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Consolidations

Complete Form 851 for a consolidated 1120 or 1120S return

Form 851 is printed from the top consolidation return. Generally, information for Form 851 comes from 3 places:
  • The top consolidation return
  • The parent return
  • The subsidiary returns
Be careful not to enter any of this information in the top consolidation’s Organizer or Tax Forms. If you enter payments on Form 851 in the top consolidation return, these amounts will override the carry information. If you enter any data in these fields manually, the application overwrites this information each time you consolidate when it transfers the Consolidation Carry Information into the Organizer.
  1. Go to
    General Information
    ,
    Basic Return Data
    , then
    Entity Information
    .
  2. In the parent return, enter the following:
    • Common parent corporation name
    • Address
    • Federal employer identification number (FEIN)
    • Tax year end
  3. In the top consolidation return, go to
    Consolidated Returns
    , then
    What to Consolidate
     and enter the company number.
  4. In the parent return, go to
    Payments and Extensions
     then
    Payment of Taxes
     and enter the following:
    • Portion of Form 7004 tax deposits
    • Portion of estimated tax credits and deposits
  5. In the top consolidation return, go to
    Informational Forms
    ,
    Affiliations Schedule
    , then
    851 Page 1
     and enter the following:
    • Company number
    • Whether the subsidiary made any non-dividend distributions
    • Stock holdings at the beginning of the year
    • Number of shares
    • Percent of voting power
    • Percent of value
    • Number owned by the corporation
    Information for Part I carries from the parent/subsidiary returns to the top consolidation return.
  6. In the parent return, go to
    General Information
    ,
    Basic Return Data
    , then
    Entity Information
     and enter the following:
    • PBA code number
    • Principal business activity (PBA)
    • PBA code number
  7. You aren't required to complete Part III for all members of the affiliated group. If the affiliated group has members who need to complete Part III, go to
    Informational Forms
    ,
    Affiliation Schedule
    , then
    851 Page 2
     and enter the following information to the Organizer screens:
    • Company number
    • Stockholder (corporation number)
    • Change in stock holdings during the year, including the date the shares were acquired and the date the shares were disposed of (if applicable)
    • Percent of voting power and percent of value (if there were changes in stock holdings)
    • Full details if any of the equitable owners of any capital stock listed here were other than the holders of record.
  8. You aren't required to complete Part IV for all members of the affiliated group. If the affiliated group has members who need to complete Part IV, enter the following information on the Organizer screens in
    Informational Forms
    ,
    Affiliations Schedule
    , then
    851 Page 3
    .
    • Answer question 1. If you answered yes, list and describe each class of stock.
    • Answer question 2. If you answered yes, list and explain the circumstances.
    • Answer questions 3a through 3d.
  9. If you have any inactive subsidiaries that you need to report on Form 851 and don't have returns included in the consolidated return, do these steps:
    1. In the top consolidation return, open the Organizer, go to
      Informational Forms
       and then
      Affiliation Schedule
      .
    2. Select
      Inactive Subsidiary Information
       then
      Add New Inactive Subsidiary
      .
    3. Enter the information for the subsidiary. For the company number, use the next consecutive number after the last active subsidiary (from the Locator List Information screen).

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