D.C. Mun. Regs. tit. 9, r. 9-167

Current through Register Vol. 71, No. 36, September 6, 2024

Rule 9-167 - COMBINED REPORTING: TAXABLE YEAR; PART-YEAR MEMBERS

167.1

Taxable year of the combined group. The combined group's taxable year is determined as follows:

(a) If two (2) or more members of a group file a federal consolidated return, the group's taxable year is the taxable year of the federal consolidated group; and

(b) In all other cases, the group's taxable year shall be the taxable year of the designated agent.

167.2

52 to 53 week tax years. Where a member files federal income tax returns on the basis of an annual period which varies from fifty-two (52) to fifty-three (53) weeks, its taxable year shall be treated as beginning with the first day of the calendar month beginning nearest to the first day of such taxable year or ending with the last day of the calendar month ending nearest to the last day of such taxable year.

167.3

Members with different taxable years. If the taxable year of a combined group member differs from the taxable year of the combined group, the designated agent shall include that member's net income or loss and apportionment factors in the combined report by using the pro rata method; however the Chief Financial Officer may require use of the interim closing method in certain instances.

167.4Pro rata method. Under the pro rata method, the income and apportionment data of the member as adjusted to reflect the determination of income under District law is assigned to the respective portion of the combined group's taxable year based on the ratio of months in common with the tax year of the combined group.

(a) The income and apportionment data from the member's recomputed taxable years is then combined with the income and apportionment data of the taxable year of the combined group, along with the income and apportionment data of other members of the combined group for the same period, similarly recomputed if necessary. The combined group's taxable income is then apportioned to each of the taxable members of the combined group.

(b) In the event that the pro rata method requires the determination of income and apportionment data of a member whose taxable year has not yet closed, and the information cannot be obtained in time for the other members to file an accurate return, the income and apportionment data for that period shall be estimated based on available information. If the use of actual income and apportionment data results in a material misstatement of income apportioned to the District by the combined group, the taxpayer members must file an amended return to reflect the change.

(c)Material misstatement. For the purpose of determining whether a re-determination of income made with respect to the pro rata method results in a material misstatement of income apportioned to the District by the combined group, it is presumed that there is such material misstatement where the aggregate tax liability of the combined group members that filed returns based on a pro rata estimate is found to have understated the aggregate correct liability for such members by the greater of ten thousand dollars ($10,000) or ten percent (10%) or, where the change in the apportioned group income for any one taxpayer member of the group increases or decreases by more than one hundred thousand dollars ($100,000).

167.5

The pro-rata method shall be used in each subsequent taxable year unless the interim closing method is required.

167.6Part-year members. If, during a combined group's taxable year, a member ceases to be a member of the combined group or a new person becomes a member, the designated agent shall include that person's items attributable to the portion of the taxable year that the person was a member in the combined report covering the combined group's entire taxable year. For the portion of the taxable year when the person was not a member of the combined group, the person shall file a separate return or file in the combined report of another combined group, as applicable.

D.C. Mun. Regs. tit. 9, r. 9-167

Final Rulemaking published at 59 DCR 10875, 10892 (September 14, 2012)

Authority: The Deputy Chief Financial Officer of the District of Columbia Office of Tax and Revenue (OTR) of the Office of the Chief Financial Officer, pursuant to the authority set forth in D.C. Official Code § 47-1335 (2005 Repl.), section 201(a) of the 2005 District of Columbia Omnibus Authorization Act, approved October 16, 2006 (120 Stat. 2019; P.L. 109-356, D.C. Official Code § 1-204.24 d (2012 Supp.)) of the Home Rule Act, and the Office of the Chief Financial Officer Financial Management and Control Order No. 00-5, effective June 7, 2000.