REV-803: Schedule C-7 - Credit for Tax Paid by Affiliated Entities (REV-803) (Revision)
Pennsylvania · Pennsylvania DOR · Used for tax years 2024, 2025, 2026
Pennsylvania REV-803, Schedule C-7, calculates the credit for tax paid by affiliated entities on income related to intangible expenses and related interest that a corporation must add back to federal taxable income. It reports affiliated entities’ state income tax liabilities and
Who files this form
Corporations claiming the credit for tax paid by affiliated entities must submit Schedule C-7 with RCT-101 and REV-802, Schedule C-6.
The credit is available to taxpayers required to add back intangible expenses or costs and related interest to federal taxable income, if:
- The affiliated entity was subject to tax in Pennsylvania or another state.
- Its tax base included the expenses or costs paid, accrued, or incurred by the taxpayer.
Include only qualifying states where the affiliated entity was required to file on a non-unitary basis and was subject to a corporate tax on net income. If you used any of the three statutory exceptions on Schedule C-6, you cannot claim this credit.
What you'll need
Have these forms and details available to complete Schedule C-7:
- RCT-101: The corporation's name, 9-digit FEIN, tax year beginning and ending dates, and the apportionment proportion from Schedule C-1, Line 1C or 2C, whichever applies.
- REV-802, Schedule C-6: The affiliated entity listing and total add-back from Section I, Line 11.
- Affiliated entity tax information: Each entity's name, FEIN, qualifying jurisdiction, credit type, state income tax, and applicable state tax credits.
- Federal Form 1120 information: State income tax amounts included in Line 17, plus income from Line 1C and Lines 4 through 10 of the affiliated entity's proforma Form 1120 that was taxable in the state.
- Expense details: The intangible expenses and related interest paid to each affiliated entity and included in that state's tax base.
You also need the Pennsylvania corporate net income tax rate to complete Section II.
How to file
Submit Schedule C-7 with RCT-101, PA Corporate Net Income Tax Report, and REV-802, Schedule C-6, at the same time you file RCT-101. The supplied text does not give a mailing address or e-file directions.
To complete the schedule:
- Enter the corporation's identifying information exactly as shown on RCT-101.
- In Section I, list affiliated entities in the same order as on Schedule C-6. For each qualifying return, add Lines a and b to get Line c. Calculate Line f as Line c × (Line d ÷ Line e).
- Add Lines 1f through 5f and enter the total on Section I, Line 6.
- Complete Section II using that total, the RCT-101 apportionment proportion, the Schedule C-6 add-back, and the Pennsylvania corporate net income tax rate.
- Enter the smaller of Section II, Line 3 or Line 8 on Line 9. Carry that amount to RCT-101, Section C, Line 15.
Common mistakes
- Using the wrong format: Fill in the form using all capital letters and whole dollars only. Do not use dashes or slashes in any field. Enter dates as MMDDYYYY.
- Including ineligible jurisdictions: Do not include states where unitary, partial unitary, or elective unitary returns included the affiliated entity.
- Using all state taxes on Line a: Enter only the corporate net income tax for the individual non-unitary filing state, not the affiliated entity's total state income taxes from federal Form 1120, Line 17.
- Including payment credits on Line b: Line b is for state tax credits other than credits for payment of tax.
- Claiming the credit after using an exception: You cannot claim this credit if you used any of the three statutory exceptions on Schedule C-6.
Questions people ask
What is this credit intended to do?
The credit is intended to prevent double taxation and discrimination against interstate commerce when intangible expenses and related interest are added back to federal taxable income.
Is there a limit on the credit?
Yes. The credit cannot exceed the taxpayer's Pennsylvania tax liability attributable to the add-back. Section II, Line 9 uses the smaller of Line 3 or Line 8.
What if I need more than five entries in Section I?
Photocopy Section I. Use a separate copy for each affiliated entity so that income tax paid to qualifying jurisdictions is shown separately on Lines 1 through 5.
Where do I report the completed credit amount?
Carry the amount from Schedule C-7, Section II, Line 9 to RCT-101, Section C, Line 15.