Instructions for Form Co-411 - Corporate Income Tax Return

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FORM CO-411 Instructions
Corporate Income Tax Return
Please print in BLUE or BLACK ink only.
Beginning in 2014
All C Corporations use Form CO-411 and related schedules. The form set has been modified to accommodate
standalone corporations as well as combined reporting for unitary groups. See details in “Forms and
Schedules Summary” section, below.
There is now a mechanism to exclude income received from a pass-through entity which was already taxed
on a composite return (of that pass-through entity). This is required due to the adoption of mandatory
composite filing requirements for certain pass-through entities. This only applies to corporations
1) receiving distributed income from a pass-through entity which as paid composite tax and 2) having
additional activity in Vermont which requires them to file a corporate income tax return. The deduction
is reported as a negative amount on Schedule BA-402, Apportionment & Allocation Schedule, Line 1b
(non-business income) and flows through to Form CO-411, Line 9, or Schedule CO-421, Unitary Affiliate
Schedule, Line 4.
Who Must File?
C Corporations (Stand-alone Corporations, not a member of an affiliated group)
Every C Corporation must file Form CO-411 if:
• It was incorporated under the laws of the State of Vermont; or
• It received income allocable or apportioned to Vermont including income received as a
shareholder, partner, or member.
• It has an open corporate income tax account. If a business wants to maintain the account
even when it has no activity or tax liability for the year, it must file a “NO VERMONT
ACTIVITY” return. No tax is due.
Affiliated Groups of Corporations Engaged in Unitary Business
Beginning in 2006, taxable corporations which are part of an affiliated group engaging in unitary
business are required to file combined reports, reporting the combined net income of the group. See
32 V.S.A. § 5862(d).
In general, an “affiliated group” means a group of two or more corporations in which more than
50% of the voting stock of each member corporation is directly or indirectly owned by a common
owner or owners, either corporate or noncorporate, or by one or more of the member corporations.
“Unitary business” means one or more related business organizations engaged in business activity
both within and outside the state. The various business organizations in a unitary business should
exhibit a unity of ownership, operation, use, and interdependence of their functions. Taxable
corporations which are part of an affiliated group engaging in unitary business are required to file
combined reports, reporting the combined net income of the group.
Form CO-411 Instructions
Page 1 of 12
http://tax.vermont.gov
Rev. 10/18
FORM CO-411 Instructions
Corporate Income Tax Return
Please print in BLUE or BLACK ink only.
Beginning in 2014
All C Corporations use Form CO-411 and related schedules. The form set has been modified to accommodate
standalone corporations as well as combined reporting for unitary groups. See details in “Forms and
Schedules Summary” section, below.
There is now a mechanism to exclude income received from a pass-through entity which was already taxed
on a composite return (of that pass-through entity). This is required due to the adoption of mandatory
composite filing requirements for certain pass-through entities. This only applies to corporations
1) receiving distributed income from a pass-through entity which as paid composite tax and 2) having
additional activity in Vermont which requires them to file a corporate income tax return. The deduction
is reported as a negative amount on Schedule BA-402, Apportionment & Allocation Schedule, Line 1b
(non-business income) and flows through to Form CO-411, Line 9, or Schedule CO-421, Unitary Affiliate
Schedule, Line 4.
Who Must File?
C Corporations (Stand-alone Corporations, not a member of an affiliated group)
Every C Corporation must file Form CO-411 if:
• It was incorporated under the laws of the State of Vermont; or
• It received income allocable or apportioned to Vermont including income received as a
shareholder, partner, or member.
• It has an open corporate income tax account. If a business wants to maintain the account
even when it has no activity or tax liability for the year, it must file a “NO VERMONT
ACTIVITY” return. No tax is due.
Affiliated Groups of Corporations Engaged in Unitary Business
Beginning in 2006, taxable corporations which are part of an affiliated group engaging in unitary
business are required to file combined reports, reporting the combined net income of the group. See
32 V.S.A. § 5862(d).
In general, an “affiliated group” means a group of two or more corporations in which more than
50% of the voting stock of each member corporation is directly or indirectly owned by a common
owner or owners, either corporate or noncorporate, or by one or more of the member corporations.
“Unitary business” means one or more related business organizations engaged in business activity
both within and outside the state. The various business organizations in a unitary business should
exhibit a unity of ownership, operation, use, and interdependence of their functions. Taxable
corporations which are part of an affiliated group engaging in unitary business are required to file
combined reports, reporting the combined net income of the group.
Form CO-411 Instructions
Page 1 of 12
http://tax.vermont.gov
Rev. 10/18
Principal Vermont Corporation
The group must designate a Principal Vermont Corporation (PVC), which will be
responsible for preparing all returns and making payments. The PVC must have nexus in
Vermont. The PVC is the parent corporation if the group includes members of a federal
consolidated group and the parent has nexus in Vermont. If the parent is not taxable
in Vermont or there is no parent, the taxpayer designates the PVC, which is the group
member that is subject to Vermont corporate income tax and that has the greatest amount of
business activity in Vermont. The PVC should be the same corporation from year to year,
and should not be changed based on moderate fluctuations in level of business activity
within the state.
Determination of Tax
Vermont income and tax are determined on a separate company basis for each taxable
member of the group. The combined group’s tax liability is the sum of the separate
taxpayer-affiliates’ liabilities. Each member of the group with Vermont nexus applies its
apportionment factor to the combined net income of the entire group. The apportionment
is determined with Schedule BA-402 for each member of the group with Vermont nexus,
using the separate company’s Vermont factors as numerator, and the entire group’s factors
as the denominator. Other items such as allocated income, credits, and net operating losses
are accounted for on a separate company basis.
Consolidated Returns
Members of a federal consolidated group that are not engaged in unitary business may elect to file
a single consolidated Vermont return, under 32 V.S.A. § 5862(c), provided that the consolidated
members have the same fiscal year. The Vermont consolidated group includes only the members
of the federal consolidated group that are taxable in Vermont and might not contain all of the
corporations in the federal group. An election to file a consolidated return is binding for five years.
Determination of Whether or Not the Corporations are Conducting Unitary Business
Review Regulation § 1.5862(d) carefully to determine if an affiliated group is conducting
unitary business (in which case the group must file a combined return – see above).
Examples of affiliated groups not conducting unitary business are the following: (1) all
members of the group conduct all of their business within Vermont, or (2) the members of
the consolidated group truly have no interconnection other than common ownership (i.e.,
no common lines of business, no shared resources, no common management).
Parent Corporation
The consolidated return must be filed by the parent corporation of the federal group if that
company has nexus (taxable presence) in Vermont. If the parent of the federal group does
not have nexus in Vermont, the parent for Vermont purposes is the group member that
conducts the most activity and has the most stable presence in Vermont over time. The
intention is that a group has the same parent corporation from year to year, rather than to
have the parent corporation change due to fluctuation in activity levels.
Consolidated Return for Affiliated Groups Engaged in Unitary Business
For affiliated groups engaging in unitary business which include members of a federal consolidated
group, the provisions of 32 V.S.A. § 5862(c) remain intact, but underneath the umbrella of
32 V.S.A. § 5862(d). That is, separate companies that are part of a federal consolidated group must
file within the combined report if they meet the unitary definition. Then, within the combined
report, the members of the federal consolidated group with Vermont nexus may elect to be treated
as a consolidated filer, i.e., a single taxpayer.
Form CO-411 Instructions
Page 2 of 12
http://tax.vermont.gov
Rev. 10/18
If this election is made, the Vermont consolidated group is treated as a single taxpayer within the
affiliated group, and provides only one Schedule BA-402. Income will be summed and taxed
as though the members of the consolidated group with Vermont nexus are one taxpayer. If the
consolidated taxpayer is in a minimum tax position, the minimum tax is assessed one time, not
once for each member of the group with nexus. An election to file a consolidated return is binding
for five years.
Nonprofit and Exempt Organizations
A nonprofit organization that engaged in activities in Vermont which produced unrelated business
income subject to federal income tax under Internal Revenue Code Section 511 during the tax
year is required to file a Vermont Corporate Income Tax Return. For more information, review the
“Nonprofit Income Tax Return Instructions” at the end of this document and Technical Bulletin
TB-59, Unrelated Business Income of Exempt Corporations, on the Department’s website.
What if the Corporation Has a Vermont Corporate Tax Account, but Is Not Currently Doing Business in Vermont?
Corporations having an existing Vermont Corporate Income Tax account, but not otherwise doing business
in Vermont, are not required to pay the minimum tax. The corporation must file Form CO-411. Mark the
“No Vermont Activity” box on the bottom of page 1 of Form CO-411.
What about Subchapter S Corporations, Partnerships, and Limited Liability Companies (LLCs)?
Subchapter S Corporations, Partnerships, and Limited Liability Companies electing not to be taxed as a
corporation file Form BI-471, Vermont Business Income Tax Return. See separate instructions for that
form.
Forms and Schedules Summary
Form CO-411, Corporate Income Tax Return: This is the initiating form, and the three pages are
required for all corporate income tax filers.
Schedule BA-402, Apportionment & Allocation Schedule: For use by all taxable entities having
activity (income and/or expenses, regardless of profit or loss) in Vermont and/or at least one other state/
province. Complete Schedule BA-402 unless the apportionment is 100% for Vermont. Returns filed
without Schedule BA-402 will be adjusted to 100% Vermont apportionment. If the corporation is part
of an affiliated group engaged in unitary business, a separate Schedule BA-402 is filed for each taxable
corporation in the group, unless consolidated filing is elected.
Form BA-403, Application for Extension of Time to File Vermont Corporate/Business Income
Tax Return: To request an extension of time to file the Vermont Corporate or Business Income Tax
return. An extension of time to file a federal return automatically extends the time to file with Vermont until
30 days beyond the federal extension date. However, tax is due on the original due date.
Schedule BA-404, Tax Credits Earned, Applied, Expired, and Carried Forward: Required for
companies that have earned or applied tax credits or incentives. This schedule is required of each
separate entity claiming credits if a consolidated return or combined report is filed. Be sure to include
all documentation required per the program guidelines of the credit you are claiming.
Schedule BA-405, Economic Advancement Tax Incentives: Required by those entities awarded
Economic Advancement Tax Incentives (EATI) credits for use for each of the six years following the
end of the EATI authorization period.
Schedule BA-410, Affiliation Schedule: For use by those entities electing to file a Vermont
consolidated return per 32 V.S.A. § 5862(c) or a combined report for a unitary group under 32 V.S.A.
§ 5862(d). Also for use by any corporation filing a return that includes the activity of one or more other
entities that are disregarded for income tax purposes, or otherwise are not filing their own income tax
return.
Form CO-411 Instructions
Page 3 of 12
http://tax.vermont.gov
Rev. 10/18
Schedule BA-423, Pass-Through Entity Ownership Schedule: To report all partnership, disregarded
entity, and Qualified Subchapter S Subsidiaries (Qsub) ownership interests held by the filing entity.
Schedule BA-424, Pass-Through Entity Ownership Income and Activity Schedule: To segregate
lower-tier activity from unique filing entity activity.
Form CO-414, Corporate Estimated Tax Payment Voucher: To make estimated payments for
corporate income tax (generally quarterly) throughout the year.
Form CO-422, Corporate Income Tax Return Payment Voucher: To direct a payment to a
corporate income tax account and period, if you do not have another form or coupon available. Form
CO-422 is not necessary if you are sending a check with Form CO-411, Form CO-414, or Form
BA-403.
Vermont Net Operating Loss statement and summary: For each taxable affiliate that has a Vermont
Net Operating Loss. For details, see the instructions that follow and Technical Bulletin TB-35, Net
Operating Losses, on the Department’s website.
Federal Information: For all taxable members of the group, provide the following:
o
The first five pages of the federal Form 1120, U.S. Corporation Income Tax Return, or
other return filed (one form if the consolidated group is the same as the Vermont unitary
group, or one for each separate member if the affiliates are not part of the same federal
consolidated group). If the consolidated/combined group is different than the federal
group, this will be a pro forma return;
o
Federal Form 4562, Depreciation and Amortization as filed and pro forma, if any members
of the group have taken “bonus” depreciation;
o
Copies of federal statements regarding other income and deductions, net operating loss, and
taxes and licenses.
Additional Schedules for Combined Reporting for Affiliated Groups Engaged in Unitary Business
Beginning in 2014
Starting in 2014, unitary groups file Form CO-411. Each return package will have a Schedule BA-402
which reports the PVC’s apportionment percentage, and carries forward to Line 6 of Form CO-411. The
tax calculation for the PVC occurs on Form CO-411, Lines 6 through 17, comparable to Schedule CO-421.
For each additional taxable affiliate, calculate tax by preparing a Schedule BA-402 and Schedule CO-421.
This process is unchanged from prior years.
Total tax due for the group is the sum of Form CO-411, Line 16 (the tax for the PVC), and all
Schedules CO-421, Line 11 (tax for each additional taxable affiliate). This total amount is reported on
Form CO-411, Line 18.
A properly prepared combined report for unitary group will contain one fewer Schedule CO-421 than
Schedule BA-402, because the apportionment percentage from the first Schedule BA-402 and tax calculation
for the PVC will be reported on Form CO-411.
Schedule CO-421, Unitary Affiliate Schedule: Required of each affiliate taxpayer (other than the
PVC) filing unitary combined returns to determine the separate Vermont tax of each group member.
(Schedule CO-421 is not required for members of the group that have elected to be treated as a
consolidated filer, as tax will be calculated on Form CO-411.) Separate attributes, such as apportionment
of group income, credits and incentives, net operating loss deductions, and allocated non-business
income are accounted for on this schedule. The amount of tax due for each affiliate carries through to
Form CO-411.
Form CO-411 Instructions
Page 4 of 12
http://tax.vermont.gov
Rev. 10/18
Schedule CO-419, Apportionment of Foreign Dividends: Used by unitary-combined filers (if
applicable) to determine the amount of apportioned foreign dividends taxable to the State of Vermont.
Prepare Schedule CO-419 for the PVC, and for every taxable affiliate in the group. Schedule(s) CO-419
is/are not necessary if there were no taxable foreign dividends paid into the group or if modified
apportionment and factor relief are not being calculated. Refer to Regulation Sec. 1.5862(d) -7(f) and
-8(b) regarding what dividends are taxable.
Schedule CO-420, Foreign Divided Factor Increments: Used by unitary-combined filers (if
applicable) to determine the incremental factors to Sales and Receipts, Salaries and Wages, and
Property, in order to provide factor relief for apportionment of foreign dividends. Prepare one Schedule
CO-420 for each entity that paid foreign dividends subject to modified apportionment to any member of
the combined group. Do not prepare Schedule(s) CO-420 if there are no foreign dividends or if factor
relief and modified apportionment are not being calculated.
General Instructions
Filing Dates and Payments
Returns are due on the date prescribed for filing under the Internal Revenue Code, or the extended due date.
The Vermont extended due date is 30 days beyond the federal extended due date. Corporations needing a
Vermont extension should file Form BA-403 by the original due date, and mark the “Extended Return” box
in Part A when filing their corporate return. Form BA-403 requires that you indicate which federal income
tax form will be filed. If only a federal extension was filed, please attach a copy of federal Form 7004.
For nonprofits reporting URBI on Form CO-411, the due date is the same as the date the federal return is
due. If any extension is requested, the Vermont extended due date is 30 days after the federal extended due
date.
An extension of time to file does not extend the time to pay the tax due. Any tax due, including the
Vermont minimum tax, must be paid by the original due date of the return. Any tax due which is unpaid by
the original due date will accrue interest and late payment penalties.
Estimated Taxes
Any corporation anticipating a Vermont tax liability more than $500 must make estimated payments of the
15th day of the 4th, 6th, 9th, and 12th months of the taxable year. Use payment voucher, Form CO-414.
If payment is to be applied to a Vermont consolidated group or combined report for unitary group, provide
information for the Vermont parent or PVC, respectively.
Interest, Late Fees, and Penalties
Interest is charged on payments not made by the statutory due date.
The rate of
interest is established each year.
Current and historical interest rates are available here:
http://tax.vermont.gov/research-and-reports/interest-rates.
If the filing is more than 60 days late from
the original due date, a $50 late file penalty applies even if no tax is due unless the return is timely filed
under extension. The failure to pay an income tax liability when due will result in imposition of a penalty
equal to 1% per month of the outstanding liability. Estimated payments not made when due are subject to
interest and a late payment penalty of 1% for each month that the payment is late, up to a maximum of 25%.
Form CO-411 Instructions
Page 5 of 12
http://tax.vermont.gov
Rev. 10/18

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