Q&A with the Pennsylvania Department of Revenue

Scenario: For federal income tax purposes, a corporation prepares its federal Form 1120, Schedule UTP, and Uncertain Tax Position Statement on a consolidated basis.

Jun 30, 2011
Scenario:

PQR Corp. does business in PA and is required to file a RCT-101. For federal income tax purposes, PQR Corp. files as part of the STU Corp. consolidated group. None of the other members of the STU Corp. consolidated group are required to file in PA. For federal income tax purposes, STU Corp. prepares its federal Form 1120, Schedule UTP, Uncertain Tax Position Statement, on a consolidated basis.

Q:

Is PQR Corp. required 1) to file a copy of the consolidated Schedule UTP or a pro forma separate company Schedule UTP with its pro forma federal Form 1120? 2) to file a pro forma separate company Schedule UTP, and how does the corporation prepare that schedule, e.g., only including those uncertain tax positions reported on the consolidated Schedule UTP that relate to that entity?

If none of the items reported on the consolidated Schedule UTP relate to PQR Corp., is the corporation required to file either a copy of the consolidated Schedule UTP or a pro forma separate company Schedule UTP?

A:

The taxpayer is required to file a pro forma separate company Schedule UTP including those uncertain tax positions taken by the taxpayer in the preparation of the pro forma separate company Federal return. In addition, any corporation that is part of a consolidated group required Schedule UTP must provide a copy of the consolidated Schedule UTP. In cases where there are no uncertain tax positions associated with the taxpayer, the taxpayer must include a statement to this effect.

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.