(1)
(a) "Taxable income," as defined by Section
220.13(2), F.S., is the starting point in determining Florida corporate income
tax due.
(b) In general, "taxable
income" is the amount of a corporation's income that is subject to federal tax.
However, the federal deductions provided for net operating losses, capital
losses, excess charitable contributions, excess pension trust contributions,
excess stock bonus and profit-sharing trust contributions are limited by
Section 220.13(1)(b), F.S.
(c)
Elections under s. 338(h)(10), I.R.C. For federal tax purposes, an election
under s. 338(h)(10), I.R.C., can only be made if a consolidated return is being
filed that includes both the target corporation and the selling consolidated
group. The federal tax treatment of s. 338(h)(10), I.R.C., which is
incorporated by reference in Rule
RSA
12C-1.0511, F.A.C., will be piggybacked to
the greatest extent possible even though the taxpayer is not filing a
consolidated Florida return. The target corporation should report the gain
attributable to the deemed asset sale on its separate Florida return, if
appropriate. The basis in the assets will then be stepped-up for Florida tax
purposes to the same extent as for federal income tax purposes.
(d) "Taxable income" for an S corporation is
defined as the amount subject to tax under s. 1374, I.R.C., which is
incorporated by reference in Rule
RSA
12C-1.0511, F.A.C., (built-in gains or
capital gains) or s. 1375, I.R.C., which is incorporated by reference in Rule
RSA
12C-1.0511, F.A.C. (passive investment
income).
(e) For tax years ending
on or after July 1, 1998, limited liability companies and foreign limited
liability companies qualified to do business in Florida will be allowed to file
in the same manner for Florida corporate income tax purposes as for federal tax
purposes.
(2) A
taxpayer's "adjusted federal income" means an amount equal to the taxpayer's
taxable income, as defined in Section
RSA
220.13(2), F.S.,
adjusted for the Florida additions required by Section
RSA
220.13(1)(a),
F.S., and the subtractions provided by Section 220.13(1)(b), F.S.
(3)
(a)
Adjustments to the federal taxable income reported on Form 1120 by a taxpayer
may be necessary. That is, the federal taxable income reported on Form 1120 may
not be the federal taxable income to which the additions and subtractions
required by Section
RSA
220.13, F.S., are made. These adjustments
include adjustments related to depreciation required under Sections
RSA 220.03(5)(b) and
(c), F.S., and consolidated income
adjustments for taxpayers grandfathered under the provisions of the flush left
paragraph in Section
RSA
220.131(1), F.S.
(1985).
(b) Depreciation
adjustment.
1. If Election A was made
pursuant to Section
RSA
220.03(5)(b),
F.S., and depreciable assets were placed in service between January 1, 1981 and
December 31, 1981, a depreciation adjustment must be computed for these assets.
The adjustment is for the difference, if any, between the depreciation deducted
for federal purposes for these assets and the depreciation allowable for these
assets under the Internal Revenue Code of 1954, as amended and in effect on
January 1, 1980.
2. If Election B
was made pursuant to Section 220.03(5)(c), F.S., and depreciable assets were
placed in service between January 1, 1981 and December 31, 1986, a depreciation
adjustment must be computed for these assets. The adjustment is for the
difference, if any, between the depreciation deducted for federal purposes for
these assets and the depreciation allowable for these assets under the Internal
Revenue Code of 1954, as amended and in effect on January 1,
1980.
(c) Consolidated
return adjustment.
1. No consolidated income
adjustment is allowed unless an election was properly made under Section
RSA
220.131 (1), F.S., to file a consolidated
return on the same basis as consolidated returns were filed prior to July 19,
1983. Such election must have been made within 90 days of December 20, 1984, or
upon filing the taxpayer's first return after December 20, 1984.
2. If this election was properly made, an
adjustment will be required where the membership of the Florida affiliated
group included in the Florida consolidated return differs from the membership
in the federal affiliated group included in the federal consolidated return.
The federal taxable income for the Florida affiliated group must be computed.
The computation of the consolidated income of the Florida affiliated group must
be made under the procedures, including all intercompany adjustments and
eliminations, as are required by s. 1502, I.R.C. An adjustment is required for
the difference, if any, between the income of the Florida and federal
affiliated groups.
(4)
(a) In
computing regular tax due under Section
RSA
220.11(2), F.S.,
an addition to taxable income is required by Section
RSA
220.13(1) (a)2.,
F.S., for all interest which is excluded from federal taxable income, less the
associated expenses that were disallowed. This addition includes interest
income excluded under s. 103(a), I.R.C., principally interest from state and
local debt obligations, and interest income derived from other obligations
which are exempt from federal income tax by federal law, by state law, or by
the terms of their issue.
(b) In
calculating alternative minimum tax due pursuant to Section
RSA
220.11(3), F.S.,
an adjustment to the addition of exempt interest is provided. Cross reference:
subparagraph 12C-1.013(19)(b)5., F.A.C.
(c) Earnings received on premiums paid by a
savings and loan association into a secondary reserve maintained by the Federal
Savings and Loan Insurance Corporation, an instrumentality of the United
States, are not excluded from federal taxable income but are merely deferred.
Such earnings are taken into account in accordance with the taxpayer's method
of accounting for federal income tax purposes.
(d)
1.
Where municipal bonds are acquired at market discount, and the discount is not
considered to be tax-exempt interest for federal tax purposes, then for Florida
tax purposes there will be no requirement for the discounted amount to be added
back to federal taxable income. Premiums paid are considered to be an expense
associated with exempt interest for purposes of Section
RSA
220.13 (1)(a)2., F.S.
2. Subsection 1288(a), I.R.C., and Rev.
Chapter 73-112 which is incorporated by reference in Rule
RSA
12C-1.0511, F.A.C., describes the position of
the Internal Revenue Service. This treatment provides, to the extent the
discount on state or municipal obligations is original issue discount, it is
treated as tax-exempt interest. Therefore, corporations will be required for
Florida tax purposes to add back the original issue discount as exempt interest
in the same manner as provided by s. 1272, I.R.C., which is incorporated by
reference in Rule
RSA
12C-1.0511, F.A.C.
(e) Dividends received from Federal Home Loan
Bank stock issued prior to March 28, 1942, are not properly classifiable as
interest and should not be added back to taxable income under the provision of
section 220.13(1)(a)2., F.S.
(5)
(a) An
addition is required by Section 220.13(1)(a)1., F.S., to federal taxable income
equal to the amount of any tax upon or measured by income, paid or accrued as a
liability to any state of the United States or to the District of Columbia,
which is deductible from gross income in the computation of taxable income for
the taxable year. There is no addition required for tax paid to a political
subdivision of a state (for example, a city or county) or to the Commonwealth
of Puerto Rico, or any territory or possession of the United States, or any
foreign country.
(b) The intent of
the Legislature when this provision was enacted was to prevent an erosion of
the Florida tax base by the amount of the federal tax benefit obtained by
paying state income taxes. Therefore, the taxpayer will only be required to add
back the amount actually deducted, not an amount that could have been deducted.
For example, a taxpayer pays corporate income taxes in 20 states. In computing
the deduction allowable for federal purposes, the taxpayer forgets the income
tax paid to Georgia. In computing the Florida corporate income tax, the
taxpayer only adds back the tax deducted for the 19 states. There is no addback
for the Georgia income tax that was not deducted for federal purposes, but was
deductible under the Internal Revenue Code. If this error is later discovered,
the Department will not require an addback of the amount of the Georgia
tax.
(c) For purposes of this
subsection, value added taxes will not be construed to be a tax upon or
measured by income.
(6)
Section 220.13(1)(a)4., F.S., requires a business to add back an amount equal
to that portion of the wages or salaries paid or incurred for the taxable year
which is equal to the amount allowable as an enterprise zone jobs credit. The
addback is for the amount of the credit that is allowable, regardless of
whether that amount of credit is actually used in the taxable year or carried
forward under the provisions of Section
RSA
220.181(1)(d),
F.S. Example: In 1992, a taxpayer pays salaries of $1,000 to "new employees",
as defined by Section
RSA
220.03(1)(q),
F.S. Under the provisions of Section
RSA
220.181, F.S., the taxpayer would be allowed
a credit of $150 (15% x $1,000). However, the taxpayer has a net operating loss
for the taxable year. If the taxpayer intends to claim the $150 as a credit
carryover in a future year, the taxpayer is required for the 1992 taxable year
to addback $150 to federal taxable income (loss).
(7) Section 220.13(1)(a)5., F.S., requires a
business to add back an amount equal to any ad valorem taxes paid which are
allowable as an enterprise zone property tax credit. The addback is for the
total ad valorem taxes paid or accrued in the taxable year that are eligible
for the credit, regardless of whether that amount of credit is actually used in
the taxable year or carried forward under the provisions of Section
RSA
220.182(1)(b),
F.S.
(8)
(a) Section 220.13(1)(a)6., F.S., provides
for an addition of the amount of emergency excise tax paid or accrued which is
deductible for federal income tax purposes.
(b) The Department will only require the
taxpayer to add back the amount of emergency excise tax paid or accrued that
was actually deducted, not the amount that could have been deducted.
(9) An addback is required by
Section 220.13(1)(a)7., F.S., of the amount of assessments paid to guaranty
associations which is allowable for the taxable year as a credit. This includes
the amounts paid to the Florida Health Maintenance Organization Consumer
Assistance Plan.
(10)
(a) There will be subtracted from taxable
income, to the extent included therein, the amounts provided in paragraphs (b),
(c), (d) and (e) of this subsection. However, as to any amount subtracted under
this paragraph, such amount will be reduced by all expenses deducted on the
taxpayer's return for the taxable year which are attributable, directly or
indirectly, to such subtracted amount. Further, no amount will be subtracted
from federal taxable income with respect to dividends paid or deemed paid by a
Domestic International Sales Corporation.
(b) A subtraction for subpart F income,
included for federal tax purposes under s. 951, I.R.C., is not allowed for
taxable years beginning before January 1, 1993. For taxable years beginning on
or after January 1, 1993, a subtraction from adjusted federal income is
provided for subpart F income reported under s. 951, I.R.C., net of associated
expenses. To support the amount of subpart F income claimed, all federal forms,
schedules and worksheets associated with I.R.S. Form 5471 must be attached to
the Form F-1120.
(c) Dividends
treated as received from sources without the United States, as determined under
s. 862, I.R.C.
(d) All amounts
included in taxable income under s. 78, I.R.C.
(e) All amounts included in taxable income
under s. 951A, I.R.C.
(11) Any amount of nonbusiness income
included in taxable income must be subtracted therefrom. Cross reference: Rule
RSA
12C-1.016, F.A.C.
(12) A Florida subtraction from taxable
income is provided by Section
RSA
220.13(1)(b) 3.,
F.S., equal to the Florida salary and wages included in determining the federal
targeted jobs credit, which were disallowed as an expense on the federal return
pursuant to s. 280C(a), I.R.C. There is no subtraction provided for an amount
equal to the salary and wages paid to employees in other states which were
disallowed as an expense pursuant to s. 280C(a), I.R.C.
(13) A subtraction from taxable income is
provided by Section
RSA
220.13(1)(b) 1.,
F.S., for the net operating loss deduction allowable for federal income tax
purposes under s. 172, I.R.C., the net capital loss allowable for federal
purposes under s. 1212, I.R.C., the excess charitable contribution deduction
allowable for federal income tax purposes under s. 170(d)(2), I.R.C., and the
excess contributions deductions allowable for federal tax purposes under s.
404, I.R.C. Form F-1120, the corporate income tax return, provides for an
addback of these amounts subtracted for federal purposes and then a subtraction
for these amounts for Florida purposes. The two-step process is for
computational ease because the amounts allowed for federal and Florida purposes
may be different. Differences may occur because of the apportionment ratio in
the year of the loss or the use of the loss when either federal or Florida
income was greater than the other.
(14) Adjustments for excess s. 179, I.R.C.,
expense, special 50 percent bonus depreciation (s. 168(k), I.R.C.), and
deferred cancellation of indebtedness income.
(a) Additions Required:
1. For tax years that begin after December
31, 2007, and before January 1, 2015, taxpayers are required to add back the
amount of the federal deduction claimed under s. 179, I.R.C., that exceeds
$128,000, except for tax years beginning in 2010, in which case taxpayers are
required to add back the amount of the federal deduction claimed under s. 179,
I.R.C., that exceeds $250,000. All amounts in excess of $128,000 ($250,000 for
tax years beginning in 2010) are required to be added back, including amounts
carried over from previous tax years under s. 179(b)(3)(B), I.R.C. The
increased overall investment limitation contained in s. 179(b)(2), I.R.C., is
the same for Florida as it is for federal income tax purposes.
2. Taxpayers are required to add back the
amount of the federal deduction claimed as bonus depreciation under s. 168(k),
I.R.C., for assets placed in service after December 31, 2007, and before
January 1, 2027.
3. For
indebtedness acquired after December 31, 2008, and before January 1, 2010,
taxpayers are required to add back the gross amount of cancellation of
indebtedness income that is deferred under s. 108(i), I.R.C. (relating to
business indebtedness discharged by the reacquisition of a debt instrument).
The deferral of the deduction for original issue discount in debt for debt
exchanges required by s. 108(i)(2), I.R.C., is also required for Florida
corporate income tax purposes.
(b) Subtractions allowed for special 50
percent bonus depreciation and s. 179, I.R.C., expense previously added back:
1. In each of the seven tax years commencing
with the year the addition is made under Section
RSA
220.13(1)(e),
F.S., taxpayers may subtract one-seventh of the amount of excess s. 179,
I.R.C., expense and one-seventh of the special 50 percent bonus depreciation
that is added back under Section
RSA
220.13(1)(e),
F.S.
2. The total amount that may
be subtracted over the seven-year period should equal, but may not exceed, the
amounts of s. 179, I.R.C., expense and special 50 percent bonus depreciation
that have been added back to Florida taxable income under Section
RSA
220.13(1)(e),
F.S.
3. Subtractions may be
transferred to the surviving company in a merger or acquisition. Otherwise, if
a taxpayer ceases to do business during the seven-year period, it may not
accelerate, transfer, or otherwise utilize a subtraction.
(c) Subtractions for cancellation of
indebtedness deferred under s. 108(i), I.R.C.:
1. Taxpayers may subtract the income required
to be added back under Section
RSA
220.13(1)(e) 3.,
F.S., when the deferred cancellation of indebtedness income is recognized for
federal income tax purposes. The subtraction may not exceed the amount of
income from deferred cancellation of indebtedness that is added back under
Section
RSA
220.13(1)(e) 3.,
F.S.
2. Cancellation of
indebtedness income is included in the tax base, but it is excluded from the
apportionment formula by all taxpayers under Section
RSA
220.15(5)(a),
F.S.
(d) A schedule
reflecting all of the adjustments made under Section
RSA
220.13(1)(e),
F.S., must be created and maintained. Taxpayers must also report any additions
on Schedule I, Additions and/or Adjustments to Federal Taxable Income, of the
Florida Corporate Income/Franchise Tax Return (Form F-1120, incorporated by
reference in rule
RSA
12C-1.051, F.A.C.), and
any subtractions on Schedule II (Subtractions from Federal Taxable Income), of
the return for the current tax year. Partnerships filing a Florida Partnership
Information Return (Form F-1065, incorporated by reference in Rule
RSA
12C-1.051, F.A.C.), are
required to make the adjustments required by Sections
RSA
220.13(1)(e) 1.
and 3., F.S., on Part I (Florida Adjustment to Partnership Income), of the
return. The additions and subtractions under Sections
RSA
220.13(1)(e) 1.
and 3., F.S., must be reported in Part I of Form F-1065. Partnerships must
report the amount of expenses claimed under s. 179, I.R.C., to their partners,
so that their partners can compute the amount under subparagraph (14)(a)1.,
F.A.C.
(e) Basis of Property. The
adjustments required by Sections
RSA
220.13(1)(e) 1.
and 2., F.S. (relating to excess s. 179, I.R.C., expense and special 50 percent
bonus depreciation), do not affect the basis of the underlying property. The
basis of the property for Florida corporate income tax purposes is the same as
the basis of the property for federal income tax purposes. If the property is
sold or otherwise disposed of, the gain or loss for Florida corporate income
tax purposes is the same as the gain or loss for federal income tax purposes
and is included in federal taxable income apportioned to Florida. Differences
in the apportionment fraction from one year to the next are disregarded. The
applicable depreciation conventions, methods, and recovery periods are computed
in the same manner as they are computed in determining federal taxable
income.
(f) Example: On its
calendar-year 2014 federal income tax return, Taxpayer claimed $250,000 in s.
179, I.R.C., expense, of which $25,000 was a carryover from 2011 allowed under
s. 179(b)(3)(B), I.R.C. Taxpayer also claimed $300,000 in special 50 percent
bonus depreciation under I.R.C. s. 168(k) and $50,000 of depreciation under
I.R.C. s. 168(b) for assets placed in service during the 2014 calendar year.
Taxpayer is required to add back $122,000 ($250,000 minus $128,000) of s. 179,
I.R.C., expense and $300,000 of the special 50 percent bonus depreciation in
computing its Florida taxable income. Taxpayer is not required to add back the
amount of regular depreciation (non-special 50 percent bonus depreciation) it
claimed under s. 168(b), I.R.C., on its 2014 federal income tax return. On its
2014 Florida corporate income tax return, the taxpayer may also claim
subtractions for one-seventh of the amount of special 50 percent bonus
depreciation required to be added back ($300,000 divided by seven equals
$42,857.14) and one-seventh of the amount of s. 179, I.R.C., expense required
to be added back ($122,000 divided by seven equals $17,428.57). In each of the
subsequent six tax years, the Taxpayer may subtract $42,857.14 and $17,428.57.
At the end of these years, the subtractions should equal the amount(s) required
to be added back. If Taxpayer disposes of the property, the gain or loss is the
same for Florida as it is for federal income tax purposes. Any differences
resulting from additions to Florida income are recovered solely through the
subtraction process, even though the underlying property may be disposed of or
fully depreciated.
(g) Example: In
2009, Taxpayer purchased its own indebtedness, a $10,000 bond it had previously
sold for face value. Taxpayer was able to reacquire its bond for $7,000 and
elected to defer recognition of the $3,000 of cancellation of indebtedness
income under s. 108(i), I.R.C. Under Section
RSA
220.13(1)(e),
F.S., Taxpayer would add back the deferred cancellation of indebtedness income
($3,000) to Florida income. In 2014 through 2018 (five years from 2009), the
Taxpayer is required under s. 108(i), I.R.C., to recognize the $3,000 of
cancellation of indebtedness income it deferred in 2009. Therefore, Taxpayer
would be allowed under Section
RSA
220.13(1)(e),
F.S., to subtract the cancellation of indebtedness income as it is recognized
for federal tax purposes (provided that this income was added back in computing
Florida net income in 2009). When Taxpayer recognizes the $600 of cancellation
of indebtedness income in 2014 for federal tax purposes, a Florida subtraction
is allowed in 2014 for the same amount, $600. The addition and subtractions to
income associated with the cancellation of indebtedness income are excluded
from the sales factor of the apportionment formula.
(h) Example: In 2009, Taxpayer issued new
indebtedness in order to acquire its previously issued indebtedness. Taxpayer
issued a 10-year, $10,000 bond, for $9,000, which was used to purchase a
$15,000 bond it had previously sold for face value. The Taxpayer makes an
election under s. 108(i), I.R.C., to defer recognition of cancellation of
indebtedness income. Taxpayer is prevented by s. 108(i)(2)(A), I.R.C., from
amortizing the $1,000 original issue discount on the new $10,000 bond. Under
Section 220.13(1)(e), F.S., Taxpayer would add back the deferred cancellation
of indebtedness income of $5,000 to Florida income and would also be prohibited
from amortizing the $1,000 original issue discount. When Taxpayer recognizes
the $5,000 ($1,000 per year) in cancellation of indebtedness income for federal
tax purposes, a Florida subtraction is allowed for the same amount (provided
that this income was added back in computing Florida net income). The deduction
for the $1,000 original issue discount will be recognized for Florida corporate
income tax purposes when it is allowed as a deduction for federal tax
purposes.
(i) The subtractions
allowed by Section 220.13(1)(e), F.S., are the means by which the additions
required by section 220.13(1)(e), F.S., are reconciled and recovered. If a
taxpayer does not claim a deduction for special 50 percent bonus depreciation,
does not claim a deduction for s. 179, I.R.C., expense in excess of $128,000
($250,000 for tax years beginning in 2010), or does not elect to defer
cancellation of indebtedness income pursuant to s. 108(i), I.R.C., on the
related federal income tax return(s), no add back is required or subtraction
allowed for Florida corporate income tax purposes. Similarly, if a taxpayer did
not add back special 50 percent bonus depreciation, or did not add back excess
s. 179, I.R.C., expense, or deferred cancellation of indebtedness income
because, for example, it was not subject to the Florida corporate income tax in
that year, no subtraction is allowed for Florida corporate income tax
purposes.
(j) Bonus depreciation
claimed for assets placed in service prior to January 1, 2008, is not required
to be added back under Section 220.13(1)(e), F.S., Section 179, I.R.C., expense
claimed in tax years beginning before January 1, 2008, is not required to be
added back. No subtraction is allowed for special 50 percent bonus
depreciation, s. 179, I.R.C., expense, or deferred cancellation of indebtedness
income unless it has been added back in computing Florida taxable income under
Section 220.13(1)(e), F.S.
(15) Net Operating Losses.
(a) Generally, Florida law follows the
Internal Revenue Code with respect to the computation and handling of a net
operating loss (NOL). However, under Section 220.13(1)(b)1., F.S., a net
operating loss may not be allowed as a carryback to years prior to the year of
the loss. It may be allowed only as a carryover (NOLCO) and is treated in the
same manner and for the same period of time as allowed in s. 172,
I.R.C.
(b) In all cases, the NOLCO
allowable for a taxable year will be applied after the apportionment factor for
the current year has been applied against current year activities.
(c) The Florida portion of a federal loss is
determined by the Florida apportionment factor in effect for the year the loss
occurred.
(d) A Florida addition or
subtraction under Section 220.13(1), F.S., never creates an NOL or increases
the amount of a federal NOL. However, adjustments to federal taxable income
such as the adjustment for long-term contracts and the adjustment for Election
B required under the provisions of Section
RSA
220.03(5)(c),
F.S., impact the net operating loss and therefore, the carryover for Florida
purposes. While a Florida addition or subtraction may never increase the amount
of the net operating loss carryover over the federal amount, an adjustment may
increase or decrease the net operating loss carryover for Florida
purposes.
(e) Section
RSA
220.13(1)(d),
F.S., provides that no deduction for a NOL will be allowed in a tax year if in
a prior tax year the losses have been allowed for Florida tax purposes,
notwithstanding the fact that such deduction may not have been fully utilized
for federal tax purposes. Therefore, a Florida addition may decrease the amount
of NOL carryover the taxpayer has available for Florida purposes.
(f) Only the excess of Florida additions over
Florida subtractions will dilute the amount of net operating loss carryover
available to the following tax year. Example: A corporation's taxable income
for 1991 was $(200,000). The taxpayer was required pursuant to Section
220.13(1)(a)2., F.S., to addback $100,000 exempt interest. A subtraction of
$50,000 was provided by Section 220.13(1)(b)2.b., F.S., for the gross-up of
income required by s. 78, I.R.C. The net operating loss carryover will be
diluted for Florida tax purposes only by the excess of Florida additions over
Florida subtractions. The net operating loss carryover to 1992 will be
calculated as $(200,000) - ($100,000 - $50,000). Therefore, the net operating
loss carryover available for Florida tax purposes will be $150,000.
(g)
1. When
a corporation which was a member of an affiliated group that filed a
consolidated return ceases to be a member of the affiliated group or is granted
permission to file a separate return according to the provisions of Section
RSA
220.131, F.S., and Rule
RSA
12C-1.0131, F.A.C., the portion of any
consolidated net operating loss attributable to that member will be determined
as follows: The consolidated net operating loss is multiplied by a fraction,
the numerator of which is the separate net operating loss of such corporation,
and the denominator of which is the sum of the separate net operating losses of
all members of the group in such year having such losses. The net operating
loss carryover that is allocated to that corporation is based on the
consolidated apportionment factor in effect for the year of the loss.
2. Example 1. ABC affiliated group filed a
consolidated Florida return in 1992. The consolidated apportionment factor was
.300000. The incomes (losses) of the members were as follows:
A
|
B
|
C
|
Consolidated
|
Federal Taxable
|
Income (Loss)
|
$(5,000)
|
$500
|
$(1,500)
|
$(6,000)
|
Florida Additions
|
-0-
|
-0-
|
-0-
|
-0-
|
Florida Subtractions
|
-0-
|
-0-
|
-0-
|
-0-
|
Total
|
$(5,000)
|
$500
|
$(1,500)
|
$(6,000)
|
Apportioned Loss
|
$(1,800)
|
A's portion:
|
$(5,000) x $(6,000) x .300000 = $ (1,385)
|
(6,500)
|
B's portion:
|
$0 x $ (6,000) x .300000 = $ 0
|
C's portion:
|
$(1,500) x $ (6,000) x .300000 = $ (415)
|
(6,500)
|
3.
Example 2: ABC affiliated group filed a consolidated Florida return in 1992.
The consolidated apportionment factor was .300000. The incomes (losses) of the
members were as follows:
A
|
B
|
C
|
Consolidated
|
Federal Taxable
|
Income (Loss)
|
$(5,000)
|
$500
|
$(1,500)
|
$(6,000)
|
Florida Additions
|
1,000
|
-0-
|
-0-
|
1,000
|
Florida Subtractions
|
-0-
|
-0-
|
-0-
|
-0-
|
Total
|
$(4,000)
|
$500
|
$(1,500)
|
$(5,000)
|
Apportioned Loss
|
$(1,500)
|
A's portion:
|
$(4,000) x $(5,000) x .300000 = $ (1,091)
|
(5,500)
|
B's portion:
|
$0 x $ (5,000) x .300000 = $ 0
$(1,500) x $(5,000) x .300000 = $(409)
|
C's portion:
|
|
(5,500)
|
4.
Example 3: ABC affiliated group filed a consolidated Florida return in 1992.
The consolidated apportionment factor was .300000. The incomes (losses) of the
members were as follows:
A
|
B
|
C
|
Consolidated
|
Federal Taxable
|
Income (Loss)
|
$ (5,000)
|
$ 500
|
$ (1,500)
|
$ (6,000)
|
Florida Additions
|
-0-
|
1000
|
1,000
|
2,000
|
Florida Subtractions
|
1,000
|
-0-
|
-0-
|
1,000
|
Total
|
$(6,000)
|
$1,500
|
$(500)
|
$(5,000)
|
Apportioned Loss
|
$(1,500)
|
A's portion:
|
$(6,000) x $ (5,000) x .300000 = $ (1,385)
|
6,500
|
B's portion:
|
$ 0 x $ (5,000) x .300000 = $ 0
|
C's portion:
|
$ ( 500) x $ (5,000) x .300000 = $ (115)
|
(6,500)
|
It should be noted that the reason the subtraction is allowed
to increase the NOL allocated to A is that subtractions are allowed to the
extent of additions in calculating the net operating loss carryover. Therefore,
all of the subtraction was allowed in computing the consolidated NOL
carryover.
5. Example 4: ABC
affiliated group filed a consolidated Florida return in 1992. The consolidated
apportionment factor was .300000. The income (losses) of the members were as
follows:
A
|
B
|
C
|
Consolidated
|
Federal Taxable
|
Income (Loss)
|
$(5,000)
|
$500
|
$(1,500)
|
$(6,000)
|
Florida Additions
|
-0-
|
-0-
|
-0-
|
-0-
|
Florida Subtractions
|
-0-
|
-0-
|
(2,000)
|
-0-
|
Total
|
$(5,000)
|
$500
|
$(1,500)
|
$(6,000)
|
Apportioned Loss
|
$(1,800)
|
A's portion:
|
$(5,000) x $ (6,000) x .300000 = $ (1,385)
|
6,500
|
B's portion:
|
$ 0 x $ (6,000) x .300000 = $ 0
|
C's portion:
|
$ (1,500) x $ (6,000) x .300000 = $ ( 415)
|
(6,500)
|
The subtractions for C are not included within the
calculation of the allocation of the NOL because the subtractions may not
increase the consolidated NOL.
(h) In the event of a corporate
reorganization in which the tax attributes are carried over for federal tax
purposes (for example, as provided in s. 381, I.R.C., which is incorporated by
reference in Rule
RSA
12C-1.0511, F.A.C.), the net operating losses
will be carried over for Florida purposes.
(i) Net operating losses carried over into
unitary reporting years are limited by the separate return limitation year
(SRLY) rules promulgated under the I.R.C. For taxable years beginning on or
after September 1, 1982, and before September 1, 1984, the unitary reporting
concepts must be used by members of a unitary business group. A net operating
loss incurred during a unitary reporting year, determined before application of
the NOLCO from any prior year, is attributed to each unitary group member based
on its share of the unitary group's combined net operating loss for that year.
A member's share of the unitary NOL is determined by multiplying the combined
NOL by a factor which consists of that member's own Florida numerators over the
group's combined denominators. In a tax year subsequent to the unitary years,
the use of the attributable share of this NOLCO is limited by the member's
adjusted federal income or share thereof, determined before subtraction of the
NOLCO, apportioned to Florida for the subsequent tax year.
(j) Section 382, I.R.C., generally limits on
an annual basis the use of a net operating loss carryforward of an acquired
corporation to the equity value of the acquired corporation at the time of
acquisition multiplied by a defined interest rate factor. Florida piggybacks
the federal provisions in s. 382, I.R.C., which is incorporated by reference in
Rule
RSA
12C-1.0511, F.A.C., concerning the limitation
on the use of any NOL carryforward of an acquired corporation. In computing the
Florida corporate income tax, a deduction for the NOL carryover will be allowed
to the extent of the amount allowed for federal purposes, provided that the
deduction does not exceed the total amount of the Florida NOL carryover
available in such taxable year.
(k)
Section 108, I.R.C., limits any net operating loss or net operating loss
carryover in a year in which there has been a discharge of indebtedness.
Florida piggybacks the federal provisions in s. 108, I.R.C., which is
incorporated by reference in Rule
RSA
12C-1.0511, F.A.C., concerning the limitation
of any net operating loss or net operating loss carryover in a year in which
there has been a discharge of indebtedness. For Florida purposes, the net
operating loss must be recalculated to reflect the reduction for any discharge
of indebtedness. This amount is adjusted by the additions and subtractions
required by Section 220.13, F.S. The apportionment factor for the year of the
loss would then be applied.
(l)
With respect to Florida's AMT, the Florida Income Tax Code does not create a
separate NOL for AMT purposes. Therefore, any amount of a NOL carryover that is
allowed to be subtracted in calculating Florida tax due, whether regular tax or
AMT, will reduce the amount of NOL carryover available. Section
RSA
220.13(1)(d),
F.S., provides that no deduction for NOLs will be allowed in a tax year if in a
prior tax year the losses have been allowed for Florida tax purposes,
notwithstanding the fact that such deduction may not have been fully utilized
for federal tax purposes. Example: A taxpayer calculates the 1991 tax liability
as follows:
Regular tax
|
AMT
|
Tentative apportioned adjusted federal income
|
$1,500,000
|
$2,500,000
|
NOL carryforward available
|
(2,000,000)
|
(2,000,000)
|
Adjusted federal income apportioned to Florida
|
$(500,000)
|
$500,000
|
The taxpayer would not have any NOL carryover available for
use in subsequent years since the $2,000,000 of NOL carryover was already
allowed for Florida tax purposes against the 1991 alternative minimum taxable
income.
(m)
1. A taxpayer may be allowed a net operating
loss carryforward for Florida tax purposes from a year the corporation has
federal and Florida alternative minimum tax due. The Florida net operating loss
carryforward for Florida tax purposes will be limited to the amount of net
operating loss carryforward available without the application of alternative
minimum tax calculation.
2.
Example: For 1991, the taxpayer's regular federal taxable income was
$(100,000). Due to federal alternative minimum tax adjustments and preference
items the taxpayer paid federal alternative minimum tax. The taxpayer was
required for Florida purposes to calculate both regular and alternative minimum
tax. Florida additions to taxable income for regular tax purposes were $50,000.
For Florida purposes, the taxpayer would be allowed a net operating loss
carryover of $50,000 to subsequent tax years, even though Florida AMT was paid
in 1991.
(16)
Net Capital Loss Carryovers.
(a) A net capital
loss may only be allowed as a carryover and is treated in the same manner and
for the same period of time as allowed in s. 1212, I.R.C. In all cases, the net
capital loss carryover allowable for a taxable year will be applied after the
apportionment factor for the current year has been applied against current year
activities.
(b)
1. The Florida portion of a federal net
capital loss carryforward is determined by the Florida apportionment factor in
effect for the year the loss occurred.
2. If a corporation that was a member of an
affiliated group that filed a consolidated return ceases to be a member of the
affiliated group or is granted permission to file a separate return according
to the provisions of Section
RSA
220.131, F.S. and Rule
RSA
12C-1.0131, F.A.C., the portion of any
consolidated net capital loss attributable to that member is an amount equal to
the consolidated net capital loss multiplied by a fraction, the numerator of
which is the separate net capital loss of such corporation, and the denominator
of which is the sum of the separate net capital losses of all members of the
group in such year having such losses. The net capital loss carryover that is
allocated to that corporation is based on the consolidated apportionment factor
in effect for the year of the loss.
(c) For Florida income tax purposes, a
capital loss is allowed to the extent it is allowed for federal tax purposes.
That is, it is allowed to the extent of capital gains for federal purposes
provided the deduction does not exceed the Florida carryover
available.
(d) In the event of a
corporate reorganization in which the tax attributes are carried over for
federal tax purposes (for example, as provided in s. 381, I.R.C., which is
incorporated by reference in Rule
RSA
12C-1.0511, F.A.C.), the net capital losses
will be carried over for Florida purposes.
(17) Excess Charitable Contributions.
(a) The excess charitable contribution
deduction provided by s. 170(d)(2), I.R.C., allowable for a taxable year will
be applied after the apportionment factor for the current year has been applied
against current year activities.
(b)
1. The
Florida portion of a federal excess charitable contribution carryforward is
determined by the Florida apportionment factor in effect for the year the
excess occurred.
2. If a
corporation that was a member of an affiliated group that filed a consolidated
return ceases to be a member of the affiliated group or is granted permission
to file a separate return according to the provisions of Section 220.131, F.S.,
and Rule
RSA
12C-1.0131, F.A.C., the portion of any excess
charitable contribution carryforward attributable to that member is an amount
equal to the consolidated excess charitable contribution multiplied by a
fraction, the numerator of which is the separate excess charitable contribution
of such corporation, and the denominator of which is the sum of the separate
excess charitable contributions of all members of the group in such year having
such excess. The excess charitable contribution carryover that is allocated to
that corporation is based on the consolidated apportionment factor in effect
for the year of the excess.
(c) If a contribution is deductible according
to the federal limitation of 10 percent of federal taxable income, there is no
additional limitation for Florida. The deduction for the initial contribution
is not limited to 10 percent of Florida's taxable income; the federal deduction
is simply already incorporated in federal taxable income, which is the starting
point for Florida. The charitable contributions determined to be in excess for
federal purposes are apportioned to Florida based upon Florida apportionment
factor. This apportioned amount would be the Florida excess charitable
contributions for the taxable year. A deduction for an excess contribution
carryover would be allowed for Florida purposes to the extent claimed for
federal purposes, as long as the deduction did not exceed the total amount of
the Florida carryover to the taxable year. The excess charitable contribution
deduction may not create or increase a net operating loss for
Florida.
(d) In the event of a
corporate reorganization in which the tax attributes are carried over for
federal tax purposes (for example, as provided in s. 381, I.R.C., which is
incorporated by reference in Rule
RSA
12C-1.0511, F.A.C.), the excess charitable
contributions will be carried over for Florida purposes.
(18) Excess Contribution Deduction.
(a) The excess contributions deduction
provided by s. 404, I.R.C., which is incorporated by reference in Rule
RSA
12C-1.0511, F.A.C., allowable for a taxable
year will be applied after the apportionment factor for the current year has
been applied against current year activities.
(b)
1. The
Florida portion of a federal excess contributions carryforward is determined by
the Florida apportionment factor in effect for the year the excess
occurred.
2. When a member of an
affiliated group that filed a consolidated return is no longer included in the
consolidated return of that affiliated group, the excess contributions
carryover that is allocated to that corporation is based on the consolidated
apportionment factor in effect for the year of the
contribution.
(c) If a
contribution is deductible according to the federal limitation, there is no
additional limitation for Florida. The deduction for the initial contribution
is not separately computed in computing Florida adjusted federal income; the
federal deduction is simply already incorporated in federal taxable income,
which is the starting point for Florida. The contributions determined to be in
excess for federal purposes are apportioned to Florida based upon the Florida
apportionment factor. This apportioned amount would be the Florida excess
contributions for the taxable year. A deduction for an excess contribution
carryover would be allowed for Florida purposes to the extent claimed for
federal purposes, as long as the deduction did not exceed the total amount of
the Florida carryover to the taxable year. The excess contribution deduction
may not create or increase a net operating loss for Florida.
(d) In the event of a corporate
reorganization in which the tax attributes are carried over for federal tax
purposes (for example, as provided in s. 381, I.R.C., which is incorporated by
reference in Rule
RSA
12C-1.0511, F.A.C.), the excess contributions
will be carried over for Florida purposes.
(19) Florida Alternative Minimum Tax.
(a) For taxable years beginning on or after
January 1, 2018, no taxpayer is required to pay Florida Alternative Minimum Tax
(AMT) because no corporate income taxpayer is required to pay federal AMT.
However, a taxpayer with previously earned Florida AMT credits must compute
Florida AMT to determine the amount of Florida AMT credit allowable against
Florida corporate income tax.
(b)
1. For taxable years beginning before January
1, 2018, a corporation subject to the Florida Income Tax Code may be required
to pay an alternative minimum tax. Florida AMT is equal to 3.3 percent of the
Florida alternative minimum taxable income. Corporations required to pay
federal AMT must compute the amount of regular Florida corporate income tax and
the amount of Florida AMT that may be due. The corporation is liable for
whichever amount is greater.
2. A
taxpayer is not liable for the Florida AMT unless liable for the federal AMT. A
taxpayer who is part of an affiliated group that filed a federal consolidated
return and was not liable for federal AMT is not liable for Florida AMT when
filing on a separate return basis. The entity is not subject to Florida AMT
regardless of the amounts of federal tax preference items contained in the
separate return. A corporation that is part of an affiliated group that filed a
consolidated return for federal income tax purposes, and paid the federal AMT,
must compute Florida AMT, even if it files a separate return for Florida. This
requirement applies even if the individual corporation would not have been
subject to federal AMT if a separate return had been filed.
3. The computation of the Florida alternative
minimum taxable income is similar to the computation of the regular Florida
taxable income. The primary difference is the starting point for the
computation. Florida uses federal alternative minimum taxable income as the
starting point in determining Florida AMT, after allowance of the federal
exclusion amount provided in s. 55(d)(2), I.R.C.
4. The adjustments, additions, and
subtractions provided in Section 220.13, F.S., are applied to the Florida
alternative minimum taxable income amount to arrive at adjusted federal income.
The tax base is adjusted by the same type of adjustments, additions, and
subtractions that are made to the regular federal taxable income when the
regular Florida corporate income tax is computed. Because different amounts may
be included within the base (the "starting point"), there may be differences in
the amounts of the adjustments, additions, and subtractions.
5. An addition that must be made when
computing the Florida AMT is for the amount of interest that is exempt for
federal income tax purposes. Section 220.13(1)(a)2., F.S., requires interest
excluded from federal taxable income under s. 103(a), I.R.C., less the
associated expenses, be added to the taxpayer's federal taxable income.
However, this subparagraph excludes 60 percent of the amounts already included
in the federal alternative minimum taxable income, including interest on
private activity bonds issued after August 7, 1986. If the federal Adjusted
Current Earnings adjustment includes interest exempt under s. 103(a), I.R.C.,
there is an exclusion of 60 percent of the amount included in the federal
Adjusted Current Earnings adjustment.
6.
a. An
addition is required when computing the Florida AMT for the federal net
operating loss (NOL) deduction. When computing adjusted federal taxable income
on the Florida corporate income/franchise tax return for regular Florida tax
purposes, the taxpayer must add back the amount of the regular federal NOL
deduction. When computing adjusted federal taxable income on the Florida return
for Florida AMT purposes, the taxpayer is only required to add back the amount
of the federal AMT NOL deduction.
b. The Florida NOL deduction allowed, for
purposes of AMT, is the Florida portion of the federal loss apportioned to
Florida as provided in this section. The Florida Income Tax Code does not
create a separate NOL for AMT purposes.
c. The Florida Income Tax Code does not limit
the amount of the NOL deduction to 90 percent of the alternative minimum
taxable income before the NOL deduction.
d. The amount of the Florida NOL carryover is
reduced by the amount of the NOL deduction used in computing the Florida
corporate income tax, whether AMT or regular corporate income tax is finally
determined to be due.
e. As with
regular Florida corporate income tax, the use of an NOL carryover is not
optional. It will be deemed used if it is available.
f. Cross reference: subsection 12C-1.013(15),
F.A.C.
7. A possible
adjustment when computing Florida AMT is the depreciation adjustment for
Election A and Election B taxpayers. If there is an adjustment that is required
when computing federal AMT to the depreciation expense for property placed in
service between January 1, 1981, and December 31, 1986, then the amount of
adjustment required is different when Florida AMT is computed.
8. The Florida Income Tax Code allows the
income tax credits listed in Section 220.02(8), F.S. to be used against the
amount of Florida AMT due. The use of a tax credit against Florida AMT is not
optional and will be deemed used if it is available.
9. If the Florida AMT is paid, an alternative
minimum tax credit is allowed by Section
RSA
220.186, F.S., in subsequent years. Cross
reference: Rule
RSA
12C-1.0186,
F.A.C.
(20)
Adjustments from partnerships. Parts I and II of Form F-1065, Florida
Partnership Information Return, are used to report to the partner and the State
each partner's share of the Florida partnership's adjustments.
(21) Notwithstanding any other provision of
these rules, any increment of any apportionment factor which is directly
related to an increment of gross receipts or income which is deducted,
subtracted, or otherwise excluded in determining adjusted federal income shall
be excluded from both the numerator and denominator of such apportionment
factor. Further, all valuations made for apportionment factor purposes shall be
made on a basis consistent with the taxpayer's method of accounting for federal
income tax purposes.