Instructions for IRS Form 1120 Schedule O - Consent Plan and Apportionment Schedule for a Controlled Group

ADVERTISEMENT
Instructions for Schedule O
Department of the Treasury
Internal Revenue Service
(Form 1120)
(Rev. December 2018)
Consent Plan and Apportionment Schedule for a Controlled Group
Have no apportionment plan in
The filing of Schedule O by a
Section references are to the Internal
Revenue Code unless otherwise noted.
effect and are not adopting an
component member provides the
apportionment plan; or
required information as to the status
Future Developments
Already have an apportionment
of the group's apportionment plan.
For the latest information about
plan in effect.
Such information must indicate, when
developments related to Schedule O
applicable, whether all the component
Use Schedule O (Form 1120)
(Form 1120) and its instructions, such
members of the controlled group are
(Rev. December 2012) to
!
as legislation enacted after they were
adopting, amending, or terminating an
amend an existing
published, go to IRS.gov/Form1120.
apportionment plan.
CAUTION
apportionment plan for tax years
If all such members complete the
beginning before January 1, 2018.
What’s New
required written agreement setting
Schedule O (Form 1120) and the
forth the terms of the adopted or
Who Must File
Instructions for Schedule O (Form
amended apportionment plan or an
1120) have been revised to reflect the
agreement to terminate a previously
A corporation must file Schedule O
replacement of the graduated
adopted plan, then each member of
with its income tax return, amended
corporate tax structure with a flat 21%
that group may rely on this agreement
return, or claim for refund for each tax
corporate tax rate and the repeal of
as the member's basis for
year that the corporation is a
the corporate alternative minimum tax.
representing on its Schedule O that
component member of a controlled
These changes are effective for tax
the other component members of the
group, even if (1) no apportionment
years beginning after December 31,
group also have consented to
plan is in effect, or (2) the amounts
2017.
adopting, amending, or terminating
apportioned have not changed from
the apportionment plan.
the previous tax year. See
Definitions
General Instructions
The agreement must be signed by
and Special
Rules, later.
a person authorized to sign on behalf
Consolidated groups. If any of the
of each component member of the
Purpose of Schedule
component members of a controlled
controlled group and retained. No
group also are members of a
A corporation that is a component
member should attach this agreement
consolidated group, then the common
member (defined below) of a
(or a copy of it) to their federal income
parent of that consolidated group
controlled group must use
tax returns. Each component member
must file, as part of its consolidated
Schedule O to report the
must keep, as part of its records,
income tax return, one Schedule O on
apportionment of certain tax benefits
either the original or a copy of the
behalf of the members of that
between all component members of
signed agreement. The agreement
consolidated group. No subsidiary of
the group. These members will be
must contain the group's
that consolidated group should file
subject to limitations on the use of
apportionment methodology (for
Schedule O on its own behalf. The
certain tax benefits for their applicable
example, percentages) for each
Schedule O should contain the
tax year. See
Apportionment of
tax-benefit item that is apportioned.
required consolidated information for
tax-benefit
items, later.
all members of the consolidated
Definitions and Special
Also use Schedule O to indicate
group. See
Identifying
Information,
Rules
that the member filing this return
later.
consents to and represents that all the
Types of Controlled Groups
Exception. If all of the members of
other component members of the
a parent–subsidiary controlled group
controlled group:
Parent–subsidiary group. A
that are required to file a U.S. tax
Are adopting an apportionment
parent–subsidiary group is one or
return join in filing the same
plan, effective for the current tax year;
more chains of corporations
consolidated tax return, then the
Are amending the existing
connected through stock ownership
parent of that group does not have to
apportionment plan;
with a common parent corporation if:
file Schedule O on behalf of the
Are terminating the existing
Stock possessing at least 80% of
group.
apportionment plan and not adopting
the total combined voting power of all
a new plan;
classes of stock entitled to vote or at
Completing and Filing
Are terminating the existing
least 80% of the total value of shares
Schedule O
apportionment plan and adopting a
of all classes of stock of each of the
new plan;
corporations, except the common
In completing Schedule O, the
parent corporation, is directly or
following apply.
Nov 07, 2018
Cat. No. 48211V
Instructions for Schedule O
Department of the Treasury
Internal Revenue Service
(Form 1120)
(Rev. December 2018)
Consent Plan and Apportionment Schedule for a Controlled Group
Have no apportionment plan in
The filing of Schedule O by a
Section references are to the Internal
Revenue Code unless otherwise noted.
effect and are not adopting an
component member provides the
apportionment plan; or
required information as to the status
Future Developments
Already have an apportionment
of the group's apportionment plan.
For the latest information about
plan in effect.
Such information must indicate, when
developments related to Schedule O
applicable, whether all the component
Use Schedule O (Form 1120)
(Form 1120) and its instructions, such
members of the controlled group are
(Rev. December 2012) to
!
as legislation enacted after they were
adopting, amending, or terminating an
amend an existing
published, go to IRS.gov/Form1120.
apportionment plan.
CAUTION
apportionment plan for tax years
If all such members complete the
beginning before January 1, 2018.
What’s New
required written agreement setting
Schedule O (Form 1120) and the
forth the terms of the adopted or
Who Must File
Instructions for Schedule O (Form
amended apportionment plan or an
1120) have been revised to reflect the
agreement to terminate a previously
A corporation must file Schedule O
replacement of the graduated
adopted plan, then each member of
with its income tax return, amended
corporate tax structure with a flat 21%
that group may rely on this agreement
return, or claim for refund for each tax
corporate tax rate and the repeal of
as the member's basis for
year that the corporation is a
the corporate alternative minimum tax.
representing on its Schedule O that
component member of a controlled
These changes are effective for tax
the other component members of the
group, even if (1) no apportionment
years beginning after December 31,
group also have consented to
plan is in effect, or (2) the amounts
2017.
adopting, amending, or terminating
apportioned have not changed from
the apportionment plan.
the previous tax year. See
Definitions
General Instructions
The agreement must be signed by
and Special
Rules, later.
a person authorized to sign on behalf
Consolidated groups. If any of the
of each component member of the
Purpose of Schedule
component members of a controlled
controlled group and retained. No
group also are members of a
A corporation that is a component
member should attach this agreement
consolidated group, then the common
member (defined below) of a
(or a copy of it) to their federal income
parent of that consolidated group
controlled group must use
tax returns. Each component member
must file, as part of its consolidated
Schedule O to report the
must keep, as part of its records,
income tax return, one Schedule O on
apportionment of certain tax benefits
either the original or a copy of the
behalf of the members of that
between all component members of
signed agreement. The agreement
consolidated group. No subsidiary of
the group. These members will be
must contain the group's
that consolidated group should file
subject to limitations on the use of
apportionment methodology (for
Schedule O on its own behalf. The
certain tax benefits for their applicable
example, percentages) for each
Schedule O should contain the
tax year. See
Apportionment of
tax-benefit item that is apportioned.
required consolidated information for
tax-benefit
items, later.
all members of the consolidated
Definitions and Special
Also use Schedule O to indicate
group. See
Identifying
Information,
Rules
that the member filing this return
later.
consents to and represents that all the
Types of Controlled Groups
Exception. If all of the members of
other component members of the
a parent–subsidiary controlled group
controlled group:
Parent–subsidiary group. A
that are required to file a U.S. tax
Are adopting an apportionment
parent–subsidiary group is one or
return join in filing the same
plan, effective for the current tax year;
more chains of corporations
consolidated tax return, then the
Are amending the existing
connected through stock ownership
parent of that group does not have to
apportionment plan;
with a common parent corporation if:
file Schedule O on behalf of the
Are terminating the existing
Stock possessing at least 80% of
group.
apportionment plan and not adopting
the total combined voting power of all
a new plan;
classes of stock entitled to vote or at
Completing and Filing
Are terminating the existing
least 80% of the total value of shares
Schedule O
apportionment plan and adopting a
of all classes of stock of each of the
new plan;
corporations, except the common
In completing Schedule O, the
parent corporation, is directly or
following apply.
Nov 07, 2018
Cat. No. 48211V
indirectly owned by one or more of the
corporations each of which is a
testing date and is not treated as an
other corporations; and
member of either a parent–subsidiary
excluded member (defined below).
The common parent corporation
group or a brother–sister group, and
In general, in determining if a
directly or indirectly owns stock
at least one of which is both the
member of a controlled group is a
possessing at least 80% of the total
common parent of a parent–
component member of that group, the
combined voting power of all classes
subsidiary group and also a member
applicable tax year of that corporation
of stock entitled to vote or at least
of a brother–sister group.
must be tested to determine if it was a
80% of the total value of shares of all
Life insurance companies only
member of the controlled group for at
classes of stock of at least one of the
group. Two or more life insurance
least half the number of days in its
other corporations, excluding, in
companies subject to tax under
testing period. Also, in order to
computing such voting power or
section 801 which are members of
determine the applicable tax year of
value, stock owned directly by such
any parent–subsidiary, brother–sister,
the member being tested, the group's
other corporations.
or combined controlled group will be
testing date must be determined. See
For purposes of determining
treated as a controlled group separate
Testing date
and
Testing
period, later.
whether a corporation is a member of
from any other type of controlled
a parent–subsidiary controlled group
group to which these corporations
Note. If a controlled group has an
within the meaning of section 1563(a)
would otherwise belong if they were
apportionment plan in effect and
(1), stock owned by a corporation
not life insurance companies. The life
some of the members of that
means:
insurance companies that make up a
controlled group join in filing a
Stock owned directly by the
life insurance controlled group do not
consolidated return, then the
corporation, and
have to be in a direct ownership
members of that consolidated group
Stock constructively owned by that
relationship with each other.
are treated together as if they were a
corporation under sections 1563(e)
single member of the controlled
Example. Life insurance
(1), (2), and (3).
group. If a controlled group does not
companies Corporation X and
have an apportionment plan in effect
Brother–sister group. A brother–
Corporation Z make up a life
and any of the members of that group
sister group generally is two or more
insurance company only group, where
join in filing a consolidated return,
corporations where the same five or
Corporation X, a life insurance
then each member of that
fewer persons who are individuals,
company, owns all the stock of
consolidated group will be treated as
estates, or trusts directly or indirectly
Corporation Y, a non-life insurance
a separate member of the controlled
own stock possessing:
company, and Corporation Y, a
group.
At least 80% of the total combined
non-life insurance company owns all
voting power of all classes of stock
the stock of Corporation Z, a life
Additional member. A member of a
entitled to vote or at least 80% of the
insurance company.
controlled group is treated as an
total value of shares of all classes of
additional member if the corporation:
Exception for life–nonlife
the stock of each corporation (the
Was a member of the controlled
consolidated group. The rule above
80% test), and
group at any time during a calendar
does not apply to any life insurance
More than 50% of the total
year,
company that is a member (whether
combined voting power of all classes
Was not a member of the controlled
eligible or ineligible to join in filing a
of stock entitled to vote or more than
group on that testing date,
consolidated return) of a life–nonlife
50% of the total value of shares of all
Was a member of the controlled
affiliated group for which a section
classes of stock of each corporation,
group for at least one-half the number
1504(c)(2) election is in effect.
taking into account the stock
of days of its testing period, and
Instead, an eligible life insurance
ownership of each such person only
Is not an excluded member
company will be treated as a member
to the extent such stock ownership is
(defined next).
of a life–nonlife consolidated group,
identical with respect to each such
Any member of a controlled group
and an ineligible life insurance
corporation (the 50% test).
that is treated as an additional
company will be treated as a member
For purposes of allocating the
member also is treated as a
of a life–nonlife controlled group
accumulated earnings credit, a
component member of that group.
(deemed to constitute a parent–
brother–sister group is defined using
subsidiary controlled group).
Excluded member. A corporation is
only the 50% test above.
treated as an excluded member of a
Component Member
For purposes of determining
controlled group on the December 31
whether a corporation is a member of
A corporation qualifies as a
testing date for its tax year that
a brother–sister controlled group
component member of a controlled
includes that December 31 testing
within the meaning of section 1563(a)
group, for a tax year, if the
date, if the corporation is:
(2), stock owned by a person who is
corporation:
A member of such group for less
an individual, estate, or trust includes:
Is not a member of the controlled
than one-half the number of days in its
Stock owned directly by such
group on the applicable December 31
testing period,
person, and
testing date (defined below), but is
Exempt from tax under section
Stock constructively owned under
treated as an additional member
501(a) (except a corporation which is
section 1563(e).
(defined below); or
subject to tax on its unrelated
Is a member of the controlled group
Combined group. A combined
business taxable income under
on the applicable December 31
controlled group is three or more
section 511) or 521 for such year,
-2-
A foreign corporation not subject to
controlled group which includes
December 31 date, the last day of its
tax under section 882(a) for such tax
Corporations Y and Z and which has a
short tax year is deemed to function
year,
testing date of December 31, 2018.
as the December 31 testing date for
A life insurance company subject to
However, Corporation X is not a
that member only. For a member on a
tax under section 801 other than
component member, additional
full fiscal tax year, the portion of its tax
either a life insurance company which
member, or excluded member of that
year beginning on the December 31
is a member of a life insurance
group for that testing period.
testing date and ending on the last
controlled group or a life insurance
Corporations Y and Z therefore are
day of its tax year is not taken into
company which is a member (whether
not required to include any
account for determining its status
eligible or ineligible) of a life–nonlife
information about Corporation X in
either as a component member or as
affiliated group for which a section
their respective 2018 Schedules O,
an excluded member. In determining
1504(c)(2) election is in effect,
filed with their 2018 income tax
how many days comprise a member's
Not a franchised corporation as
returns. Further, Corporation X does
testing period, the group takes into
defined in section 1563(f)(4), or
not have to file Schedule O with its
account the day that the member is
An S corporation, as defined in
2018 income tax return for the
sold, but does not take into account
section 1361.
controlled group that includes
either the day that such member is
Corporations Y and Z.
acquired or the member's December
Any member of a controlled group
31 testing date.
that is treated as an excluded member
Testing date. The testing date is the
is not a component member, but is a
date for determining whether amounts
Overlapping Groups
member of the group. However, no
of certain tax benefits otherwise
If a corporation is a component
tax-benefit items should be
available to a corporation will be
member of more than one controlled
apportioned to an excluded member.
limited in their use with regard to a
group with respect to any tax year,
If an excluded member of the group
particular tax year of a component
that corporation will be treated as a
owns a controlling interest in a
member of a controlled group. Each
component member of only one
corporation that meets the entity
member of the group uses a
controlled group. The determination
status requirements for being a
December 31 date, when possible, as
as to the group of which such
component member, that corporation
its testing date, whether such member
corporation is a component member
is a component member of the group.
uses a calendar, or fiscal, tax year.
will be made under regulations
When a member of a controlled group
Example. Domestic corporation P
prescribed by the Secretary.
qualifies as a component member of
owns all of the stock of domestic
Excluded Stock
that group on a particular December
corporation S. Domestic corporation S
31 date, it will be required to limit its
To be a member of a controlled group,
owns all of the stock of foreign
use of certain specified tax benefits
a corporation cannot be connected
corporation F. Foreign corporation F
with regard to a tax year that includes
through stock ownership based on
owns all of the stock of domestic
a December 31 date. Each member of
“excluded stock.” Excluded stock
corporation X. Corporations P, S, and
the group uses the December 31 date
includes:
X are component members of a
included within that member's tax year
Nonvoting stock which is limited
controlled group.
as its testing date, whether such
and preferred as to dividends,
Exception. A corporation that (1)
member uses a calendar or fiscal tax
Treasury stock, and
was included in a controlled group at
year. However, if a component
Stock which is treated as excluded
any time during its tax year, (2) was
member of a controlled group has a
stock under section 1563(c)(2)(A) for
not included in that controlled group
short tax year that does not include a
a parent–subsidiary controlled group
on the group's December 31 testing
December 31 date, then the last day
or section 1563(c)(2)(B) for a brother–
date, and (3) was not included in the
of that short tax year will be the testing
sister controlled group.
controlled group for at least half the
date for that member. See
Special
Apportionment Plan
number of days of its testing period, is
allocation rules for a short tax
year,
not treated as a component member,
An apportionment plan is an
later. Each member of a controlled
additional member, or excluded
agreement between the component
group will apply those limitations to
member.
members of a controlled group for
that tax year that is governed by the
apportioning certain corporate tax
Example. For years prior to 2018,
applicable December 31 testing date
benefits among the members of that
Corporation X has been a component
applied to that group.
group. By contrast, a tax-sharing
member of controlled group XYZ.
Testing period. The testing period is
agreement is an agreement entered
Corporations X, Y, and Z do not file
the time period for determining
into between members of an affiliated
consolidated tax returns. Corporation
whether a particular member of a
group of corporations which have
X is on a calendar tax year. On
controlled group qualifies either as a
joined in the filing of a consolidated
February 28, 2018, Corporation X was
component member or as an
tax return. Such an agreement
sold to an unrelated party that is not a
excluded member. The testing period
generally provides that the members
member of any consolidated group.
begins on the first day of that
of the affiliated group will compensate
Corporation X remained in existence
member's tax year and ends on the
each other for certain tax benefits
throughout its entire 2018 calendar
day before its testing date. However,
incurred by members separately and
year. For the period from January 1,
for a component member having a
shared by all members on the
2018, through February 28, 2018,
short tax year not including a
consolidated tax return.
Corporation X is a member of that
-3-
An apportionment plan becomes
the accumulated earnings credit,
cannot use the group's apportionment
effective for a controlled group when it
according to the terms of that plan.
method for determining the amount of
is adopted by all the component
The component members of a group
a tax-benefit item to be apportioned to
members of that group for their tax
are not required to apportion equally
it for its short tax year, even though
years which are subject to the same
any tax-benefit item among each of
that method has been adopted by the
December 31 testing date. Once the
them. Nor is any component member
group under its existing
members of a controlled group adopt
required to adopt the same
apportionment plan. Rather, the
an apportionment plan, it remains in
percentage of apportionment for each
short-year member must divide the full
effect until it is terminated.
tax-benefit item. A group therefore
amount of the tax-benefit item by the
may apportion all, some, or none of
number of component members in the
Amending or terminating an ap-
the amount of any these tax-benefit
controlled group as of the last day of
portionment plan. An
items to a component member.
that member's short tax year. That
apportionment plan is amended when
However, except for a member with a
amount is the amount of that
the same component members (for
short tax year that does not include a
tax-benefit item to be allocated to that
example, when no component
December 31 testing date, the total
member (and only to that member).
members have left or joined the group
amount of a tax-benefit item
The remaining component members
during their testing periods governed
apportioned to all the component
will, in accordance with the terms of
by the applicable December 31
members of the group cannot be more
their apportionment plan, apportion a
testing date) make any different
than the total amount of a tax item that
full amount of each specified
apportionment of the specified
would be allowed to a corporation that
tax-benefit item between those
tax-benefit items among themselves.
is not subject to the limitations
corporations which are the
An apportionment plan is
imposed on the members of a
component members of the group as
terminated when each component
controlled group. See
Special
of the ensuing December 31 testing
member of the controlled group
allocation rules for a short tax year
date.
consents or is deemed to consent to
below.
See section 1561 and the related
the termination of that plan. Each such
regulations for additional details
No apportionment plan in effect. If
member is deemed to have
regarding apportionment plans.
no apportionment plan is adopted or
consented to the termination of the
in effect, the component members of
Exceptions. This special allocation
plan for a tax year if:
a controlled group must divide the
rule does not apply if a component
The controlled group ceased to
amount of any tax-benefit item equally
member has a short tax year that
remain in existence (within the
among themselves (without regard to
includes the December 31 testing
meaning of section 1563) as of the
whether any members also are
date in its short tax year. For example,
testing date for that calendar year,
members of a consolidated return
Corporation Y is a fiscal year taxpayer
A corporation that was a
group).
with a tax year ending on September
component member of the group on
30. On January 31, 2018, Corporation
the testing date in the preceding tax
Special allocation rules for a short
Y is liquidated. Corporation Y's tax
year is not a component member on
tax year. Special allocation rules
year beginning on October 1, 2017,
the testing date in the current tax year,
apply to the accumulated earnings
and ending on January 31, 2018, is
or
credit, if a component member has a
not a short tax year within the
A corporation that was not a
short tax year that does not include a
meaning of section 1561(b). Thus, the
component member of the group on
December 31 date. A corporation's
normal apportionment rules apply.
the testing date in the preceding tax
tax year will end before the last day of
year is a component member on the
This special allocation rule also
its annual tax year and will have a
testing date in the current tax year.
does not apply if a member of a
short tax year if:
controlled group has a short tax year
The corporation is sold to a
Exception. If the members of a
and is a member of a consolidated
consolidated group, or
consolidated group are treated as if
group. Instead, such corporation's
The corporation is merged or
they are one component member,
income for the short tax year is
liquidated, including a deemed
then changes as to the members
included in the consolidated return
liquidation resulting from a section
which belong to that consolidated
filed by the consolidated group for that
338 election.
group (as long as that consolidated
corporation's tax year.
group remains in existence within the
Example. For years prior to 2018,
meaning of Regulations section
Corporation X has been a member of
Specific Instructions
1.1502-75(d)) will not serve to
controlled group XYZ and has a
terminate the group's apportionment
calendar tax year. On May 31, 2018,
Identifying Information
plan.
Corporation X is liquidated.
Corporation X has a short tax year
Apportionment of Tax-Benefit
Component member filing Sched-
that begins on January 1, 2018, and
ule O. On page 1, enter the name
Items
ends on May 31, 2018. Corporation X
and employer identification number
therefore applies the special
Apportionment plan in effect. If the
(EIN) of the component member filing
allocation rule to the accumulated
component members of a controlled
this Schedule O.
earnings credit.
group have an apportionment plan in
In Part II, column (a), line 1, enter
effect, they must apportion the
Determining the amount to be
the component member's name and
specified tax-benefit items, such as
apportioned. A short-year member
-4-
EIN. In column (b), enter the
check box 3a. By checking box 3a,
Even though X will not be a member
member's tax year ending date
this corporation is consenting to the
of the group on its December 31,
(Yr-Mo).
adoption of an apportionment plan
2018, testing date, it is treated as an
and also is representing that the other
additional member of the group on
Other component members of the
component members of the group
that date. Consequently, for 2018 the
controlled group. For Part II,
also are consenting to the adoption of
XYZ controlled group must apportion
column (a), lines 2 through 10, and
that plan. See
Completing and Filing
the tax-benefit items according to the
column (b), enter the corresponding
Schedule
O, earlier.
terms of its apportionment plan.
information for each of the other
Therefore, X, Y, and Z would each
component members of the controlled
If all the component members
check box 3c on its 2018 Schedule O.
group, in the same manner as the
consent to amend an apportionment
member filing this Schedule O. If more
plan, check box 3b. By checking
If box 3c or 3d is checked,
space is needed, attach additional
complete Part II under either of the
box 3b, this corporation is consenting
sheets.
following circumstances.
to the amendment of an
apportionment plan and also is
If a corporation that is joining or
Consolidated groups. If several
leaving the group still qualifies as a
representing that the other component
component members also are
component member for its tax year,
members of the group are consenting
members of a single consolidated
to the amendment of that plan.
complete Part II according to the
group, then with respect to those
terms of any applicable
However, to amend a plan both of the
members, in Part II, column (a) and
apportionment plan.
following conditions must be satisfied.
column (b), enter only the information
The controlled group already has
If a corporation that is joining or
of the common parent of the
leaving the group will not qualify as a
an apportionment plan in effect, and
consolidated group.
component member for its tax year,
There has been no change in the
If any component members of
then, following the corporation's name
component-member composition of
the controlled group also are
in column (a), enter the notation “(E)”
the group from the previous taxable
TIP
members of a consolidated
for excluded member. In Part II,
year.
group, the parent of such
column (b), enter the ending date of
If the component members of a
consolidated group should file only
the tax year (Yr-Mo) and enter -0- in
group are either adopting a new
one Schedule O on behalf of all such
the remaining columns, as applicable.
apportionment plan or amending an
members of the controlled group.
existing apportionment plan that
Such form must contain the required
Note. Do not check more than one
involves prior tax years of those
information for each such member.
box on line 3. If a corporation does not
component members, at least one
See Regulations section 1.1561-3(a)
adopt an apportionment plan, amend
year must remain on each of the
(2).
a previous apportionment plan, or
statutes of limitations for assessing a
terminate an existing apportionment
tax deficiency against all of the
plan, then skip line 3 and go to line 5.
Part I. Apportionment Plan
component members of the group for
Information
Line 4. Reason for termination of
such prior tax years. See the
existing apportionment plan.
instructions, below.
Line 1. Type of controlled group. A
Check box 4a if all the component
component member of a controlled
If the apportionment plan for the
members of a controlled group are
group must check the applicable box
component members of a controlled
consenting to terminate the
to indicate the type of group. For more
group is terminated:
apportionment plan. Check box 4b if:
information, see
Types of Controlled
Check box 3c if the remaining
The controlled group has ceased to
Groups, earlier.
component members choose not to
remain in existence within the
For a brother–sister controlled
adopt (or are not able to adopt) a new
meaning of section 1563,
group, check box 1b whether that
apportionment plan, or
A corporation that was a
group is a brother–sister group for
Check box 3d if the remaining
component member of the group on
purposes of applying only the 50%
component members choose to adopt
the testing date for the preceding tax
test or for purposes of applying both
a new apportionment plan.
year is no longer a component
the 80% and 50% tests.
member in the current tax year, or
With regard to box 3c, the
A corporation that was not a
Line 2. Member status. If a
remaining component members will
component member of the group on
corporation was not a component
not be able to adopt a new
the testing date for the preceding tax
member of the group for each day of
apportionment plan if, for example,
year is a component member for the
its tax year, check box 2b and provide
such component members have left
current tax year.
the required information. If the taxable
the group.
year of this corporation does not
Line 5. Status of apportionment
Example. For years prior to 2018,
include a December 31 date, a
plan. Check the applicable box to
Corporation X has been a member of
special allocation rule applies. See
indicate the status of any
controlled group XYZ and has a
Special allocation rules for a short tax
apportionment plan of the controlled
calendar tax year. Corporations X, Y,
year, earlier.
group.
and Z are component members of a
Check box 5a if the controlled
Line 3. Consent and represent. If
controlled group and each has a
group does not have an
all the component members consent
calendar tax year. On August 31,
to adopt an apportionment plan,
2018, X is sold to an unrelated party.
-5-

Download Instructions for IRS Form 1120 Schedule O - Consent Plan and Apportionment Schedule for a Controlled Group

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