>Introduction to the Philadelphia Corporation Return
The Philadelphia return is prepared for calendar and fiscal-year corporations (fiscal-year filers must use the form for the year their fiscal year ends.) Form BIRT-EZ is produced when "PHI" is entered on the federal General worksheet > Basic Data section, under General Information. If "PHI" is not entered as the city code on the federal General Basic Data worksheet, Form BTP-EZ will be produced if "Yes" is entered on the Philadelphia General worksheet > Options section > Code to produce Form BIRT. Form BIRT-EZ is the default return and should be used when 100% of the business activity is conducted in Philadelphia. To activate Form BIRT when business is conducted in and out of Philadelphia, Form PHI-3, Schedule C-1- Computation of Apportionment Percentage is required. You can also activate Form BIRT by using code "1" in the Philadelphia General worksheet > Options section > Form print code.
The following forms and schedules are prepared:
Form BIRT-EZ - Business Privilege Tax Return - EZ
Form BIRT - Business Privilege Tax Return
BIRT, Schedule A - Computation of Tax on Net Income (Method I)
BIRT, Schedule B - Computation of Tax on Net Income (Method II)
BIRT, Schedule C-1 - Computation of Apportionment Percentage
BIRT, Schedule D - Computation of Tax on Gross Receipts
BIRT, Schedule E - Alternate Method of Computing Tax on Gross Receipts
BIRT, Schedule SC - Special Credits
BIRT, Worksheet N
BIRT, Extension
BIRT, Payment Coupon
Form BIRT as a Real Estate Investment Trust (REIT)
Method II is calculated from 1120REIT information using taxable income prior to special deductions, with the exception of the special deduction for dividends paid.
Form BIRT as a Regulated Investment Company (RIC)
Method II is calculated from 1120RIC information using regulated investment company taxable income, including the special deduction for dividends paid.
Form BIRT Extension Coupon
The BIRT Extension is calculated from entries made for the BIRT return and "PHI" entered as the city code on the State/City Extension section of the federal Extensions worksheet.
Federal Interview Form Notes and Features
General Information Forms
Philadelphia uses the following fields on the federal State/City Common Data worksheet to enter the following data:
Account/file number
Amended Return - override
Initial return (New Business)
Final Return - override
Final Return Date
Overpayment Options
To apply the current year overpayment of BIRT to the following year, enter "First only, refund balance" in the Overpayment Code of the City Estimate section of the Estimate and Overpayment worksheet under the Payment and Penalties heading. If only a portion of the overpayment is to be applied, enter an amount of overpayment to apply to estimate.
Interest and Penalty
To compute late payment interest for the BIRT return, check the box for late payment interest on the City Detail section of the Penalty worksheet under the Payment and Penalty heading. To compute late payment penalty, check the box for late payment penalty on the City Detail section of the Penalty worksheet under the Payment and Penalty heading.
FS Codes
The Philadelphia return is computed from income on the federal corporation return. FS codes are not required to prepare the Philadelphia return.
Features. Generally, additions and subtractions from federal income are handled on Philadelphia worksheets. The following items from the federal return carry to the Philadelphia return and do not require additional entries on the Philadelphia worksheets:
Interest income from U.S. Government obligations
Municipal Bond Interest from states other than Pennsylvania
Gross receipts for calendar year returns
Depreciation
Philadelphia has decoupled from the additional IRS bonus depreciation, and follows Pennsylvania law. Net Income from the federal government will be adjusted on Schedule B. A statement will be printed showing the net adjustment.
A Pennsylvania return must be created to get an adjustment in the Philadelphia return.
Net Operating Losses
Net income prior to the subtraction for net operating losses is carried to Schedule B from the federal return. Enter Philadelphia net operating losses from applicable periods on the Net operating loss section of the Philadelphia Income and Deductions worksheet.
U.S. Government Obligations
The system carries interest on obligations of the United States from Income/Deductions > Interest worksheet, Dividends worksheet, and Pass-through items worksheets to Form BIRT, Schedule B, as a reduction to federal income.
Municipal Bond Interest
Municipal bond interest from states other than Pennsylvania is included in taxable income on Form BIRT, Schedule B.
Be sure to enter the source of the municipal bond interest. Indicate the source of the interest by entering the appropriate state code in the "State" code field on the federal Interest worksheet. It is assumed that interest originates in the state entered in the home state code field on the federal Basic Data worksheet if the state code entered on the federal Interest worksheet is blank.
City Tax Accrual
An option is available to carry state and city taxes to the federal return. Philadelphia taxes computed on Form BIRT carry to Form 1120, page 1, if "1" is entered in the "State and City Accrual Option" box on the Calculation Options section of the federal General worksheet. This entry also accrues the tax to the appropriate sections of the federal balance sheet.
If State and City Tax Accrual Option "2" is entered, Philadelphia taxes carry to Form 1120, page 1, but do not accrue to the federal balance sheet. If required, a Schedule M-1 book/tax adjustment is made.
If State and City Tax Accrual Option "3" is entered, Philadelphia taxes carry to the rental schedule instead of Form 1120, page 1, and the taxes are accrued to the federal balance sheet.
If State and City Tax Accrual Option "4" is entered, Philadelphia taxes carry to the rental schedule but the taxes do not accrue to the federal balance sheet.
If a State and City Accrual Option is not entered, Philadelphia taxes do not accrue to the federal return.