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QSSS Form 1120S consolidations

The system gives you the ability to treat the assets, liabilities, income, deductions, and credits of qualified subchapter S subsidiaries (QSSS) as those of the parent S corporation.
To consolidate the QSSS items into the parent return, we use the same consolidation procedures used for C corporation consolidation. These procedures require Top Consolidation, parent, elimination, and subsidiary (QSSS) returns be used. The consolidation process combines data from the parent, elimination, and subsidiary returns into the top return. Also, no division should be included in the Subsidiary Listing with parent and subsidiaries on a consolidation.
The system also provides the ability to consolidate S Corporation divisions. You shouldn't include any entities marked as Parent or Subsidiary in the divisional consolidation. You must set the entity type as a division, and include an elimination in the divisional consolidation.
You need to input detail with Tax Combination Codes (TCC) for all members; otherwise, the detail won't be consolidated and you may see duplicate descriptions. The system will consolidate the detail by TCCs for all members, and bring detail information up to the Organizer on the divisional rollup during consolidation. You may review the detail in the Organizer and print as a single company.
Specific to S corporation consolidations are the following points:
  • We assume 1120S returns identified as subsidiaries meet the requirements for QSSS treatment, and the parent has made the proper election.
  • Since the top return's the return that's actually filed, the taxpayer name shouldn't refer to as Top or Consolidated Return and Subsidiaries, or a similar designation.
  • Even though eliminations may not be applicable, an elimination return is required to complete the consolidation process.
  • Shareholder information, including share transfers, special allocations, and time segment allocations, must be entered on the parent return. In the consolidation process, shareholder information's transferred from the parent to the top return.
  • Section 179 limitations and tax (excess net passive income tax or tax from Schedule D) are computed on the top return, and Schedule K's based on the combined amounts.
  • Schedules K-1 are computed based on the top return shareholder information and the Schedule K items and amounts.

This article applies to:

  • Product: ONESOURCE Income Tax
  • Return type: 1120 Corporation
  • Subject: Consolidations

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