Instructions for Schedule O (Form 1120) (Rev. December 2018)

1 Instructions for Schedule O Department of the Treasury Internal Revenue Service ( form 1120). (Rev. December 2012). Consent Plan and Apportionment Schedule for a Controlled Group Section references are to the Internal group, even if (1) no apportionment adopting, amending, or terminating Revenue Code unless otherwise noted. plan is in effect, or (2) the amounts the apportionment plan. apportioned have not changed from The agreement must be signed by Future Developments the previous tax year. See Definitions a person authorized to sign on behalf For the latest information about and Special Rules, below.

2 Of each component member of the developments related to Schedule O controlled group and retained. No ( form 1120) and its Instructions , such Consolidated groups. If any of the component members of a controlled member should attach this agreement as legislation enacted after they were (or a copy of it) to their federal income published, go to group are also members of a consolidated group, then the common tax returns. Each component member form1120. must keep, as part of its records, parent of that consolidated group must file, as part of its consolidated either the original or a copy of the General Instructions income tax return, one Schedule O on signed agreement.

3 The agreement behalf of the members of that must contain the group's Purpose of Schedule consolidated group. No subsidiary of apportionment methodology (for that consolidated group should file example, percentages) for each tax A corporation that is a component Schedule O on its own behalf. The benefit item that is apportioned. member (defined below) of a controlled group must use Schedule O should contain the Schedule O to report the required consolidated information for Definitions and Special apportionment of taxable income, all members of the consolidated Rules income tax, and certain tax benefits group.

4 See Identifying Information. Types of Controlled Groups between all component members of Exception. If all of the members of the group. These members will be Parent-subsidiary group. A. a parent-subsidiary controlled group parent-subsidiary group is one or subject to limitations on the use of that are required to file a tax certain tax benefits for their applicable more chains of corporations return join in filing the same connected through stock ownership tax year. See Apportionment of Tax consolidated tax return, then the Benefit Items.

5 With a common parent corporation if: parent of that group does not have to Stock possessing at least 80% of Also use Schedule O to indicate file Schedule O on behalf of the the total combined voting power of all that the member filing this return group. classes of stock entitled to vote or at consents to and represents that all the Completing and Filing least 80% of the total value of shares other component members of the Schedule O of all classes of stock of each of the controlled group: corporations, except the common In completing Schedule O, the Are adopting an apportionment parent corporation, is directly or following apply.

6 Plan, effective for the current tax year; indirectly owned by one or more of the The filing of Schedule O by a Are amending the existing other corporations; and component member provides the apportionment plan; The common parent corporation required information as to the status Are terminating the existing directly or indirectly owns stock of the group's apportionment plan. apportionment plan and not adopting possessing at least 80% of the total Such information must indicate, when a new plan; combined voting power of all classes applicable, whether all the component Are terminating the existing of stock entitled to vote or at least members of the controlled group are apportionment plan and adopting a 80% of the total value of shares of all adopting, amending, or terminating an new plan; classes of stock of at least one of the apportionment plan.

7 Have no apportionment plan in other corporations, excluding, in If all such members complete the effect and are not adopting an computing such voting power or required written agreement setting apportionment plan; or value, stock owned directly by such forth the terms of the adopted or Already have an apportionment other corporations. amended apportionment plan (or an plan in effect. agreement to terminate a previously For purposes of determining adopted plan), then each member of whether a corporation is a member of Who Must File that group may rely on this agreement a parent-subsidiary controlled group A corporation must file Schedule O as the member's basis for of corporations within the meaning of with its income tax return, amended representing on its Schedule O that section 1563(a)(1)

8 , stock owned by a return, or claim for refund for each tax the other component members of the corporation means: year that the corporation is a group have also consented to Stock owned directly by the component member of a controlled corporation, and Nov 16, 2012 Cat. No. 48211V. Stock constructively owned by that section 801 which are members of its testing period. Also, in order to corporation under sections 1563(e) any parent-subsidiary, brother-sister, determine the applicable tax year of (1), (2), and (3).

9 Or combined controlled group will be the member being tested, the group's treated as a controlled group of testing date must be determined. See Brother-sister group. A. corporations separate from any other Testing date and Testing period. brother-sister group generally is two type of controlled group to which or more corporations where the same Note. If a controlled group has an these corporations would otherwise five or fewer persons who are apportionment plan in effect and belong if they were not life insurance individuals, estates, or trusts directly some of the members of that companies.

10 The life insurance or indirectly own stock possessing: controlled group join in filing a companies that make up a life At least 80% of the total combined consolidated return, then the insurance controlled group do not voting power of all classes of stock members of that consolidated group have to be in a direct ownership entitled to vote or at least 80% of the are treated, together, as if they were a relationship with each other. total value of shares of all classes of single member of the controlled the stock of each corporation (the Example.)