17 NCAC 05F .0503 — Combined Return Tax Credits

(a) Any member of the combined group that has activities that qualify for a North Carolina income tax credit shall provide all required information to determine and support the amount of the credit on a separate company basis. This information shall be included with the combined return in each year the qualifying member becomes eligible to claim a credit or an installment of a credit, even if the group's income tax liability for that tax year is not sufficient for the combined group to benefit from the income tax credit. (b) Combined groups eligible to claim income tax credits shall complete Form CD-425, Corporate Tax Credit Summary, on a combined basis and file it with the group's income tax return. If a member of the combined group is eligible to claim an income tax credit limited by statute to 50 percent of tax, the combined group shall also complete Form NC-478, Summary of Tax Credits Limited to 50 Percent of Tax. SECTION .0600 – FRANCHISE TAX RETURN 17 NCAC 05F .0601 PROCEDURES FOR FILING A FRANCHISE TAX RETURN (a) The provisions of this Rule apply unless the Secretary authorizes a combined group to file a combined franchise tax return under G.S. 105-122. Each corporation that is doing business in this State pursuant to G.S. 105-114(b)(3) shall file a separate North Carolina franchise tax return and pay any franchise tax due. Any corporation that is included in a combined income tax return but that is not doing business in this State pursuant to G.S. 105-114(b)(3) is not subject to North Carolina franchise tax. (b) The principal member shall file its franchise tax return on the combined group's CD-405. (c) All other members' separate returns shall include zero dollars ($0) on the "Net Taxable Income" and "NC Net Income Tax" lines on the CD-405 and include a statement with the return that: (1) Indicates its income is included in the combined income tax return filed by the principal member; and (2) Identifies the name and Federal Employer Identification Number of the principal member. (d) If the corporation filing a franchise tax return is a multistate taxpayer, then it shall calculate an apportionment factor to be used in calculating its capital stock base using its separate entity property, payroll, and sales before intercompany eliminations. Schedule O of the CD-405 must reflect the entity's apportionment factor for franchise tax purposes. SUBCHAPTER 05G – MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME SECTION .0100 – GENERAL RULES