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Individual & Corporate Income Tax

Alabama Consolidated Corporate Income Tax Returns
 

 

Alabama Consolidated Corporate Income Tax Information Requirements

Act 2001-1089(HB4) revised the Consolidated filing requirements in Alabama Code Section 40-18-39 for tax periods beginning after December 31, 2001. Alabama consolidated returns can only include Alabama "nexus" companies.

Each corporation included in the Alabama consolidated return must compute their Alabama taxable income on a separate company basis. Then, the taxable income of the Alabama group is combined to determine the tax due. The filing fee has also been increased from a maximum of $12,500 to a $25,000 maximum. This election is binding for 120 consecutive months.

Many questions have been asked by taxpayers concerning the new nexus consolidated filing requirements. The information listed below describes many of the Department of Revenue’s new forms and information required for filing Alabama Affiliated Group (AAG) Consolidated returns. The forms and information should be included with the nexus consolidated return, in order for the return to be processed on a timely basis.

  • Election to File Consolidated Corporate Income Tax Return (Form 20C-CRE). Form 20C-CRE should be signed the first year of filing the consolidated return, and a copy is to be filed with all returns filed thereafter.
  • Alabama Affiliations Schedule (Form 20C-AS) for each tax year election is in effect.
  • Completed Form AB for each separate related member. Regulation 810-3-35-.02, Restricts the Deductibility of Certain Intangible Expenses and Costs and Interest Expenses and Costs of corporations within the Alabama consolidated return.
  • Spreadsheet of affiliated nexus companies complete Form 20C information as would otherwise be on page 1 of the Alabama Form 20C filed on a separate company basis. (Form 20C-AAGIS).
  • Parent must have Alabama nexus. If federal parent does not have Alabama nexus, designate an Alabama nexus company as parent.
  • Schedule with the following information of each entity within the AAG consolidated return:
    • Name of Corporation
    • FEIN
    • Amount of any corporate income tax paid. (This is for first year AAG consolidated return filers only. Beginning the second year of filing, all payments are required to be made by the Alabama nexus parent.)
    • Amount of any business privilege tax paid.
    • Business privilege tax apportionment factor.
  • Net Operating Loss Schedule – Attach computations of NOLs for companies included within Alabama consolidated returns for 1999, 2000 and 2001. These prior losses must be apportioned back to the loss companies only, on a separate return loss year (SRLY) basis, at the separate company level. Only those losses attributable to the AAG nexus companies may be utilized. Once the separate company losses have been applied for years prior to 2002, the Consolidated Net Operating Loss may be applied at the consolidated level.
  • Copy of consolidated Federal Form 1120, pages 1-4, as signed and filed with the IRS.
  • Copy of income spreadsheet (Form 1120, page 1) for every corporation in the federal consolidated group.
  • Complete schedules of Federal Form 1120 information for each corporation included in the Alabama consolidated return. (Can be in spreadsheet form.) This should include, but it not limited to statements of separate company information on other deductions, other income, taxes and licenses.
  • Copy of Federal Form 851, Affiliations Schedule.
  • Federal Income Tax calculations for each company.
  • Estimated and extension payments are to be filed in the Alabama parent’s name.

      The above requirements are mandatory, but the Alabama Department of Revenue reserves the right to request any other information deemed necessary.

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Updated last: February 16, 2007