Title 15 . Revenue

Chapter 20 . (Repealed)

Section 100. Returns

15 AAC 20.100. Returns

(a) Each taxpayer shall file a return except that two or more taxpayers that engage in a unitary business and that join in filing a consolidated federal return shall file a consolidated Alaska return.

(b) Two or more taxpayers that do not join in a consolidated federal return may file a consolidated Alaska return if they are engaged in a unitary business and are eligible to file a consolidated federal return. For purposes of this subsection, the provisions of subsections (b)(3), (b)(4), or (b)(7) of Internal Revenue Code section 1504 (26 U.S.C 1504(b)(3), (b)(4), or (b)(7)) that disqualify a corporation from the definition of "includible corporation" in Internal Revenue Code section 1504(b) (26 U.S.C. 1504(b)) for the purpose of filing a consolidated federal tax return do not apply to disqualify a corporation from joining in filing a consolidated Alaska return under AS 43.20 and this chapter.

(c) If, under this section, two or more taxpayers file a consolidated Alaska return, all includible taxpayers engaged in the unitary business shall join in the consolidated Alaska return.

(d) Taxpayers that join in filing a consolidated Alaska return under this section shall apply Internal Revenue Code sections 1502 - 1552 (26 U.S.C. 1502 - 26 U.S.C. 1552) to consolidate taxable income and determine tax payable. In a consolidated Alaska return the separate taxable income of each taxpayer shall be combined and the consolidated group's net operating loss, net capital gain, section 1231 loss, charitable contribution, and dividends received deduction shall be determined on a consolidated basis.

(e) For the purpose of illustrating the making of a consolidated Alaska return under (d) of this section, the following example is offered:

EXAMPLE

Taxpayer A and Taxpayer B join in the filing of a consolidated Alaska return. The unitary business realized a business net capital gain of $100, made charitable contributions of $40, and generated apportionable business income (excluding capital gains and charitable contributions) of $200. Taxpayer A realized a $25 non-business capital loss allocable to Alaska. The apportionment factors of Taxpayers A and B are 10 percent and 15 percent respectively. The individual apportioned and allocated income or loss of Taxpayer A and Taxpayer B under the combined reporting method are as follows:

A B

Ordinary Income 20 30 Capital Gain or (Loss) (15) 15 Excess Capital Loss 15 0 Charitable Contributions 4 6 Contribution Deduction 2 5 Taxable Income 18 40

In the consolidated return of Taxpayer A and Taxpayer B, the net capital gain or loss and charitable contribution deduction are consolidated items determined on a consolidated basis:

A B Com- Adjust- Consoli- bined ment dated

Separate Taxable Income 20 30 50 50 Capital Gain or (Loss) (15) 15 0 0 Contributions 4 6 10 (5) 5 Taxable Income 40 5 45 Contributions Carryforward 5 Excess Capital Loss 0

(f) A taxpayer shall determine its charitable contribution limitation by applying Internal Revenue Code section 170 (26 U.S.C. 170) based upon its Alaska taxable income. The charitable contributions subject to limitation for a taxpayer required to use the combined method of reporting are the current charitable contributions of the unitary business before the federal Internal Revenue Code section 170(b) (26 U.S.C. 170(b)) limitation, multiplied by its apportionment factor plus the Alaska charitable contribution carryforward of the taxpayer, if any. For purposes of determining the education credit under AS 43.20.014 , qualified contributions are limited to charitable contributions as defined in Internal Revenue Code section 170(c) (26 U.S.C. 170(c)) that also meet the requirements of AS 43.20.014 . A taxpayer may not deduct any part of qualified contributions upon which a credit claimed under AS 43.20.014 is based.

(g) For purposes of illustrating the determination of the taxpayer's Alaska charitable contribution limitation and deduction under (f) of this section, the following example is offered:

EXAMPLE

Taxpayer A made a $100 contribution that qualified for the Alaska education credit under AS 43.20.014 and generated a $50 education credit. Taxpayer A made $500 of other charitable contributions during the tax year. The $600 of contributions may not be deducted in the determination of apportionable income. None of Taxpayer A's contributions were currently deductible in its federal return as a result of the limitation imposed by Internal Revenue Code section 170 (26 U.S.C. 170). Taxpayer A has an Alaska apportionment factor of 15 percent and its apportioned and allocated Alaska income measured under Internal Revenue Code section 170(b) (26 U.S.C. 170(b)) is $900. Taxpayer A's charitable contribution limitation is $90 ($900 X 10 percent) and its entire $75 ($500 X 15 percent) of apportioned charitable contributions may be deducted in determining its taxable income. No part of taxpayer A's $100 contribution applied to generate its education credit under AS 43.20.014 may be deducted.

(h) A taxpayer shall determine its dividends received deduction by applying Internal Revenue Code sections 243, 244, 246, 246A, and 247 (26 U.S.C. 243, 244, 246, 246A, and 247) to dividends included in its taxable income as if the dividend payor and payee were domestic corporations. A taxpayer shall apply the limitation imposed by Internal Revenue Code section 246(b) (26 U.S.C 246(b)) by reference to its Alaska taxable income. A taxpayer using the combined reporting method shall apply this subsection only to its dividend income as apportioned and allocated to Alaska. A dividends received deduction shall not be allowed with respect to a dividend eliminated or excluded from income under 15 AAC 20.300(n) or AS 43.20.073 (b), or gain treated as a dividend for federal tax purposes under Internal Revenue Code section 1248 (26 U.S.C. 1248).

(i) The sum of a taxpayer's apportioned and allocated income or loss, if a net loss, is the taxpayer's net operating loss. A taxpayer shall carry forward or carry back its net operating loss in accordance with the Internal Revenue Code.

(j) A taxpayer that is required to file a federal return shall submit a copy of its complete federal return with the return required under AS 43.20; the Alaska return is not complete unless the complete federal return is submitted. A taxpayer that joins in the filing of a consolidated federal return shall submit a copy of the consolidated federal return; a pro forma separate company return does not establish a complete return. A taxpayer may comply with this subsection by submitting, in lieu of the complete federal return, only the portions of the federal return that are specified by the department in the written instructions for the return required under AS 43.20.

History: Eff. 4/14/82, Register 82; am 7/9/93, Register 127; am 3/6/98, Register 145

Authority: AS 43.05.080

AS 43.20.030

AS 43.20.031

AS 43.20.072

AS 43.20.073