the affiliated group.
(c) When filing an Arkansas consolidated corporate income tax return, a complete copy of the federal consolidated corporate income tax return filed with the federal Internal Revenue Service for that taxable year must be attached to the Arkansas return.
(d) (1) The election to file an Arkansas consolidated corporate income tax return for any income year shall require the filing of consolidated corporate income tax returns for all subsequent income years so long as the individual corporations remain members of the affiliated group unless the Director of the Department of Finance and Administration consents to the filing of separate returns by any members of the affiliated group.
(2) However, in the event that the General Assembly amends or supplements the Arkansas Income Tax Act, 26-51-101 et seq., in a manner which would substantially alter the method of allocating or apportioning net income or loss subject to the Arkansas Income Tax Act, 26-51-101 et seq., or in computing the tax due from the affiliated group, then the affiliated group may revoke the election to file an Arkansas consolidated corporate income tax return effective for the income year to which any such change to the Arkansas Income Tax Act, 26-51-101 et seq., is effective.
(e) In any case of two (2) or more corporations, whether or not affiliated, owned, or controlled directly or indirectly by the same interests, the director may distribute, apportion, or allocate gross income, deductions, credits, or allowances between or among such corporations if he determines that the distribution, apportionment, or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income to any such corporation. This subsection is based upon the concept of 26 U.S.C. 482 as of January 1, 1989, as that section applies to corporations.
(f) In computing Arkansas consolidated taxable income or loss to which the tax rate is applied, the separate net income or loss of each corporation which is entitled to be included in the affiliated group shall be included in the consolidated net income or loss to the extent that its net income or loss is separately apportioned or allocated to the State of Arkansas in accordance with the provisions of 26-51-701 et seq.
(g) This section is specifically designed to clarify the filing of consolidated corporate income tax returns with the Revenue Division of the Department of Finance and Administration and is to amend the Arkansas Income Tax Act, 26-51-101 et seq. This section is based upon the concept of filing federal consolidated income tax returns.