Generally, there will be requirements to file pre and post-acquisition tax reports in Illinois. If two or more companies or business are merged into a single unitary business, then a single federal consolidated report may be filed.
However, elements of the federal taxable income and carry backs for losses, such as capital losses may be a bit more tricky and complicated to figure out. Depending on whether or not your company made a profit or a loss the year it made the acquisition does not end the inquiry. Often times, capital losses from subsequent years of operations may be carried back to the year that the acquisition was made and tax refunds may be available.
In a recent First District Appellate Court, opinion, the Court stated that capital losses are elements of the Federal or Illinois base income. The capital losses of a single unitary business are determined and allocated based on the losses of each individual member divided by the total losses of the single unitary business. Ameritech made the mistake of calculating capital losses of the single unitary business by using combined apportionment method of section 304 (e). So, why does it matter?
Well the difference in methodology led to a difference of approximately 30 million dollars in what Ameritech could recover as a tax refund for the post-acquisition tax period for the year it made the acquisition. This is why it is important to consider and consult tax specialists before, during and after an acquisition.
See: Ameritech Case