Is it true that there are no new ideas, only rediscoveries? The 2018 Kentucky General Assembly rediscovered both unitary combined reporting and elective consolidated reporting. As a notable aside, the General Assembly also effectively lowered the corporate rate to a flat 5%, updated the Internal Revenue Code reference date to conform to the 2017 Tax Cuts and Jobs Act (with the notable exceptions of depreciation and the qualified business income deduction), replaced the double-weighted sales three factor apportionment formula with a single sales factor (exceptions for communications, cable, and internet access businesses), and adopted market based sourcing; these changes went into effect for tax years beginning on January 1, 2018. Back to unitary and consolidated reporting, effective for tax years beginning on or after January 1, 2019, a corporate taxpayer doing business in the Commonwealth that is a member of a unitary group must determine its corporation income tax using the unitary combined reporting method, unless the corporate group makes an election to file consolidated with its affiliated group under the Internal Revenue Code of 1986, as amended.
“The Matrix…is the world that has been pulled over your eyes….” Morpheus in The Matrix (1999) - Unitary Ban Lifted
Going back to basics for a moment, what state consolidated reporting is would seem to be relatively straightforward, i.e., computing income on the same basis as the federal consolidated income tax return and apportioning and allocating the income thereof as though it were a single corporation. Unitary reporting is computing income by combining the income of the