Taxation
Ca. Tax Lawyer 2016, VOLUME 25, NUMBER 3
Content
- Bar Business Taxation Section Overview
- Contents
- Masthead
- Message from the Chair
- Order Out of Chaos ̶ Making [the Other Half of] California's Trust Taxation System Work
- Proposal to Amend Revenue and Taxation Code Section 19255 to Avoid Extension of the 20-Year Statute of Limitations by Unilateral Action of the California Franchise Tax Board
- Taxation Section 2015-2016 Leadership Directory
- The United State Income Tax Treatment of Australian Superannuation Funds Owned by U.S. Persons (Part 1 of 2)
- Visiting the Committees
- Clean Break: Terminating Agency Relationship with Key Corporation
Clean Break: Terminating Agency Relationship with Key Corporation1
By Mike Shaikh & Erin Mariano2
EXECUTIVE SUMMARY
California combined group filing is quite simple: Each corporation filing in California must file a separate return. Corporations that are part of a combined unitary group may elect to file a combined report, with a "key corporation" filing on behalf of each member of the group and taking any future actions on behalf of all group members. This election is made for a particular tax year. By default, the election continues in perpetuity, permitting the key corporation to act on behalf of all other members, even after a member is no longer part of the unitary group. The election for any given tax year may be withdrawn by providing notice to the Franchise Tax Board ("FTB").
Though simple, lack of education and guidance to taxpayers has left some taxpayers in the dark regarding actions that other corporations may take on their behalf. Some taxpayers are unaware that the relationship may be severed. Others, relying on language in tax forms, believe that ending the relationship for future years does so for past years as well.