Ohio Tax - Manufacturers' Education Council

2011 Ohio Tax Conference
Ohio Commercial Activity Tax (CAT) Audit Experiences
Appendix A
Joint Venture
Example JV-1. Initially taxpayer filed a consolidated elected group at 50% including ABC, DEF,
GHI and JKL. Upon review, the Department determined that although it is permissible to show
ABC as the primary filer on the CAT registration, it is improper to classify it as the “common
owner” for the 50% consolidated elected group. ABC does not have a 50% controlling interest
in the other members of the 50% consolidated elected group. However, Mr. X and Mr. Y, the two
individual shareholders, who have a 50% ownership interest in each of the entities listed as
members of the 50% consolidated elected group meet the common ownership test. Therefore,
either of them could elect to be the common owner of the 50% consolidated elected group. Under
review, the taxpayer agreed that Mr. X would be the “common owner” for all the entities listed as
members of the ABC 50% consolidated elected group. Mr. X will be jointly and severally liable
for 100% of the consolidated elected group’s tax liability.
It should be noted that under review, the Department also determined that Mr. X and Mr. Y, in
spite of their common owner status, were not required to file as a part of the consolidated elected
group since neither shareholder has $4,500 in taxable gross receipts and therefore met the de
minimis test for exclusion from the consolidated group.
Diagram JV-1.
Mr. X
Mr. Y
25%
Mr. Z
25%
50%
50%
50%
ABC, Inc. DEF Inc.
GHI, Inc.
JKL, LLC MNO, LLC
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