Form 1122 is the IRS form a subsidiary corporation signs the first year it joins a consolidated federal income tax return, authorizing the parent to include it in the group’s Form 1120. Its full title is “Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return.” The subsidiary never mails the form to the IRS on its own. It hands the signed form to the common parent, which attaches it to the consolidated return. The form itself is one page, but a missing or defective Form 1122 can give the IRS grounds to challenge the consolidated election for the whole group, so getting it right matters more than its length suggests.
Which Subsidiaries Have to File One
A Form 1122 is required from each subsidiary the first time it is included in a consolidated return. If the subsidiary was already part of the group’s consolidated return the prior year, no new form is needed.1eCFR. 26 CFR 1.1502-75 – Filing of Consolidated Returns The form is a one-time act of consent tied to a subsidiary’s first year in the group, whether the group is brand new or has been filing consolidated for decades.
To be eligible, the subsidiary has to belong to an “affiliated group” as defined in IRC Section 1504. That requires the common parent to own, directly or through other group members, stock meeting two tests at once: at least 80 percent of the subsidiary’s total voting power and at least 80 percent of the total value of its stock.2Office of the Law Revision Counsel. 26 US Code 1504 – Definitions Both prongs have to be satisfied. Ninety percent of the vote but 75 percent of the value does not clear the bar.
The right to file a consolidated return belongs to the affiliated group, conditioned on every member corporation consenting to the consolidated return regulations.3Office of the Law Revision Counsel. 26 USC 1501 – Privilege to File Consolidated Returns Form 1122 is how each new subsidiary gives that consent.
Corporations That Cannot Be Included
Only domestic “includible corporations” can join a consolidated group. IRC Section 1504(b) excludes several categories, and these exclusions trip up groups more often than the mechanics of the form itself:
- Tax-exempt corporations under Section 501
- Insurance companies taxed under Section 801
- Foreign corporations
- Regulated investment companies (RICs) and real estate investment trusts (REITs)
- DISCs (Domestic International Sales Corporations)
- S corporations
S corporations are the common surprise. A parent that owns 100 percent of an S corp cannot fold it into a consolidated return. Insurance companies have a narrow exception: two or more domestic insurance companies taxed under Section 801 can file their own consolidated return among themselves, and the parent of a broader group can elect to pull insurance subsidiaries into the main consolidated return once they have been members for at least five consecutive tax years.2Office of the Law Revision Counsel. 26 US Code 1504 – Definitions
What Goes on the Form
Form 1122 is short, but every field has to be accurate. The subsidiary provides:
- Its full legal name as registered with the state of incorporation
- Its Employer Identification Number (a wrong digit here can cause the IRS to fail to match the form to the subsidiary’s records)
- Street address, city, state, and ZIP code
- The tax year it is consenting to, which must match the parent’s consolidated return period
- The parent corporation’s name and EIN, which links the consent to the correct consolidated return
The body of the form is a pre-printed authorization statement. By signing, the subsidiary authorizes the parent to include it in the consolidated return for the tax year shown and for every subsequent year the group is required to file consolidated returns.4Internal Revenue Service. IRS Form 1122 – Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return The consent is not a one-year arrangement. It locks the subsidiary into the consolidated group going forward.
Who Signs
The form has to be signed by an officer authorized to sign tax returns on behalf of the subsidiary. IRC Section 6062 identifies who qualifies: the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other officer duly authorized to act.5Office of the Law Revision Counsel. 26 US Code 6062 – Signing of Corporation Returns The officer’s name and title go below the signature. Confirm the signatory’s authority against corporate resolutions or charter documents before signing. A signature from someone outside the authorized group is far easier to prevent than to clean up after the return is filed.
How the Parent Attaches It
The subsidiary does not file Form 1122 with the IRS. It delivers the signed form to the common parent, and the parent attaches it to the group’s consolidated Form 1120.6Internal Revenue Service. Instructions for Form 1120 (2025) A separate Form 1122 is attached for each subsidiary joining for the first time that year.
The regulations give large groups a practical shortcut. The parent can attach either signed originals or unsigned copies. If unsigned copies go with the return, the parent must retain the signed originals under the record-retention requirements of Section 1.6001-1(e).1eCFR. 26 CFR 1.1502-75 – Filing of Consolidated Returns For electronic filers, the unsigned version is typically attached as a PDF to the electronic Form 1120, while the wet-ink originals stay in the parent’s files.
Form 1122 does not travel alone. Every consolidated return also includes Form 851, the Affiliations Schedule, which identifies the common parent, lists every member of the affiliated group, reports how estimated tax payments and overpayment credits are allocated among members, and confirms that each subsidiary meets the ownership requirements.7Internal Revenue Service. About Form 851, Affiliations Schedule The Form 1120 instructions require both forms to be attached.6Internal Revenue Service. Instructions for Form 1120 (2025)
Deadline
Form 1122’s deadline is the due date of the parent’s consolidated return. For a calendar-year C corporation, IRC Section 6072 sets that at April 15 following the close of the tax year.8Office of the Law Revision Counsel. 26 USC 6072 – Time for Filing Income Tax Returns Fiscal-year filers have until the 15th day of the fourth month after year-end. If the parent files Form 7004 for the automatic six-month extension, the deadline for the consolidated return and all attached Forms 1122 moves with it, pushing a calendar-year group to October 15.9Internal Revenue Service. About Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns
What Signing Actually Commits the Subsidiary To
Form 1122 is more than paperwork. It binds the subsidiary to all consolidated return regulations for the current year and every subsequent year the group is required to file consolidated. The group is treated as a single taxpayer, and member profits and losses are netted together.
The intercompany transaction rules are a good illustration of what the subsidiary is agreeing to. Under Treasury Regulation 1.1502-13, when one group member sells property to another member, the selling member’s gain is deferred until the buying member disposes of the property outside the group. The two corporations are treated as divisions of a single entity for timing and character purposes, though they still calculate gain or loss as separate entities.10eCFR. 26 CFR 1.1502-13 – Intercompany Transactions The deferral is often a benefit, but it also means the subsidiary surrenders control over the timing of its own gains and losses.
The consent is not a year-to-year election. Once given, the subsidiary cannot unilaterally decide to file a separate return next year. The group continues filing consolidated returns unless a termination event occurs or the IRS grants permission to stop.
When the Consent Ends
A subsidiary’s inclusion in the consolidated return terminates when it leaves the affiliated group. The usual triggers:
- Sale or disposition that drops the parent’s ownership below the 80 percent voting power or value threshold
- Spin-off or restructuring that removes the subsidiary from the parent’s ownership chain
- Termination of the group itself, as when the common parent merges into a corporation outside the group, which requires all subsidiaries to file separate returns
A subsidiary that leaves mid-year has to file a separate return for the portion of the tax year after its departure.2Office of the Law Revision Counsel. 26 US Code 1504 – Definitions
A departed subsidiary cannot simply rejoin the next year. IRC Section 1504(a)(3) bars the subsidiary (and any successor) from being included in any consolidated return filed by the same affiliated group, or by another group with the same common parent, until the 61st month after the first tax year in which it left.2Office of the Law Revision Counsel. 26 US Code 1504 – Definitions That is roughly five years of mandatory separation. The Treasury Secretary can waive the restriction, but the waiver is discretionary. Groups planning to sell and later reacquire a subsidiary need to work around this well in advance.
If a Form 1122 Was Missed
A missing Form 1122 is not automatically fatal to the consolidated election, but it creates real risk. The regulations provide two paths to relief.
Under the facts-and-circumstances test, if a subsidiary did not file Form 1122 but its income and deductions were included in the consolidated return, it did not file a separate return, and it appeared on Form 851, the Commissioner may determine that it effectively consented to consolidation despite the missing form.1eCFR. 26 CFR 1.1502-75 – Filing of Consolidated Returns
Alternatively, if the failure to consent was due to a mistake of law, mistake of fact, or inadvertence, the common parent can demonstrate this to the Commissioner. If accepted, the subsidiary is treated as if it had filed Form 1122 all along.1eCFR. 26 CFR 1.1502-75 – Filing of Consolidated Returns
Neither path is guaranteed. The safer practice is to build Form 1122 into every acquisition closing checklist so the signed consent exists before the consolidated return is being prepared. Discovering the omission during an IRS exam is a worse time to rely on relief provisions.