PURPOSE: This rule sets out the formula that will be used to determine the federal income tax deduction of a member of the affiliated group for each taxable year an affiliated group of corporations filed a federal consolidated income tax return and did not file a Missouri consolidated income tax return.

Editor’s Note: The secretary of state has determined that the publication of this rule in its entirety would be unduly cumbersome or expensive. The entire text of the material referenced has been filed with the secretary of state. This material may be found at the Office of the Secretary of State or at the headquarters of the agency and is available to any interested person at a cost established by state law.

1. (1) For each taxable year an affiliated group of corporations filing a federal consolidated income tax return does not file a Missouri consolidated income tax return, the federal income tax deduction of a member of the affiliated group shall be determined by applying the formula set forth as follows:

   1. (A) The group’s consolidated federal income tax liability under Chapter 1 of the Internal Revenue Code (IRC) for the same taxable year for which the Missouri return is being filed after reduction for all credits on the return, except for the credit for the overpayment of any federal tax and the credits allowed by the IRC of 1954 by Section 31 (tax withheld on wages), Section 33 (tax on a foreign country and United States possessions) and Section 39 (tax on certain uses of gasoline, special fuels and lubricating oils) shall be multiplied by a fraction, the numerator of which shall be the federal taxable income of the member in question and the denominator of which shall be the sum of the federal taxable income of each member of the consolidated group; and
   2. (B) The product computed in subsection (1)(A) shall be multiplied by a fraction, the numerator of which shall be the taxpayer’s Missouri taxable income (excluding any federal income tax deduction) from Missouri sources and the denominator of which shall be the Missouri taxable income (excluding any federal income tax deduction) as though the taxpayer had derived all of its income from sources within Missouri.
2. (2) This rule applies to taxable years beginning on or after June 11, 1984.

AUTHORITY: section 143.961, RSMo (1986).* Original rule filed Feb. 24, 1984, effective June 11, 1984. Amended: Filed Aug. 17, 1984, effective Dec. 13, 1984. *Original authority 1972.