Pennsylvania — No Consolidated or Combined Corporate Return — Pennsylvania requires separate-company corporate net income tax reporting; consolidated and combined returns are not permitted

# Summary

Pennsylvania does not permit consolidated or combined corporate net income tax returns. Each corporation subject to the corporate net income tax files its own RCT-101 on a separate-company basis, and membership in a federal consolidated group does not change that. The REV-1200 CT-1 booklet states the requirement in the filing checklist: a taxpayer must provide a "[c]omplete copy of federal income tax return, on separate company basis, with all supporting schedules," and "[a] corporation filing a consolidated return to the federal government must include ... [s]chedules reflected on the federal Form 1120, 1120C, 1120F or 1120S on a separate company basis, including a schedule of taxes expensed." The RCT-101 asks the filer to indicate the type of return filed with the IRS and, where "the activity is included in the federal tax return of another company, either as part of a consolidated group or as a disregarded entity," to indicate the type of return filed by the entity reporting the activity — an identification requirement, not permission to file on a consolidated basis.

# Practical effect for a federal consolidated group

A corporation that joins in a federal consolidated return must recast its federal taxable income on a separate-company basis for Pennsylvania purposes and attach the supporting federal schedules restated the same way, together with a schedule of taxes expensed. Intercompany eliminations made for federal consolidated reporting therefore do not carry to the Pennsylvania return, and each member's Pennsylvania liability is computed on its own income and its own apportionment. Net operating losses follow the separate company as well and are supported on RCT-103. If a question asks for Pennsylvania's corporate filing method, the answer is separate-company reporting; "consolidated" or "combined" is incorrect, and the checkbox on the RCT-101 identifying a federal consolidated group is not an election to file that way in Pennsylvania.