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Consolidation

General principles of an S Corporation consolidated review

Each member of an S Corporation consolidated group includes a parent member, subsidiary members, and an optional eliminations member. Only S Corporations are eligible members of a consolidated group.
If an S Corporation has a Qualified Subchapter S Subsidiary (QSSS or QSub), the QSSS's assets, liabilities, and items of income, deduction, and credit are treated as belonging to the parent S Corporation.
To combine the information from the parent S Corporation and the QSSS members in UltraTax/1120, you can set up an S Corporation consolidated group, similar to how a C Corporation consolidated group is set up.
For example, for a consolidated group with a parent and 1 QSSS member, you would create a total of 3 or 4 returns in UltraTax CS, depending on whether or not you want an eliminations member. If you don't want an eliminations member, set up a parent, a subsidiary, and a consolidated return. If you do want an eliminations member, set up a parent, a subsidiary, an eliminations, and a consolidated return.
Most data from the parent, subsidiary, and eliminations returns is combined and displays on the input screens of the consolidated return. You'll need to enter a small amount of data in the consolidated return.
You can enter shareholder information in either the parent S Corporation or the consolidated return. If you enter the shareholders in the parent S Corporation and then create the consolidated return, the shareholders are automatically listed in the consolidated return. If you enter the shareholders in the parent S Corporation after you create or proforma the consolidated return, you need to add the shareholders to the consolidated return. Enter any shareholder basis information in the consolidated return.

Parent

The parent client is the 1st company listed in the S Corporation consolidation reports. Some information entered in the parent return, such as name, address, date of incorporation, method of accounting, and product or service, are used to complete parts of the consolidated Form 1120-S.

Subsidiary

The subsidiary returns include any 1120-S Corporations processed in UltraTax CS for the current year. You don't need to prepare these returns differently than any other return. However, consistency among the group members' separate returns ensures a successful consolidated group return. Any overrides entered in 1 of the separate returns appear in the Adjustments column of the consolidated group reports. In certain cases, form overrides will cause the detail not to match the information in the consolidated group reports.
UltraTax CS assumes the subsidiary members meet the requirements for QSSS treatment and the parent S Corporation has elected to treat the subsidiary as a QSSS.
If you have a C Corporation that is a QSSS, you need to clone the return, change the return to an S Corporation, and make any necessary data entry on the S Corporation input screens. Separate returns are needed for each entity including the eliminations member.

Eliminations

Use the eliminations return to enter inter-company transactions. Enter amounts to add as positive values, and amounts to subtract as negative values. The eliminations return information is listed under the Eliminations column of the consolidation reports. Including an eliminations member as part of a consolidated group is optional.

Adjustments

UltraTax CS makes automatic adjustments for Section 179, built-in gains tax, and passive income tax.
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