(1) The department shall review for completeness the domestic disclosure spreadsheets that are filed as required by ARM 42.26.304. Completeness means that entries are provided for each item requested. A spreadsheet which is not properly completed shall be treated as if not filed, except that the taxpayer will be given 60 days to correct any deficiencies which it has been informed of in writing by the department. A taxpayer who fails to file a domestic disclosure spreadsheet or fails to file a complete spreadsheet after having been given an opportunity to correct any deficiencies shall have its water's-edge election revoked by the department.

(2) The corporations includable in a water's-edge election may be modified by the department for the inclusion of additional unitary corporations as described in 15-31-322, MCA, or the exclusion of nonunitary corporations. The modification cannot require the inclusion of any corporations not described in 15-31-322, MCA.

(3) The calculation of water's-edge combined income may be modified to reflect adjustments to transfer prices, royalty rates, allocation of common expenses, and similar adjustments necessary to reflect a proper apportionment of income.

(4) In calculating water's-edge combined apportionable income, transactions between or among any member of the water's-edge combined group and any other nonincluded affiliated corporation, whether domestic or foreign, must be restored if eliminated in the computation of federal net income of the water's-edge combined group.

(5) Limitations of net operating loss deductions of a water's-edge group are addressed in ARM 42.23.805.