Table of Contents
- Businesses Taxed as Corporations
- Property Exchanged for Stock
- Capital Contributions
- Filing and Paying Income Taxes
- Accounting Methods
- Accounting Periods
- Recordkeeping
- Income, Deductions, and Special Provisions
- Costs of Going Into Business
- Related Persons
- Income From Qualifying Shipping Activities
- Election to Expense Qualified Refinery Property
- Deduction to Comply With EPA Sulfur Regulations
- Energy-Efficient Commercial Building Property Deduction
- Corporate Preference Items
- Dividends-Received Deduction
- Extraordinary Dividends
- Below-Market Loans
- Charitable Contributions
- Capital Losses
- Net Operating Losses
- At-Risk Limits
- Passive Activity Limits
- Figuring Tax
- Accumulated Earnings Tax
- Distributions to Shareholders
- How To Get Tax Help
The rules you must use to determine whether a business is taxed as a corporation changed for businesses formed after 1996.
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A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic.
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A business formed under a state law that refers to it as a joint-stock company or joint-stock association.
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An insurance company.
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Certain banks.
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A business wholly owned by a state or local government.
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A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships).
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Certain foreign businesses.
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Any other business that elects to be taxed as a corporation (for example, a limited liability company (LLC)) by filing Form 8832, Entity Classification Election. For more information, see the instructions for Form 8832.
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Its principal activity during the “testing period” is performing personal services (defined later). Generally, the testing period for any tax year is the prior tax year. If the corporation has just been formed, the testing period begins on the first day of its tax year and ends on the earlier of:
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The last day of its tax year, or
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The last day of the calendar year in which its tax year begins.
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Its employee-owners substantially perform the services in (1). This requirement is met if more than 20% of the corporation's compensation cost for its activities of performing personal services during the testing period is for personal services performed by employee-owners.
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Its employee-owners own more than 10% of the fair market value of its outstanding stock on the last day of the testing period.
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He or she is an employee of the corporation or performs personal services for, or on behalf of, the corporation (even if he or she is an independent contractor for other purposes) on any day of the testing period.
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He or she owns any stock in the corporation at any time during the testing period.
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It is not a personal service corporation.
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At any time during the last half of the tax year, more than 50% of the value of its outstanding stock is, directly or indirectly, owned by or for five or fewer individuals. “Individual” includes certain trusts and private foundations.
If you transfer property (or money and property) to a corporation in exchange for stock in that corporation (other than nonqualified preferred stock, described later), and immediately afterward you are in control of the corporation, the exchange is usually not taxable. This rule applies both to individuals and to groups who transfer property to a corporation. It also applies whether the corporation is being formed or is already operating. It does not apply in the following situations.
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The corporation is an investment company.
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You transfer the property in a bankruptcy or similar proceeding in exchange for stock used to pay creditors.
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The stock is received in exchange for the corporation's debt (other than a security) or for interest on the corporation's debt (including a security) that accrued while you held the debt.
Both the corporation and any person involved in a nontaxable exchange of property for stock must attach to their income tax returns a complete statement of all facts pertinent to the exchange. For more information, see section 1.351-3 of the Regulations.
Example 1.
You and Bill Jones buy property for $100,000. You both organize a corporation when the property has a fair market value of $300,000. You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. No gain is recognized by you, Bill, or the corporation.
Example 2.
You and Bill transfer the property with a basis of $100,000 to a corporation in exchange for stock with a fair market value of $300,000. This represents only 75% of each class of stock of the corporation. The other 25% was already issued to someone else. You and Bill recognize a taxable gain of $200,000 on the transaction.
Example.
You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. Right after the exchange, you own 85% of the outstanding stock. No gain is recognized on the exchange of property. However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation.
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The holder has the right to require the issuer or a related person to redeem or buy the stock.
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The issuer or a related person is required to redeem or buy the stock.
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The issuer or a related person has the right to redeem or buy the stock and, on the issue date, it is more likely than not that the right will be exercised.
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The dividend rate on the stock varies with reference to interest rates, commodity prices, or similar indices.
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If the liabilities the corporation assumes are more than your adjusted basis in the property you transfer, gain is recognized up to the difference. However, if the liabilities assumed give rise to a deduction when paid, such as a trade account payable or interest, no gain is recognized.
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If there is no good business reason for the corporation to assume your liabilities, or if your main purpose in the exchange is to avoid federal income tax, the assumption is treated as if you received money in the amount of the liabilities.
Example.
You transfer property to a corporation for stock. Immediately after the transfer, you control the corporation. You also receive $10,000 in the exchange. Your adjusted basis in the transferred property is $20,000. The stock you receive has a fair market value (FMV) of $16,000. The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. Gain is realized as follows.
FMV of stock received | $16,000 |
Cash received | 10,000 |
Liability assumed by corporation | 5,000 |
Total received | $31,000 |
Minus: Adjusted basis of property transferred | 20,000 |
Realized gain | $11,000 |
The basis of any other property you receive is its fair market value on the date of the trade.
This section explains the tax treatment of contributions from shareholders and nonshareholders.
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Depreciable property.
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Amortizable property.
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Property subject to cost depletion but not to percentage depletion.
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All other remaining properties.
Basis of each piece of property | |
Bases of all properties (within that category) |
The federal income tax is a pay-as-you-go tax. A corporation generally must make estimated tax payments as it earns or receives income during its tax year. After the end of the year, the corporation must file an income tax return. This section will help you determine when and how to pay and file corporate income taxes.
For certain corporations affected by Presidentially declared disasters relating to Hurricanes Katrina, Rita, and Wilma, the due dates for filing returns, paying taxes, and performing other time-sensitive acts may be extended. The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma; and Publication 553, Highlights of 2005 Tax Changes.
This section will help you determine when and how to report a corporation's income tax.
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The corporation paid more than $200,000 in federal depository taxes in the second preceding tax year; or
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The corporation was required to make electronic deposits in the prior tax year.
For example, if the corporation made more than $200,000 in federal depository taxes in 2004, or the corporation was required to use EFTPS in 2005, it would be required to use EFTPS in 2006. Once a corporation is required to use EFTPS it must continue to do so in all subsequent tax years. If the corporation is required to use EFTPS because of the $200,000 threshold it must continue to use EFTPS in later years even if subsequent deposits are less than the $200,000. If the corporation fails to use EFTPS, it may be subject to a 10% penalty. If the corporation is not required to use EFTPS, it may voluntarily make deposits using EFTPS. However, if the corporation is voluntarily using EFTPS it will not be subject to the 10% penalty if it makes deposits using a paper coupon. For more information on EFTPS and enrollment, visit www.eftps.gov or call 1-800-555-4477. Also see Publication 966, The Secure Way to Pay Your Federal Taxes.
Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. See sections 6662, 6662A, and 6663 of the Internal Revenue Code.
Generally, a corporation must make installment payments if it expects its estimated tax for the year to be $500 or more. If the corporation does not pay the installments when they are due, it could be subject to an underpayment penalty. This section will explain how to avoid this penalty.
Note.
In these discussions, “return” generally refers to the corporation's original return. However, an amended return is considered the original return if it is filed by the due date (including extensions) of the original return.
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The corporation must have filed a return for the previous year,
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The return must have been for a full 12 months, and
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The return must have shown a positive tax liability (not zero).
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The annualized income installment method.
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The adjusted seasonal installment method.
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The amount of the underpayment.
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The period during which the underpayment was due and unpaid.
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The interest rate for underpayments published quarterly by the IRS in the Internal Revenue Bulletin.
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The annualized income installment method was used to figure any required installment.
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The adjusted seasonal installment method was used to figure any required installment.
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The corporation is a large corporation figuring its first required installment based on the prior year's tax.
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At least 10% of its expected tax liability, and
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At least $500.
File Form 4466 before the 16th day of the 3rd month after the end of the tax year, but before the corporation files its income tax return. Do not file Form 4466 before the end of the corporation's tax year. An extension of time to file the corporation's income tax return will not extend the time for filing Form 4466. The IRS will act on the form within 45 days from the date you file it.
If a domestic corporation acquires a U.S. real property interest from a foreign person or firm, the corporation may have to withhold tax on the amount it pays for the property. The amount paid includes cash, the fair market value of other property, and any assumed liability. If a domestic corporation distributes a U.S. real property interest to a foreign person or firm, it may have to withhold tax on the fair market value of the property. A corporation that fails to withhold may be liable for the tax, and any penalties and interest that apply. For more information, see section 1445 of the Internal Revenue Code; Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities; Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interest; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests.
An accounting method is a set of rules used to determine when and how income and expenses are reported. Taxable income should be determined using the method of accounting regularly used in keeping the corporation's books and records. In all cases, the method used must clearly show taxable income.
Generally, permissible methods include:
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Cash,
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Accrual, or
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Any other method authorized by the Internal Revenue Code.
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All the events have occurred that fix the right to receive the income, which is the earliest of the date:
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The required performance takes place,
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Payment is due, or
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Payment is received and
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The amount can be determined with reasonable accuracy.
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All events that determine the liability have occurred,
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The amount of the liability can be figured with reasonable accuracy, and
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Economic performance takes place with respect to the expense.
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The services are in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; or
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The corporation's average annual gross receipts for the 3 prior tax years does not exceed $5 million.
A corporation must figure its taxable income on the basis of a tax year. A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. Generally, corporations can use either a calendar year or a fiscal year as its tax year. A corporation must adopt a tax year by the due date (not including extensions) of its first income tax return.
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It elects to use a 52-53 week tax year that ends with reference to the calendar year;
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It can establish a business purpose for a different tax year and obtains approval of the IRS. See Form 1128, Application To Adopt, Change, or Retain a Tax Year, and Publication 538; or
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It elects under section 444 of the Internal Revenue Code to have a tax year other than a calendar year. Use Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, to make the election.
A corporation should keep its records for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Usually records that support items of income, deductions, or credits on the return must be kept for 3 years from the date the return is due or filed, whichever is later. Keep records that verify the corporation's basis in property for as long as they are needed to figure the basis of the original or replacement property.
The corporation should keep copies of all filed returns. They help in preparing future and amended returns.
Rules on income and deductions that apply to individuals also apply, for the most part, to corporations. However, the following special provisions apply only to corporations.
When you go into business, treat all costs you incur to get your business started as capital expenses. See Capital Expenses in chapter 1 of Publication 535 for a discussion of how to treat these costs if you do not go into business.
However, a corporation can elect to deduct a limited amount of start-up or organizational costs. Any cost not deducted can be amortized.
Start-up costs are costs for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Organizational costs are the direct costs of creating the corporation.
For more information on deducting or amortizing start-up and organizational costs, see the Instructions for Forms 1120 and 1120-A and chapters 8 and 9 of Publication 535.
A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income. Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. If a deduction is denied, the rule will continue to apply even if the corporation's relationship with the person ends before the expense or interest is includible in the gross income of that person. These rules also deny the deduction of losses on the sale or exchange of property between related persons.
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Another corporation that is a member of the same controlled group as defined in section 267(f) of the Internal Revenue Code.
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An individual who owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation.
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A trust fiduciary when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation.
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An S corporation if the same persons own more than 50% in value of the outstanding stock of each corporation.
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A partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership.
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Any employee-owner if the corporation is a personal service corporation (defined earlier), regardless of the amount of stock owned by the employee-owner.
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Stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust is treated as being owned proportionately by or for its shareholders, partners, or beneficiaries.
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An individual is treated as owning the stock owned, directly or indirectly, by or for the individual's family. Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants.
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Any individual owning (other than by applying rule (2)) any stock in a corporation is treated as owning the stock owned directly or indirectly by that individual's partner.
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To apply rule (1), (2), or (3), stock constructively owned by a person under rule (1) is treated as actually owned by that person. But stock constructively owned by an individual under rule (2) or (3) is not treated as actually owned by the individual for applying either rule (2) or (3) to make another person the constructive owner of that stock.
A corporation may make an election to be taxed on its notional shipping income at the highest corporate tax rate. If a corporation makes this election it may exclude income from qualifying shipping activities from gross income. Also if the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. A corporation making this election may also elect to defer gain on the disposition of a qualifying vessel.
A corporation uses Form 8902, Alternative Tax on Qualifying Shipping Activities, to make the election and figure the alternative tax. For more information regarding the election, see Form 8902.
A corporation can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct 50% of the cost of qualified refinery property (defined in section 179C(c) of the Internal Revenue Code), placed into service after August 8, 2005, and before January 1, 2012. The deduction is allowed the year the property is placed in service.
A subchapter T cooperative can make an irrevocable election on its return by the due date (including extensions) to allocate this deduction to its owners based on their ownership interest.
For more information see section 179C of the Internal Revenue Code.
A small business refiner can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct up to 75% of qualified costs paid or incurred to comply with the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency (EPA).
A subchapter T cooperative can make an irrevocable election on its return filed by the due date (including extensions) to allocate the deduction to its owners based on their ownership interest.
For more information, see sections 45H and 179B of the Internal Revenue Code.
A corporation can claim a deduction for costs associated with energy-efficient commercial building property, placed in service after December 31, 2005, and before January 1, 2008. In order to qualify for the deduction:
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The costs must be associated with depreciable or amortizable property in a Standard 90.1-2001 domestic building;
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The property must be either a part of the interior lighting system, the heating, cooling, ventilation and hot water system, or the building envelope (defined in section 179D(c)(1)(C) of the Internal Revenue Code); and
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The property must be installed as part of a plan to reduce the total annual energy and power costs of the building by 50%.
The deduction is limited to $1.80 per square foot of the building less the total amount of deductions taken for this property in prior tax years. The corporation must reduce the basis of any property by any deduction taken. The deduction is subject to recapture if the corporation fails to fully implement an energy savings plan.
For more information see section 179D of the Internal Revenue Code.
A corporation must make special adjustments to certain items before it takes them into account in determining its taxable income. These items are known as corporate preference items and they include the following.
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Gain on the disposition of section 1250 property. For more information, see Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544.
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Percentage depletion for iron ore and coal (including lignite). For more information, see Mines and Geothermal Deposits under Mineral Property in chapter 10 of Publication 535.
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Amortization of pollution control facilities. For more information, see Pollution Control Facilities in chapter 9 of Publication 535 and section 291(a)(5) of the Internal Revenue Code.
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Mineral exploration and development costs. For more information, see Exploration Costs and Development Costs in chapter 8 of Publication 535.
For more information on corporate preference items, see section 291 of the Internal Revenue Code.
A corporation can deduct a percentage of certain dividends received during its tax year. This section discusses the general rules that apply. For more information, see the instructions for Forms 1120 and 1120-A.
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A real estate investment trust (REIT).
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A corporation exempt from tax under section 501 or 521 of the Internal Revenue Code either for the tax year of the distribution or the preceding tax year.
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A corporation whose stock was held less than 46 days during the 91-day period beginning 45 days before the stock became ex-dividend with respect to the dividend. Ex-dividend means the holder has no rights to the dividend.
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A corporation whose preferred stock was held less than 91 days during the 181-day period beginning 90 days before the stock became ex-dividend with respect to the dividend if the dividends received are for a period or periods totaling more than 360 days.
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Any corporation, if your corporation is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.
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80% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from 20%-owned corporations, then
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70% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from less-than-20%-owned corporations (reducing taxable income by the total dividends received from 20%-owned corporations).
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The net operating loss deduction.
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The domestic production activities deduction.
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The deduction for dividends received.
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Any adjustment due to the nontaxable part of an extraordinary dividend (see Extraordinary Dividends, below).
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Any capital loss carryback to the tax year.
Example 1.
A corporation loses $25,000 from operations. It receives $100,000 in dividends from a 20%-owned corporation. Its taxable income is $75,000 ($100,000 - $25,000) before the deduction for dividends received. If it claims the full dividends-received deduction of $80,000 ($100,000 × 80%) and combines it with an operations loss of $25,000, it will have an NOL of ($5,000). Therefore, the 80% of taxable income limit does not apply. The corporation can deduct the full $80,000.
Example 2.
Assume the same facts as in Example 1, except that the corporation only loses $15,000 from operations. Its taxable income is $85,000 before the deduction for dividends received. After claiming the dividends-received deduction of $80,000 ($100,000 × 80%), its taxable income is $5,000. Because the corporation will not have an NOL after applying a full dividends-received deduction, its allowable dividends-received deduction is limited to 80% of its taxable income, or $68,000 ($85,000 × 80%).
If a corporation receives an extraordinary dividend on stock held 2 years or less before the dividend announcement date, it generally must reduce its basis in the stock by the nontaxed part of the dividend. The nontaxed part is any dividends-received deduction allowable for the dividends.
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5% for stock preferred as to dividends, or
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10% for other stock.
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The stock when issued has a dividend rate that declines (or can reasonably be expected to decline) in the future.
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The issue price of the stock exceeds its liquidation rights or stated redemption price.
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The stock is otherwise structured to avoid the rules for extraordinary dividends and to enable corporate shareholders to reduce tax through a combination of dividends-received deductions and loss on the disposition of the stock.
If a corporation receives a below-market loan and uses the proceeds for its trade or business, it may be able to deduct the forgone interest.
A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. A below-market loan generally is treated as an arm's-length transaction in which the borrower is considered as having received both the following:
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A loan in exchange for a note that requires payment of interest at the applicable federal rate, and
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An additional payment in an amount equal to the forgone interest.
Treat the additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction.
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The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus
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Any interest actually payable on the loan for the period.
See Below-Market Loans in chapter 5 of Publication 535 for more information.
A corporation can claim a limited deduction for charitable contributions made in cash or other property. The contribution is deductible if made to, or for the use of, a qualified organization. For more information on qualified organizations, see Publication 526, Charitable Contributions, and Publication 78, Cumulative List of Organizations.
Note.
You cannot take a deduction if any of the net earnings of an organization receiving contributions benefit any private shareholder or individual.
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The deduction for charitable contributions.
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The dividends-received deduction (for example line 29b of the 2006 Form 1120).
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The deduction allowed under section 249 of the Internal Revenue Code.
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The domestic production activities deduction.
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Any net operating loss carryback to the tax year.
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Any capital loss carryback to the tax year.
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The approximate date and manner of acquisition of the donated property and
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The cost or other basis of the donated property held by the donor for less than 12 months prior to contribution.
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The ordinary income and short-term capital gain that would have resulted if the property were sold at its FMV and
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For certain contributions, the long-term capital gain that would have resulted if the property were sold at its FMV.
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Contributions of tangible personal property for use by an exempt organization for a purpose or function unrelated to the basis for its exemption;
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Contributions of any property to or for the use of certain private foundations except for stock for which market quotations are readily available; and
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Contributions of any patent, certain copyrights, trademark, trade name, trade secret, know-how, software (that is a section 197 intangible), or similar property, or applications or registrations of such property.
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Inventory and other property made to a donee organization and used solely for the care of the ill, the needy, and infants.
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Scientific property constructed by the corporation (other than an S corporation, personal holding company, or personal service corporation) and donated no later than 2 years after substantial completion of the construction. The property must be donated to a qualified organization and its original use must be by the donee for research, experimentation, or research training within the United States in the area of physical or biological science.
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Computer technology and equipment acquired or constructed and donated no later than 3 years after either acquisition or substantial completion of construction to an educational organization for educational purposes within the United States.
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The lobbying activities relate to matters of direct financial interest to the donor's trade or business and
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The principal purpose of the contribution was to avoid federal income tax by obtaining a deduction for activities that would have been nondeductible under the lobbying expense rules if conducted directly by the donor.
A corporation can deduct capital losses only up to the amount of its capital gains. In other words, if a corporation has an excess capital loss, it cannot deduct the loss in the current tax year. Instead, it carries the loss to other tax years and deducts it from any net capital gains that occur in those years.
A capital loss is carried to other years in the following order.
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3 years prior to the loss year.
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2 years prior to the loss year.
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1 year prior to the loss year.
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Any loss remaining is carried forward for 5 years.
When you carry a net capital loss to another tax year, treat it as a short-term loss. It does not retain its original identity as long term or short term.
Example.
A calendar year corporation has a net short-term capital gain of $3,000 and a net long-term capital loss of $9,000. The short-term gain offsets some of the long-term loss, leaving a net capital loss of $6,000. The corporation treats this $6,000 as a short-term loss when carried back or forward.
The corporation carries the $6,000 short-term loss back 3 years. In year 1, the corporation had a net short-term capital gain of $8,000 and a net long-term capital gain of $5,000. It subtracts the $6,000 short-term loss first from the net short-term gain. This results in a net capital gain for year 1 of $7,000. This consists of a net short-term capital gain of $2,000 ($8,000 - $6,000) and a net long-term capital gain of $5,000.
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When figuring the current year's net capital loss, you cannot combine it with a capital loss carried from another year. In other words, you can carry capital losses only to years that would otherwise have a total net capital gain.
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If you carry capital losses from 2 or more years to the same year, deduct the loss from the earliest year first.
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You cannot use a capital loss carried from another year to produce or increase a net operating loss in the year to which you carry it back.
A corporation generally figures and deducts a net operating loss (NOL) the same way an individual, estate, or trust does. The same 2-year carryback and up to 20-year carryforward periods apply, and the same sequence applies when the corporation carries two or more NOLs to the same year. For more information on these general rules, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts.
A corporation's NOL generally differs from individual, estate, and trust NOLs in the following ways.
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A corporation can take different deductions when figuring an NOL.
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A corporation must make different modifications to its taxable income in the carryback or carryforward year when figuring how much of the NOL is used and how much is carried over to the next year.
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A corporation uses different forms when claiming an NOL deduction.
The following discussions explain these differences.
A corporation figures an NOL in the same way it figures taxable income. It starts with its gross income and subtracts its deductions. If its deductions are more than its gross income, the corporation has an NOL.
However, the following rules for figuring the NOL apply.
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A corporation cannot increase its current year NOL by carrybacks or carryovers from other years.
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A corporation cannot use the domestic production activities deduction to create or increase its current year NOL, including any carryback or carryover.
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A corporation can take the deduction for dividends received, explained later, without regard to the aggregate limits (based on taxable income) that normally apply.
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A corporation can figure the deduction for dividends paid on certain preferred stock of public utilities without limiting it to its taxable income for the year.
Generally, a corporation must carry an NOL back 2 years prior to the year the NOL is generated, if the NOL is not used in the prior 2 years the remaining NOL can be carried forward for up to 20 years after the tax year in which the NOL was generated.
A corporation can make an election to waive the 2 year carryback period and use only the 20 year carryforward period. To make the election attach a statement to the original return filed by the due date (including extensions) for the NOL year.
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If a corporation carries back the NOL, it can use either Form 1120X or Form 1139. A corporation can get a refund faster by using Form 1139. It cannot file Form 1139 before filing the return for the corporation's NOL year, but it must file Form 1139 no later than 1 year after the year it sustains the NOL.
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If the corporation does not file Form 1139, it must file Form 1120X within 3 years of the due date, plus extensions, for filing the return for the year in which it sustains the NOL.
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A personal service corporation may not carryback an NOL to or from any tax year in which a section 444 election to have a tax year other than a required tax year applies.
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Certain electric utility companies may elect a 5 year carryback period for NOLs arising in tax years 2003, 2004, and 2005. The NOL carryback amount is limited to 20% of the total capital expenditures for electric transmission property and pollution control facilities. The election may be made during any tax year ending after December 31, 2005, and before January 1, 2009.
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A corporation can elect to treat a casualty loss arising in tax years ending after August 27, 2005, from the loss of public utility property used predominantly in a rate-regulated trade or business as a specified liability loss treated as a separate NOL subject to a 10 year carryback period. The loss must be the result of Hurricane Katrina. For more information see the Instructions for Form 1139.
If the NOL available for a carryback or carryforward year is greater than the taxable income for that year, the corporation must modify its taxable income to figure how much of the NOL it will use up in that year and how much it can carry over to the next tax year.
Its carryover is the excess of the available NOL over its modified taxable income for the carryback or carryforward year.
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It can deduct NOLs only from years before the NOL year whose carryover is being figured.
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The corporation must figure its deduction for charitable contributions without considering any NOL carrybacks.
The at-risk rules limit your losses from most activities to your amount at risk in the activity. The at-risk limits apply to certain closely held corporations (other than S corporations).
The amount at risk generally equals:
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The money and the adjusted basis of property contributed by the taxpayer to the activity, and
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The money borrowed for the activity.
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Stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust is considered owned proportionately by its shareholders, partners, or beneficiaries.
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An individual is considered to own the stock owned, directly or indirectly, by or for his or her family. Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants.
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If a person holds an option to buy stock, he or she is considered to be the owner of that stock.
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When applying rule (1) or (2), stock considered owned by a person under rule (1) or (3) is treated as actually owned by that person. Stock considered owned by an individual under rule (2) is not treated as owned by the individual for again applying rule (2) to consider another the owner of that stock.
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Stock that may be considered owned by an individual under either rule (2) or (3) is considered owned by the individual under rule (3).
The passive activity rules generally limit your losses from passive activities to your passive activity income. Generally, you are in a passive activity if you have a trade or business activity in which you do not materially participate during the tax year, or you have a rental activity.
The passive activity rules apply to personal service corporations and closely held corporations other than S corporations.
Corporations subject to the passive activity limitations must complete Form 8810, Corporate Passive Activity Loss and Credit Limitations. For more information on the passive activity limits, see the Instructions for Form 8810 and Publication 925.
After you figure a corporation's taxable income, you figure its tax. This section discusses the tax rates, credits, recapture taxes, and alternative minimum tax.
If the corporation elects to deduct the one-time dividends received deduction under section 965 of the Internal Revenue Code, see the Instructions for Form 8895 before figuring its tax.
Most corporations figure their tax by using the following tax rate schedule. An exception to that rule applies to qualified personal service corporations. Other exceptions are discussed in the instructions for Schedule J, Form 1120, or Part I, Form 1120-A.
Tax Rate Schedule
If taxable income (line 30, Form 1120, or line 26, Form 1120-A) is: | |||
Over— | But not over— | Tax is: | Of the amount over— |
$0 | 50,000 | 15% | -0- |
50,000 | 75,000 | $ 7,500 + 25% | $50,000 |
75,000 | 100,000 | 13,750 + 34% | 75,000 |
100,000 | 335,000 | 22,250 + 39% | 100,000 |
335,000 | 10,000,000 | 113,900 + 34% | 335,000 |
10,000,000 | 15,000,000 | 3,400,000 + 35% | 10,000,000 |
15,000,000 | 18,333,333 | 5,150,000 + 38% | 15,000,000 |
18,333,333 | — | 35% | -0- |
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Substantially all the corporation's activities involve the performance of personal services (as defined earlier under Personal services).
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At least 95% of the corporation's stock, by value, is owned, directly or indirectly, by any of the following.
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Employees performing the personal services.
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Retired employees who had performed the personal services.
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An estate of the employee or retiree described above.
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Any person who acquired the stock of the corporation as a result of the death of an employee or retiree (but only for the 2-year period beginning on the date of the employee's or retiree's death).
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The tax laws give special treatment to some types of income and allow special deductions and credits for some types of expenses. These laws enable some corporations with substantial economic income to significantly reduce their regular tax. The corporate alternative minimum tax (AMT) ensures that these corporations pay at least a minimum amount of tax on their economic income. A corporation (other than a small corporation exempt from the AMT) owes AMT if its tentative minimum tax is more than its regular tax.
The tentative minimum tax of a small corporation is zero. This means that a small corporation will not owe AMT.
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It was treated as a small corporation exempt from the AMT for all prior tax years beginning after 1997, and
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Its average annual gross receipts for the 3-tax-year period (or portion thereof during which the corporation was in existence) ending before its current tax year did not exceed $7.5 million ($5 million if the corporation had only 1 prior tax year).
A corporation's tax liability is reduced by allowable credits. The following list includes some credits available to corporations.
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Credit for federal tax on fuels used for certain nontaxable purposes (see Publication 378, Fuel Tax Credits and Refunds).
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General business credit.
A corporation's general business credit consists of its carryforward of business credits from prior years plus the total current year business credits. For a list of allowable business credits, see Form 3800.
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Nonconventional source fuel credit (see Form 8907).
For tax years ending after December 31, 2005, the nonconventional source fuel credit is a general business credit included on Form 3800.
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Possessions corporation tax credit (see Form 5735).
The Small Business Job Protection Act of 1996 repealed the possessions credit. However, existing credit claimants may qualify for a credit under the transitional rules for tax years ending before January 1, 2006. For guidance regarding continuation of business after December 31, 2005, see Notice 2005-21 in Internal Revenue Bulletin 2005-11.
A corporation's tax liability is increased if it recaptures credits it has taken in prior years. The following list includes credits a corporation may need to recapture.
A corporation can accumulate its earnings for a possible expansion or other bona fide business reasons. However, if a corporation allows earnings to accumulate beyond the reasonable needs of the business, it may be subject to an accumulated earnings tax of 15%. If the accumulated earnings tax applies, interest applies to the tax from the date the corporate return was originally due, without extensions.
To determine if the corporation is subject to this tax, first treat an accumulation of $250,000 or less generally as within the reasonable needs of most businesses. Treat an accumulation of $150,000 or less as within the reasonable needs of a business whose principal function is performing services in the fields of accounting, actuarial science, architecture, consulting, engineering, health (including veterinary services), law, and the performing arts.
In determining if the corporation has accumulated earnings and profits beyond its reasonable needs, value the listed and readily marketable securities owned by the corporation and purchased with its earnings and profits at net liquidation value, not at cost.
Reasonable needs of the business include the following.
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Specific, definite, and feasible plans for use of the earnings accumulation in the business.
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The amount necessary to redeem the corporation's stock included in a deceased shareholder's gross estate, if the amount does not exceed the reasonably anticipated total estate and inheritance taxes and funeral and administration expenses incurred by the shareholder's estate.
The absence of a bona fide business reason for a corporation's accumulated earnings may be indicated by many different circumstances, such as a lack of regular distributions to its shareholders or withdrawals by the shareholders classified as personal loans. However, actual moves to expand the business generally qualify as a bona fide use of the accumulations.
The fact that a corporation has an unreasonable accumulation of earnings is sufficient to establish liability for the accumulated earnings tax unless the corporation can show the earnings were not accumulated to allow its individual shareholders to avoid income tax.
This section discusses corporate distributions of money, stock, or other property to a shareholder with respect to the shareholder's ownership of stock. However, this section does not discuss the special rules that apply to the following distributions. See the applicable sections of the Internal Revenue Code.
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Distributions in redemption of stock — section 302.
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Distributions in complete liquidation of the corporation — sections 331 through 346.
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Distributions in corporate organizations — section 351. Also see Property Exchanged for Stock, earlier.
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Distributions in corporate reorganizations — section 351 through 368.
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Certain distributions to 20% corporate shareholders — section 301(e).
Most distributions are in money, but they may also be in stock or other property. For this purpose, “property” generally does not include stock in the corporation or rights to acquire this stock. However, see Distributions of Stock or Stock Rights, later.
A corporation generally does not recognize a gain or loss on the distributions covered by the rules in this section. However, see Gain from property distributions, later.
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Any liability of the corporation the shareholder assumes in connection with the distribution.
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Any liability to which the property is subject immediately before, and immediately after, the distribution.
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The actual FMV.
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The amount of any liabilities the shareholder assumed in connection with the distribution of the property.
Distributions by a corporation of its own stock are commonly known as stock dividends. Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire its stock. Distributions of stock dividends and stock rights are generally tax-free to shareholders. However, stock and stock rights are treated as property under the rules discussed earlier under Money or Property Distributions if any of the following apply to their distribution.
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Any shareholder has the choice to receive cash or other property instead of stock or stock rights.
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The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders.
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The distribution is in convertible preferred stock and has the same result as in (2).
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The distribution gives preferred stock to some common stock shareholders and gives common stock to other common stock shareholders.
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The distribution is on preferred stock. (An increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right is not a distribution on preferred stock.)
For this purpose, the term “stock” includes rights to acquire stock and the term “shareholder” includes a holder of rights or convertible securities.
The following sections discuss transactions that may be treated as distributions.
A corporate distribution to a shareholder is generally treated as a distribution of earnings and profits. Any part of a distribution from either current or accumulated earnings and profits is reported to the shareholder as a dividend. Any part of a distribution that is not from earnings and profits is applied against and reduces the adjusted basis of the stock in the hands of the shareholder. To the extent the balance is more than the adjusted basis of the stock, the shareholder has a gain (usually a capital gain) from the sale or exchange of property.
For information on shareholder reporting of corporate distributions, see Publication 550, Investment Income and Expenses.
Example.
You are the only shareholder of a corporation that uses the calendar year as its tax year. In January, you use the worksheet in the Form 5452 instructions to figure your corporation's current year earnings and profits for the previous year. During the year, the corporation made four $1,000 distributions to you. At the end of the year (before subtracting distributions made during the year), the corporation had $10,000 of current year earnings and profits.
Since the corporation's current year earnings and profits ($10,000) were more than the amount of the distributions it made during the year ($4,000), all of the distributions are treated as distributions of current year earnings and profits.
The corporation must issue a Form 1099-DIV to you by January 31 to report the $4,000 distributed to you during the previous year as dividends. The corporation must use Form 1096 to report this information to the IRS by February 28 (March 31 if filing electronically). The corporation does not deduct these dividends on its income tax return.
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Divide the current year earnings and profits by the total distributions made during the year.
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Multiply each distribution by the percentage figured in (1) to get the amount treated as a distribution of current year earnings and profits.
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Start with the first distribution and treat the part of each distribution greater than the allocated current year earnings and profits figured in (2) as a distribution of accumulated earnings and profits.
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If accumulated earnings and profits are reduced to zero, the remaining part of each distribution is applied against and reduces the adjusted basis of the stock in the hands of the shareholders. To the extent that the balance is more than the adjusted basis of the stock, it is treated as a gain from the sale or exchange of property.
Example.
You are the only shareholder of a corporation that uses the calendar year as its tax year. In January, you use the worksheet in the Form 5452 instructions to figure your corporation's current year earnings and profits for the previous year. At the beginning of the year, the corporation's accumulated earnings and profits balance was $20,000. During the year, the corporation made four $4,000 distributions to you ($4,000 × 4 = $16,000). At the end of the year (before subtracting distributions made during the year), the corporation had $10,000 of current year earnings and profits.
Since the corporation's current year earnings and profits ($10,000) were less than the distributions it made during the year ($16,000), part of each distribution is treated as a distribution of accumulated earnings and profits. Treat the distributions as follows.
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Divide the current year earnings and profits ($10,000) by the total amount of distributions made during the year ($16,000). The result is .625.
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Multiply each $4,000 distribution by the .625 figured in (1) to get the amount ($2,500) of each distribution treated as a distribution of current year earnings and profits.
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The remaining $1,500 of each distribution is treated as a distribution from accumulated earnings and profits. The corporation distributed $6,000 ($1,500 × 4) of accumulated earnings and profits.
The remaining $14,000 ($20,000 - $6,000) of accumulated earnings and profits is available for use in the following year.
The corporation must issue a Form 1099-DIV to you by January 31 to report the $16,000 distributed to you during the previous year as dividends. The corporation must use Form 1096 to report this information to the IRS by February 28 (March 31 if filing electronically). The corporation does not deduct these dividends on its income tax return.
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If the current year earnings and profits balance is negative, prorate the negative balance to the date of each distribution made during the year.
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Figure the available accumulated earnings and profits balance on the date of each distribution by subtracting the prorated amount of current year earnings and profits from the accumulated balance.
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Treat each distribution as a distribution of these adjusted accumulated earnings and profits.
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If adjusted accumulated earnings and profits are reduced to zero, the remaining distributions are applied against and reduce the adjusted basis of the stock in the hands of the shareholders. To the extent that the balance is more than the adjusted basis of the stock, it is treated as a gain from the sale or exchange of property.
Example.
You are the only shareholder of a corporation that uses the calendar year as its tax year. In January, you use the worksheet in the Form 5452 instructions to figure your corporation's current year earnings and profits for the previous year. At the beginning of the year, the corporation's accumulated earnings and profits balance was $20,000. During the year, the corporation made four $4,000 distributions to you on March 31, June 30, September 30, and December 31. At the end of the year (before subtracting distributions made during the year), the corporation had a negative $10,000 current year earnings and profits balance.
Since the corporation had no current year earnings and profits, all of the distributions are treated as distributions of accumulated earnings and profits. Treat the distributions as follows.
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Prorate the negative current year earnings and profits balance to the date of each distribution made during the year. The negative $10,000 can be spread evenly by prorating a negative $2,500 to each distribution.
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The following table shows how to figure the available accumulated earnings and profits balance on the date of each distribution.
March 31 Distribution | |
Accumulated earnings and profits | $20,000 |
Prorated current year earnings and profits | ($2,500) |
Accumulated earnings and profits available | $17,500 |
Amount of distribution treated as a dividend | ($4,000) |
June 30 Distribution | |
Accumulated earnings and profits | $13,500 |
Prorated current year earnings and profits | ($2,500) |
Accumulated earnings and profits available | $11,000 |
Amount of distribution treated as a dividend | ($4,000) |
September 30 Distribution | |
Accumulated earnings and profits | $7,000 |
Prorated current year earnings and profits | ($2,500) |
Accumulated earnings and profits available | $4,500 |
Amount of distribution treated as a dividend | ($4,000) |
December 31 Distribution | |
Accumulated earnings and profits | $500 |
Prorated current year earnings and profits | ($2,500) |
Accumulated earnings and profits available | ($2,000) |
Amount of distribution treated as a dividend | $0 |
Nondividend amount (reduction of stock basis or gain from sale/exchange of property) | $4,000 |
Year-end accumulated earnings and profits | ($2,000) |
The corporation must issue a Form 1099-DIV to you by the end of January to report $12,000 of the $16,000 distributed to you during the previous year as dividends. The corporation must use Form 1096 to report this information to the IRS by February 28 (March 31 if filing electronically). The corporation does not deduct these dividends on its income tax return. However, the corporation must attach Form 5452 to this return to report the nondividend distribution.
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
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Call the Taxpayer Advocate toll free at
1-877-777-4778. -
Call, write, or fax the Taxpayer Advocate office in your area.
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Call 1-800-829-4059 if you are a
TTY/TDD user. -
Visit the website at www.irs.gov/advocate.
Internet. You can access the IRS website 24 hours a day, 7 days a week, at www.irs.gov to:
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E-file. Find out about commercial tax preparation and e-file services available for free to eligible taxpayers.
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Check the status of your refund. Click on Where's My Refund. Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund.
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Download forms, instructions, and publications.
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Order IRS products online.
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Research your tax questions online.
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Search publications online by topic or keyword.
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View Internal Revenue Bulletins (IRBs) published in the last few years.
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Figure your withholding allowances using our Form W-4 calculator.
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Sign up to receive local and national tax news by email.
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Get information on starting and operating a small business.
Phone. Many services are available by phone.
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Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current-year forms, instructions, and publications and prior-year forms and instructions. You should receive your order within 10 days.
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Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
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Solving problems. You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an appointment. To find the number, go to www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.
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TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications.
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TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics.
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Refund information. If you would like to check the status of your refund, call 1-800-829-4477 and press 1 for automated refund information or call 1-800-829-1954. Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically) and have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund.
Evaluating the quality of our telephone services. To ensure that IRS representatives give accurate, courteous, and professional answers,
we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to
sometimes listen in on or
record telephone calls. Another is to ask some callers to complete a short survey at the end of the call.
Walk-in. Many products and services are available on a walk-in basis.
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Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
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Services. You can walk in to your local Taxpayer Assistance Center every business day for face-to-face tax help. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you're more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. No appointment is necessary, but if you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. To find the number, go to www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.
Mail. You can send your order for forms, instructions, and publications to the address below and receive a response within 10 business days after your request is received.
National Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
CD-ROM for tax products. You can order IRS Publication 1796, IRS Tax Products on CD-ROM, and obtain:
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A CD that is released twice so you have the latest products. The first release ships in late December and the final release ships in late February.
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Current-year forms, instructions, and publications.
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Prior-year forms, instructions, and publications.
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Tax Map: an electronic research tool and finding aid.
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Tax law frequently asked questions (FAQs).
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Tax Topics from the IRS telephone response system.
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Fill-in, print and save features for most tax forms.
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Internal Revenue Bulletins.
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Toll-free and email technical support.
Buy the CD-ROM from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders for $25 (no handling fee) or call 1-877-233-6767 toll free to buy the CD-ROM for $25 (plus a $5 handling fee).
CD-ROM for small businesses. IRS Publication 3207, The Small Business Resource Guide CD-ROM, has a new look and enhanced navigation features. The CD includes:
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Helpful information, such as how to prepare a business plan, find financing for your business, and much more.
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All the business tax forms, instructions, and publications needed to successfully manage a business.
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Tax law changes for the current year.
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IRS Tax Map to help you find forms, instructions, and publications by searching on a keyword topic.
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Web links to various government agencies, business associations, and IRS organizations.
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“Rate the Product” survey — your opportunity to suggest changes for future editions.
An updated version of this CD is available each year in early April. You can get a free copy by calling 1-800-829-3676 or by visiting the website at www.irs.gov/smallbiz.
Other Useful Forms for Corporations
Other Useful Forms | |
---|---|
Form | Use this form to— |
W-2 and W-3—Wage and Tax Statement; and Transmittal of Wage and Tax Statements | Report wages, tips, and other compensation, and withheld income, social security, and Medicare taxes for employees. |
W-2G—Certain Gambling Winnings | Report gambling winnings from horse racing, dog racing, jai alai, lotteries, keno, bingo, slot machines, sweepstakes, wagering pools, etc. |
926—Return by a U.S. Transferor of Property to a Foreign Corporation | Report certain transfers to foreign corporations under section 6038B. |
940 or 940-EZ—Employer's Annual Federal Unemployment (FUTA) Tax Return |
Report and pay FUTA tax if the corporation either:
|
952—Consent To Extend the Time To Assess Tax Under Section 332(b) | Extend the period of assessment of all income taxes of the receiving corporation on the complete liquidation of a subsidiary under section 332. |
966—Corporate Dissolution or Liquidation | Report the adoption of a resolution or plan to dissolve the corporation or liquidate any of its stock. |
1042 and 1042-S—Annual Withholding Tax Return for U.S. Source Income of Foreign Persons; and Foreign Person's U.S. Source Income Subject to Withholding | Report withheld tax on payments or distributions made to nonresident alien individuals, foreign partnerships, or foreign corporations to the extent these payments or distributions constitute gross income from sources within the United States that is not effectively connected with a U.S. trade or business. See Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. |
1042-T—Annual Summary and Transmittal of Forms 1042-S | Transmit paper Forms 1042-S to the IRS. |
1096—Annual Summary and Transmittal of U.S. Information Returns | Transmit paper Forms 1099, 1098, 5498, and W-2G to the IRS. |
1099-A, B, C, CAP, DIV, INT, LTC, MISC, OID, PATR, R, S and, SA Important: Every corporation must file Forms 1099-MISC if, in the course of its trade or business, it makes payments of rents, commissions, or other fixed or determinable income (see section 6041) totaling $600 or more to any one person during the calendar year. Also use these returns to report amounts received as a nominee for another person. For more details, see the General Instructions for Forms 1099, 1098, 5498, and W-2G. |
Report the following:
|
1122—Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return | For the first year a subsidiary corporation is being included in a consolidated return, attach this form to the parent's consolidated return. Attach a separate Form 1122 for each subsidiary being included in the consolidated return. |
1138—Extension of Time for Payment of Taxes by a Corporation Expecting a Net Loss Carryback | For a corporation expecting a net operating loss for the current year use Form 1138 to request an extension of time for payment of tax for the immediately preceding tax year. |
3520—Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts | Report a distribution received from a foreign trust; or, if the corporation was the grantor of, transferor of, or transferor to, a foreign trust that existed during the tax year. See Question 5 of Schedule N (Form 1120). |
3520-A—Annual Information Return of Foreign Trust With a U.S. Owner | Report information about the foreign trust, its U.S. beneficiaries, and any U.S. person who is treated as an owner of any portion of the foreign trust. |
4562—Depreciation and Amortization | Use Form 4562 to claim a deduction for depreciation or amortization, to make the section 179 election to expense certain property, and to provide information on the business/investment use of cars and other listed property. |
5471—Information Return of U.S. Persons With Respect to Certain Foreign Corporations |
A corporation may have to file Form 5471 if it:
|
5498—IRA Contribution Information | Report contributions (including rollover contributions) to any IRA, including a SEP, SIMPLE, or Roth IRA, and to report Roth IRA conversions, IRA recharacterizations, and the fair market value (FMV) of the account. |
5498-ESA—Coverdell ESA Contribution Information | Report contributions (including rollover contributions) to and the FMV of a Coverdell education savings account (ESA). |
5498-SA—HSA, Archer MSA, or Medicare Advantage MSA Information | Report contributions to an HSA or Archer MSA and the FMV of an HSA, Archer MSA, or Medicare Advantage MSA. For more information, see the general and specific instructions for Forms 1099, 1098, 5498, and W-2G. |
5713—International Boycott Report | Report operations in, or related to, a “boycotting” country, company, or national of a country and to figure the loss of certain tax benefits. |
8023—Elections Under Section 338 for Corporations Making Qualified Stock Purchases | Make elections under section 338 for a “target” corporation if the purchasing corporation has made a qualified stock purchase of the target corporation. |
8027—Employer's Annual Information Return of Tip Income and Allocated Tips | Report receipts from large food or beverage operations, tips reported by employees, and allocated tips. |
8264—Application for Registration of a Tax Shelter | Until further guidance is issued, material advisors who provide material aid, assistance, or advice with respect to any reportable transaction after October 22, 2004, must use Form 8264 to disclose reportable transactions in accordance with interim guidance provided in Notice 2004-80, 2004-50 I.R.B. 963; Notice 2005-17, 2005-8 I.R.B. 606; and Notice 2005-22, 2005-12 I.R.B. 756. |
8271—Investor Reporting of Tax Shelter Registration Number | Report the registration number for a tax shelter that is required to be registered. Attach Form 8271 to any tax return (including Forms 1139 and 1120X) on which a deduction, credit, loss, or other tax benefit attributable to a tax shelter is taken or any income attributable to a tax shelter is reported. |
8275—Disclosure Statement | Disclose items or positions, except those contrary to a regulation, that are not otherwise adequately disclosed on a tax return. The disclosure is made to avoid the parts of the accuracy-related penalty imposed for disregard of rules or substantial understatement of tax. Also use Form 8275 for disclosures relating to preparer penalties for understatements due to unrealistic positions or disregard of rules. |
8275-R—Regulation Disclosure Statement | Disclose any item on a tax return for which a position has been taken that is contrary to Treasury regulations. |
8281—Information Return for Publicly Offered Original Issue Discount Instruments | Report the issuance of public offerings of debt instruments (obligations). |
8300—Report of Cash Payments Over $10,000 Received in a Trade or Business | Report the receipt of more than $10,000 in cash or foreign currency in one transaction or a series of related transactions. |
8594—Asset Acquisition Statement Under Section 1060 | Report a sale of assets that make up a trade or business if goodwill or going concern value attaches, or could attach, to such assets and if the buyer's basis is determined only by the amount paid for the assets. Both the seller and buyer must use this form. |
8806—Information Return for Acquisition of Control or Substantial Change in Capital Structure | Report an acquisition of control or a substantial change in the capital structure of a domestic corporation. |
8817—Allocation of Patronage and Nonpatronage Income and Deductions | Figure and report patronage and nonpatronage income and deductions (used by taxable cooperatives). |
8842—Election To Use Different Annualization Periods for Corporate Estimated Tax | Elect one of the annualization periods in section 6655(e)(2) for figuring estimated tax payments under the annualized income installment method. |
8849—Claim for Refund of Excise Taxes | Claim a refund of certain excise taxes. |
8858—Information Return of U.S. Persons With Respect To Foreign Disregarded Entities | This form is required if the corporation directly or indirectly owns a foreign disregarded entity. See Question 1 of Schedule N (Form 1120). |
8865—Return of U.S. Person With Respect To Certain Foreign Partnerships |
Report an interest in a foreign partnership. A domestic corporation may have to file Form 8865 if it:
The domestic corporation may also have to file Form 8865 to report certain dispositions by a foreign partnership of property it previously contributed to that partnership if it was a partner at the time of the disposition. For more details, including penalties for failing to file Form 8865, see Form 8865 and its separate instructions. |
8873—Extraterritorial Income Exclusion | To figure the amount of extraterritorial income excluded from gross income for the tax year. |
8876—Excise Tax on Structured Settlement Factoring Transactions | Report and pay the 40% excise tax imposed under section 5891. |
8883—Asset Allocation Statement Under Section 338 | Report information about transactions involving the deemed sale of corporate assets under section 338. |
8886—Reportable Transaction Disclosure Statement | Disclose information for each reportable transaction in which the corporation participated. Attach Form 8886 to the corporation's income tax return for each tax year in which it participated in a reportable transaction. The corporation may have to pay a penalty if it is required to file Form 8886 and does not do so. Other penalties may also apply. For more details, see the Instructions for Form 8886. |
8903 — Domestic Production Activities Deduction | To calculate and report the domestic production activities deduction. |
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