Introduction to the Ohio Corporate Return

The Ohio corporate income tax return is prepared for calendar, fiscal and short year corporations. Using entries from the federal tax return and Ohio worksheets forms, the following forms are prepared for the Ohio return:

Commercial Activity Tax (CAT)

Form CAT 12 is the annual return for the Ohio Commercial Activity Tax (CAT). The Commercial Activity Tax is a gross receipts tax return applicable to specific business activity. The CAT-12 annual return is due 40 days after the end of the prior calendar year and includes the $150 minimum commercial activity tax for the next calendar year period.

Quarterly filing is required when actual or anticipated taxable gross receipts exceed $1,000,000. When quarterly filing is required or elected, the liability must be entered and the payment must be made online through the Ohio Business Gateway (obg.ohio.gov).

Stand alone and combined versions of the Form CAT 12 are produced. The stand alone version is applicable to corporations that are not part of a combined group. The combined version prints on the combined level only and represents the taxable gross receipts of the combined group. A white paper form Taxable Gross Receipts for the CAT 12 calculates taxable gross receipts after exclusions and/or deductions and Ohio sitused deductions. This white paper form is not required to be filed and must be requested by entry on the CAT-General Information worksheet in the "Attach all schedules and statements" field.

The name, address, FEIN and CAT account number of the primary reporting entity (entered on Interview Form OH15 at the separate company level) prints on the combined level CAT forms. The combined Form CAT 12 is found under the Ohio State Tab and the Combined Adjusted Gross Receipts and the Combined Gross Receipts are to be found under the Ohio Combined Forms heading. These two white paper forms do not require data entry to print and are not required by Ohio to be filed.

Ohio Form FT 1120C - Combined Report

We process the combined Ohio Form FT 1120C. The Combined Return Information worksheet is available to be submitted with the combining unit. See the Ohio Combined Instruction Guide for further information.

Note: If the Ohio return is not to be included in a combined report, when the federal return is included in a consolidated report, the Ohio return must be processed WITHOUT entry in the federal General category, Basic Data worksheet Consolidated worksheet, Consolidated Return Information subsection.

Ohio Form FT-OTAS - Ohio Taxpayers' Affiliation Schedule

We process the Ohio Form FT-OTAS for the 2013 report to allow affiliated companies to share in the proration of the first $50,000 of Ohio taxable income. This form is processed at either the individual company or the combined level. The form is produced automatically for combined returns in which all affiliated members are included in the combined return.

For combined returns where 1 or more affiliated members are not included in the combined return, submit the Combined Return Information worksheet, Corporations not included in a Combined Report FT-OTAS section with the combining unit to include any such affiliated members on Form FT-OTAS. The program will include all such companies in the computation of the first $50,000 of Ohio taxable income.

Note: To generate Form FT-OTAS when affiliated companies are not filing a combined return, you may submit the Combined Return Information worksheet, Corporations not included in a Combined Report, FT-OTAS section, with any individual company return. List all affiliated companies to be included.

Form FT 1120FI

Form FT1120FI, The Ohio Corporation Franchise Tax Report for Financial Institutions is available for processing. Use the Ohio Financial Institution General and Net Value worksheets and other designated fields on other Ohio worksheets to request processing and for data entry. The request to process Form FT 1120FI will suppress the processing of Form FT 1120.

Apportionment data entry is available using a combination of federal multistate fields for property and payroll and Ohio data entry fields for sales data. See field Help for additional information. A balance sheet is attached as page 5, Schedule E and is selectively printed for Form FT 1120FI vs Form FT 1120 as applicable.

Net Worth Computation

Qualified Holding Company or Income-Based Exit Tax Report

When the return is an income based tax report or is a qualifying holding company as entered on the Ohio Corporation (FT 1120) worksheet, Basic Data section, the return will be calculated without Net Worth value on line 1 of Schedule F. Likewise, Schedule K will be computed without corresponding Net Worth tax.

Exclusions from Net Worth Computation

The State of Ohio no longer allows a deduction for either deferred taxes or surplus reserves. These items will not be included in the Net Worth computation if entered on the Balance Sheet worksheet.

Form FT 1120 E/ER/EX

To produce Forms FT 1120E, ER, or EX, you must use the federal Other category, Extensions worksheet. If the Form FT 1120E, ER or EX has been requested, the system uses the amount entered on the federal worksheets for the corresponding FT 1120E, ER or EX.

Form 1120E is due January 31; 1120ER is due March 31; and, 1120EX is due May 31.

The transmittal letter and filing instructions will reflect the FT 1120E's due date until the due date has passed. If the next voucher has been prepared, the due date in the transmittal letter and filing instructions will show the FT 1120ER's due date until its due date is passed.

Once the due date for any one voucher has passed, the voucher will be locked and no longer calculate. Furthermore, if the next voucher is NOT REQUESTED on Interview Form EXT-2, the system will prepare the FT 1120. The transmittal letter will reflect the preparation of the FT 1120 as well.

After the due date for the FT 1120EX has passed, the system will continue to generate the voucher for the 2013 return, UNTIL the 2014 forms are finalized. Therefore, if you want to print this form for the 2014 return, and the forms are not finalized, the pre-printed years will appear to be incorrect.

Interest/Late Payment Penalty

If a late date of filing is entered in the "Date filed if after due date" field on the Penalties worksheet for Ohio, and if the tax exceeds the sum of the credits and extension payments, the system will calculate any interest and late payment penalty due, based on the late payment and interest calculations requested.

Make an entry in the applicable fields to request computation of interest and late payment penalty. The interest and penalty computed will be included in the balance due on Form FT 1120, page 1. When these fields are blank, interest or late penalty will NOT be computed.

If a late date of filing is entered, and if the tax exceeds the sum of the credits and timely extension payments, the system will calculate any late filing penalty due when this field is checked. If this field is left blank, a penalty will NOT be computed, even when a late filing date is entered.

Use the federal Penalty worksheet, Interest Rate Override subsection to override the late interest rate. Refer to the federal guide for further instructions.

Federal Interview Form Notes and Features

State Common Data

Presence of state data on a state input form is not necessary to create a state return. You may create one state or multiple states in a return by simply choosing from the list of states and cities on the State/City Generation worksheet located under the common State Category.

Various state and city general information which is common to all or a majority of states is now entered on the State/City Common Data worksheet under the Common State category. You may elect to apply a particular set of data to all the states and cities in the return or make individual entries for a particular state.

Please see the help files for the worksheets mentioned above and the general information portion of the state help files for more information.

FS Codes

The Ohio return starts from federal taxable income. All income and expenses included on the federal worksheets carry to the Ohio return. Generally, additions and subtractions to federal income are entered on Ohio worksheets.

Automatic Transfers. The following items are carried from the federal return to the Ohio return and do not require additional entries on Ohio interview forms:

State Tax Accrual

Make an entry in the State and City Tax Accrual Option field of the Calculations Options section of the Return options worksheet to include Form FT-1120 tax.

U.S. Obligations

Interest on obligations of the United States (entered on the federal Income & Deductions worksheet, Interest section) carries to Ohio Form FT 1120 as exempt federal interest.

To override the federal amount, use the "U.S. government interest - override" field field on the Ohio Income & Deductions worksheet, Subtractions section.

Municipal Bond Interest

Ohio includes municipal bond interest from sources both inside and outside the state in Ohio income. Interest entered as state and local obligations carries to Form FT 1120 as an addition to federal taxable income.

Interest is considered to originate in the state entered on federal General worksheet, Basic Data section, for the home state return, if:

Dividends to be Deducted from Federal Taxable Income

Dividends included in federal taxable income (Form FT 1120, Schedule B) entered on the Income and Deductions worksheet, Dividends Section using the proper category codes. The allowable amounts carry to the Ohio franchise or income tax return as a deduction from federal taxable income.

Bonus Depreciation and Excess Section 179

Ohio state budget bill S.B. 261, signed into law June 5, 2002, requires that OH taxpayers add back a portion of the amount of the 30% and 50% "Bonus" depreciation and excess Section 179 deducted on the federal return.

The default calculation is the election to add-back 5/6 of the federal 30% and 50% and excess section 179 deductions to Form FT1120 or (FT1120C), Schedule B.

The Bonus Depreciation and Section 179 Adjustment subsection of the Ohio Income and Deductions worksheet provides original data entry and overrides for current year bonus depreciation and excess Section 179 add-back and for the bonus depreciation deduction for a portion of the add-back taken in prior years.

For further information regarding Ohio adjustment of federal bonus depreciation and excess Section 179, see Ohio Department of Taxation Information Release "Recently-Enacted Legislation Affects Depreciation Deductions for Taxable Years Ending 2001 and Thereafter".

With the exception of bonus depreciation and the excess of Section 179 expensing deduction over $25,000, the state of Ohio does not require adjustments to current-year federal amounts. The Ohio adjustment for these items is automatic. Bonus depreciation other than IRC 168(k) is not required by Ohio to be added back. The add-back of 5/6 of the current year bonus depreciation and excess Section 179 deducted on Form 1120 may be overridden on the Ohio Income and Deductions worksheet, Bonus Depreciation and Section 179 Adjustment subsection.

Employment Credit

Wages or salaries eligible for the federal employment credits which were not deducted on the federal return carry to Ohio Form FT 1120, as a subtraction from federal taxable income.

Net Operating Loss Carryover

Net operating loss entries on federal Income & Deductions worksheet, NOL Carryover Section, will carry to the Ohio return. Entries on Interview Form A-5 with no F/S or state codes, or entries with an F/S code of "S" and a state code of "OH" will be carried to Form FT 1120, line 12, page 1, Schedule A. In addition, a schedule detailing the available net operating losses will be produced. Unused and current year NOLs will be pro formaed.

To override, use the Other Adjustments and Overrides section of the Income and Deductions worksheet..

Foreign Dividend Gross-Up

Ohio deducts foreign dividend gross-up, entered in Category Code field of the Dividends section of the Income and Deductions worksheet, with Category Code "FG" from federal taxable income.

Tax Accrual

If you do not choose a State Tax Accrual Option, state taxes computed on the Ohio return neither carry to the federal return nor accrue to the balance sheet.