Section 280-RICR-20-25-10.6 - Combined Reporting - OverviewA. For tax years beginning on or after January 1, 2015, each entity treated as a C corporation for federal income tax purposes which is part of a combined group, under common ownership, and engaged in a unitary business with one or more other corporations must file a return, in a manner prescribed by the Tax Administrator, for the combined group containing the combined income of the combined group. (See, also, § 10.17 of this Part, "Filing of Return," and § 10.19 of this Part, "Designated Agent.")B. Where an entity treated as a C corporation for federal income tax purposes is taxed or will be taxed under R.I. Gen. Laws Chapter 44-11, the entity must determine its Rhode Island tax liability based upon the income and apportionment information of all corporations included in the combined group using a combined return, unless it is an excluded entity as further described in § 10.7 of this Part. The use of a combined return does not disregard the separate identities of the members of the combined group; each taxpayer member is responsible for tax based on its taxable income or loss apportioned to Rhode Island. (See also "Designated Agent" in § 10.19 of this Part.)C. "Combined return" is not, in and of itself, a tax return; it is, in fact, a computational schedule or schedules - as required by Rhode Island General Laws and regulations - which are to be attached to a taxpayer member's tax return and which report the income and apportionment information of all entities of the taxpayer member's combined group, as well as any supporting information required by the Tax Administrator. The combined return shall include, for each taxable year, the following:1. Listing of companies included in the combined report, along with each company's federal Employer Identification Number (EIN) and North American Industry Classification System (NAICS) code;2. Combined federal taxable income;3. Combined Rhode Island deductions;4. Combined Rhode Island additions;5. Adjusted taxable income;6. Combined receipts for Rhode Island using Finnigan method;7. Combined receipts for everywhere using Finnigan method;8. Combined Rhode Island tax;9. First four pages of the completed U.S. Form 1120 as filed with the IRS;10. Separate company income and loss consolidation spreadsheet as filed with the IRS; and11. Information on credits, net operating losses (NOLs), and other items on such forms or schedules that the Tax Administrator may prescribe.D. The following example shows how related entities might be affected by combined reporting. For purposes of apportionment calculations in this example, the denominators reflect worldwide sales for corporations that are included in the combined group. 1. Example: The example below compares combined reporting to separate-entity reporting for three related entities - Echo Corp., Foxtrot Corp., and Golf Corp. - that are U.S. companies, part of a combined group engaged in a unitary business, and have common ownership. a. Echo Corp. is a Rhode Island retailer. Foxtrot Corp. is a Rhode Island retailer. Golf Corp. is a Missouri retailer with no Rhode Island nexus and, therefore, no Rhode Island filing requirement but for combined reporting. Most sales are in the U.S., but some are to customers in foreign jurisdictions. Apportionment: | Echo Corp (Separate) | Foxtrot Corp (Separate) | Golf Corp (Separate) | Combined Return |
Sales Factor In-State Sales Everywhere Sales Sales Percentage | $400 $600 64.0000% | $7,700 $15,000 51.3333% | $0 $50,000 0.0000% | $8,100 $65,625 12.3429% |
Taxable Income Total | $75 | $900 | $7,500 | $8,475 |
In-State Taxable Income | $48 | $462 | $0 | $1046 |
Total Taxable Income to Rhode Island | $510 | $1046 |
280 R.I. Code R. § 280-RICR-20-25-10.6