The Missouri corporate tax return is prepared for calendar, fiscal, and short year corporations using federal and Missouri entries. The following forms are prepared for the Missouri return:
Form MO-1120ES, Declaration of Estimated Tax for Corporations
Form MO-1120, Corporation Income/Franchise Tax Return
Form MO-1120V, Corporation Income/Franchise Tax Payment Voucher
Schedule MO-MS, Corporation Allocation and Apportionment of Income
Schedule MO-NAI, Nonapportionable Income Schedule
Schedule 5071, Investments in/Advances to Subsidiaries
A copy of the federal Form 1120, pages 1 through 4, is provided for filing with the Missouri return.
See the separate introductions for banking and savings & loan tax returns.
See the Missouri consolidated instruction guide for information on what is included in a consolidated Missouri return.
Missouri Consolidated Returns
A Missouri consolidated income tax return is processed in the same manner as the federal consolidated return. Each separate company must be processed before the consolidated return is processed. If a company may be included in a consolidated return, this option MUST be entered on the General category, Basic Data worksheet, General - Consolidated Return Information section. Use the Consolidated category, Membership Information worksheet, Member Information section with the consolidating return to identify the individual companies to include in the consolidation.
A Missouri consolidated return can only be prepared for membership that is identical to the federal consolidated return.
See the Missouri consolidated instruction guide for information on what is included in a consolidated Missouri return.
Missouri Initial Returns
Missouri initial returns are filed for franchise tax only, and franchise tax and income tax filing periods cannot be the same. The return is based on the beginning of the year balance sheet amounts and is due by the fifteenth day of the fourth month from the beginning of the tax period. Enter the corporation franchise tax only return code on the Other Returns worksheet, Franchise Tax section and select an initial return on the federal General category, General worksheet or Common State category, State/City Common Data worksheet. See the government instructions for information.
Federal Notes and Automatic Features
FS Codes
The Missouri return starts from federal taxable income after net operating loss and special deductions. Except as noted for municipal bond interest and the Missouri dividends deduction, FS codes are not required to prepare the Missouri return. All federal income and expenses carry to the Missouri return.
To override federal taxable income, enter the amount on the Missouri Income / Deductions worksheet, Other Adjustments and Overrides section.
Automatic Transfers. The following items from the federal return carry to the Missouri return and do not require additional entries:
State and Local Income Taxes
Municipal Bond Interest from States Other than Missouri
Missouri Depreciation Basis Adjustment (Addition or Subtraction)
Interest on U.S. Obligations
State Income Tax Refunds
Depreciation Recovery on Qualified Property that is Sold
Federal Income Tax Deduction
Dividends
Tax Accrual
State taxes carry to the federal return only when a "State and City Tax Accrual Option" is selected on the General category, Return Options worksheet, Calculation Options section. To accrue Missouri franchise tax to the federal return, an entry must be also be made on the Missouri General worksheet, Options section.
"Deduct on Federal, Adjust Balance Sheet" carries taxes computed on the state returns to page 1 of the federal return. The tax also accrues to the federal balance sheet.
"Deduct on Federal, Adjust Schedule M-1" carries state taxes to page 1 of the federal return but does not accrue them to the balance sheet. If required, a Schedule M-1 book/tax adjustment is made.
"Tax to Rental, Adjust Balance Sheet" carries state taxes to a rental schedule that carries to page 1 of the federal return, and accrues the tax to the balance sheet.
"Tax to Rental, Adjust Schedule M-1" carries state taxes to a rental schedule that carries to page 1 of the federal return, but does not accrue them to the balance sheet.
If an accrual option is not selected, taxes computed on the state returns do not carry to the federal return nor accrue to the balance sheet. State income taxes carry to the Missouri return even if an accrual option is not selected.
Enter the state and tax amount in the Income/Deductions category, Business worksheet, Taxes and Licenses section. If a state is not entered, the state code entered on the General category, Basic Data worksheet, General section is used.
State and Local Income Taxes
Missouri includes state and local (see Note) income taxes in Missouri income. These amounts entered on the Income/Deductions category, Business worksheet, Taxes and Licenses section with a state code other than "FC", and accrued from state returns carry to Form MO-1120 as an addition to federal taxable income. If a state is not entered, the state code entered on the General category, Basic Data worksheet, General section is used. No addition is required for the Missouri franchise tax.
To override these entries, enter the amount on the Missouri Income / Deductions worksheet, Additions section.
Municipal Bond Interest
Municipal bond interest from sources other than Missouri entered on the Income/Deductions category, Interest worksheet with a state other than "MO" carries to Form MO-1120 as an addition to federal taxable income.
Interest is considered to originate in the state entered on the General category, Basic Data worksheet, General section if the "State" entries on the Income/Deductions category, Interest worksheet are blank.
To override these entries, enter the amount on the Missouri Income / Deductions worksheet, Additions section.
Missouri Depreciation Basis Adjustment
Missouri does not allow the federal 30% bonus depreciation for property purchased between July 1, 2002 and June 30, 2003. No adjustment is required for the federal 50% bonus depreciation for assets purchased from May 6, 2003 to December 31, 2004. Missouri depreciation is automatically calculated from entries on the Depreciation and Amortization worksheets. An addition or subtraction adjustment carries to Form MO-1120.
To override these entries, enter the amount on the Missouri Income / Deductions worksheet, Additions or Subtractions section.
Interest on U.S. Obligations
Missouri excludes interest on U.S. obligations from Missouri income. These amounts entered on the Income/Deductions category, Interest, Dividend and Passthrough Items worksheets, carry to Form MO-1120 as a subtraction from federal taxable income.
To override these entries, enter the amount on the Missouri Income / Deductions worksheet, Subtractions section.
State Income Tax Refunds
Missouri excludes state income tax refunds from Missouri income. These amounts entered on the Income/Deductions category, Business worksheet, Income section carry to Form MO-1120 as a subtraction from federal taxable income. If a state is not entered, the state code entered on the General category, Basic Data worksheet, General section is used.
To override these entries, enter the amount on the Missouri Income / Deductions worksheet, Subtractions section.
Depreciation Recovery on Qualified Property that is Sold
An adjustment due to differences in federal and Missouri gains and losses on the disposition of assets purchased between July 1, 2002 and June 30, 2003 is computed from entries on the Income/Deductions category, Gains and Losses worksheet. This adjustment carries to Form MO-1120 as a subtraction from federal taxable income.
To override this adjustment, enter the amount on the Missouri Income / Deductions worksheet, Subtractions section.
Federal Income Tax Deduction
Missouri allows a deduction from Missouri income for one-half of the federal income tax and foreign tax credit. These amounts from the federal return carry to Form MO-1120 as a subtraction from federal taxable income.
To override these entries, enter the amounts on the Missouri Income / Deductions worksheet, Subtractions section.
Dividends Deduction
If the corporation is not using an apportionment method, the Missouri dividends deduction is calculated by subtracting federal Form 1120 special deductions from federal Form 1120 dividends. This amount carries to Form MO-1120.
If the corporation uses the single factor apportionment method, Schedule MO-C is prepared. Federal Form 1120, Schedule C dividends received amounts carry to the Column (A) of Schedule MO-C. The Missouri dividends in Column (B) are based on dividend entries on the Income/Deductions category, Dividends worksheet. Only entries with "MO", or blank when "MO" is entered as the state code on the General category, Basic Data worksheet, General section, carry to Column (B). The total Missouri dividends are multiplied by the apportionment factor and carry to Form MO-1120.
If the corporation uses the three factor apportionment method, the Missouri dividends deduction is computed by multiplying business dividends by the apportionment factor. Business dividends are federal dividends less special deductions. This amount carries to Form MO-1120.
To override these entries, enter the amounts on the Missouri Income / Deductions worksheet, Other Adjustments and Overrides section.
Interest Rates Override
Use the Penalties worksheet, Interest Rate Overrides section to override the rates that apply to the calculation of late payment interest and underpayment penalty. See the federal instruction guide for additional information.
Consolidated Federal Return, Separate Missouri Return
If an entry was made on the Missouri General worksheet, Basic Data section that a consolidated federal return and a separate Missouri return will be filed, the separate company Missouri return will use federal income after NOL based on any state FDS (federal for state) entries for NOL on the Income/Deductions category, NOL carryover worksheet.
FDS entries are only used for a member of a federal consolidated group whose federal NOL for state report purposes should not reflect consolidated adjustments. Federal taxable income before the NOL deduction less the FDS amounts will be shown on the federal taxable income line of the Missouri return. This calculation is shown in a supporting statement attached to the Missouri return.