Ohio Tax - Manufacturers' Education Council

2011 Ohio Tax Conference
Ohio Commercial Activity Tax (CAT) Audit Experiences
Appendix A
Example JV-3. The Department was conducting an audit of DEF and identified the joint venture
(LLC) between DEF and XYZ. DEF filed as part of a combined taxpayer group and XYZ filed as
part of a 50% consolidated elected group. Upon audit, the Department determined that XYZ
would be required to pick up 100% of LLC’s taxable gross receipts because it constructively
owns 50% of LLC.
Diagram JV-3.
DEF
XYZ
100% 100%
50%
A
B
49%
1%
LLC
Multiple Groups
Example MG-1. Taxpayer initially filed three separate consolidated elected groups at 80%:
Group 1: J, E, M and T (black shaded)
Group 2: S and O (diagonal lines)
Group 3: Y, Z and A (grey shaded)
Under review, the Department determined that E constructively owned 100% of S and O and as a
result the Department included S and O in the consolidated elected group of J, E, M and T.
Further, the Department determined that a taxpayer cannot have more than one consolidated
elected group within the same corporate structure. As a result, we eliminated the consolidated
group of Y, Z and A. Y, Z and A was forced into a combined return with J, their common owner.
(Note: J’s gross receipts would be reported with the consolidated elected group and not the
combined group.) Based on the changes, S and O’s $1,000,000 exclusion was eliminated and the
inter-member exclusion between Y, Z and A was eliminated.
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