Tax News

CCH (cch.taxgroup.com) reports:

  Information on corporation income tax filing requirements and net operating loss (NOL) reporting requirements for mandatory nexus consolidated filers has been posted on the Kentucky Department of Revenue's Web site.

  Members of an affiliated group doing business in the state, including the parent entity and all included affiliates, must file a consolidated return, whether or not filing a federal consolidated return. A parent entity that elected to file a consolidated tax return prior to the 2005 tax year, is subject to the mandatory consolidated return requirements at the end of the election period. If the parent entity has not established nexus in Kentucky then each affiliate that has established nexus in Kentucky must file a separate entity return.

  The NOL adjustment is reported on the return as the current net operating loss adjustment and is deducted from, or added to, preapportioned net income. A prior year NOL carryforward is a preapportioned number. An election can be made to use an apportioned carryforward by checking the box at the top of the Schedule NOL. If the election is made to use an apportioned carryforward, the adjustment is still deducted from, or added to, the preapportioned net income. The NOL deduction may not exceed 50% of the income realized by the remaining affiliated members that did not realize NOLs.

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Hot Topics , Kentucky Department of Revenue, April 21, 2009