Short Period Combined Returns
Some combined groups may have a short period in 2009. This article explains how to file a short period combined return if the final 2009 forms are not available at the time of filing.
The Department's emergency Administrative Rule 2.67(2)(c) (available at www.revenue.wi.gov/combrept/rules.html) describes the necessary components of a combined return. Short period returns must also satisfy these requirements. However, the required Forms 4, 4R, 4M, and 4A are not yet available, although they will be available as drafts by September 30, 2009. As soon as they are available as drafts, you can find them on the Department's web page at www.revenue.wi.gov/forms/2009/index.html.
After the draft forms are available, taxpayers filing short period combined returns may use the draft forms as if they are final forms. Although combined returns are generally required to be filed electronically, short period combined returns that are due before the final forms are available may be filed on paper. For cases where the taxpayer is filing a combined return before the draft forms are available, below is an explanation of what the Department will accept in place of each of these forms:
Use a 2008 Form 4, but at the top of the page, cross off "2008" and enter "2009." Also, in the middle of the top of the page write "COMBINED RETURN." The mailing address shown on the 2008 Form 4 is the same mailing address you will use to send the 2009 short period combined return.
Create a reconciliation schedule titled "Substitute Form 4R" that shows the federal taxable income (Form 1120, line 28) of the consolidated federal return in which the combined group members were included and identifies any federal taxable income amounts added to, or subtracted from, this amount to arrive at the federal taxable income included on Form 4, line 1. The federal taxable income on Form 4, line 1 should only include the federal taxable income of combined group members. Examples of reconciling items on Form 4R include:
- Federal taxable incomes of companies in the federal consolidated group but who are not in the Wisconsin combined group because they are not unitary or are excluded under the water's edge rules.
- Federal taxable incomes of companies in the Wisconsin combined group but who are not in the federal consolidated group because they do not meet the 80% ownership test or are foreign corporations.
- Adjustments necessary to account for intercompany transactions, charitable contribution limitations, and capital loss limitations computed for the Wisconsin combined group instead of the federal consolidated group.
If there was no consolidated federal return, list the federal taxable income from each combined group member's federal return (generally from Form 1120, line 28).
You must include on this schedule a statement as to whether the group is making a controlled group election as described in emergency Administrative Rule 2.63 (available at www.revenue.wi.gov/combrept/rules.html). Whether or not the group is making a controlled group election, also include a list of any other corporations that are in the same commonly controlled group but are excluded from both the Wisconsin combined group and the federal consolidated group. For example, certain foreign corporations may fall into this category.
Create a columnar spreadsheet titled "Substitute Forms 4M" with each column representing a company in the combined group and the rows representing lines 1 through 23 and 30 through 34b of 2008 Form 4, respectively. (However, you may omit lines that are merely subtotals). In the title of each column, include the name and FEIN number of the combined group member. Then enter each company's share of the Form 4 amounts that correspond to the respective rows for the short period.
Create a columnar spreadsheet titled "Substitute Form 4A" with each column representing a company in the combined group and the rows representing lines 1 through 11 of 2008 Form 4B, Part II. For the rows of Form 4B with more than one column, use a separate row for each column (for example, split row 4 into row 4a for the Wisconsin amount and row 4b for the Total Company amount). In the title of each column, include the name and FEIN number of the combined group member. Then enter each company's amounts that correspond to the respective rows.
When determining each company's apportionment factor amounts, follow the rules provided in emergency Administrative Rule Tax 2.61(7) (available at www.revenue.wi.gov/combrept/rules.html). Also, remember to change the throwback percentage on line 2 (sales of tangible personal property) to 100% and to eliminate throwback sales from lines 5 (sales of computer software) and 7 (sales of services).
If a combined group member uses an apportionment computation other than a single sales factor, create a separate spreadsheet showing the computation of the company's apportionment percentage, convert the result to a modified sales factor as described in emergency Administrative Rule Tax 2.61(7)(a) and (g), and carry forward the total modified sales factor numerator and denominator to the substitute Form 4A.
At the bottom of the substitute Form 4A, enter the following totals:
- The sum of each company's numerator
- The sum of each company's denominator
Last updated August 6, 2012