Simplified Instructions for Completing Schedule O When There Are No Tax Benefits To Allocate |
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Who is eligible to use the simplified instructions
There are instances in which there are no tax benefits to allocate among the component members. In these situations, you can follow these “Simplified” Instructions. Below are some examples of these situations (this list is NOT all inclusive):
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ALL component members of a controlled group pay tax at the highest corporate rate (35%) on the ENTIRE amount of its taxable income
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ALL component members have taxable income of $0 or less
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There are two (2) component members and one (1) of the members is filing a Form 1120-F for a treaty only position
Note: If you are not eligible to use these simplified instructions, you should refer to the Schedule O Form Instructions and Form 1120 Schedule O Guidance: Tax Year 2007.
Instructions:
Part I, Line 1
Part I, Line 2
Note: No other information needs to be completed on the Schedule O
Attachment to Schedule O
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You will need to create and attach a document in PDF format that includes a list of all Component Members:
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Name
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EIN
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Tax year end
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Taxable Income
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The PDF file must be named “SchOAttachment” and described as “Sch O Attachment”
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The PDF file should be attached to the top level return.
Below is an example of an attachment that would be required in the situation where ALL component members of a controlled group pay tax at the highest corporate rate (35%) on the ENTIRE amount of its taxable income. You should tailor your attachment to fit your situation.
Example:
SCHEDULE O ATTACHMENT
Taxpayer: Example, Inc. & Subsidiaries
EIN: NN-NNNNNNN
Year End: December 31, 200X
The Component Members of the Controlled Group for purposes of Schedule O and Temp. Reg. Section 1.1561-1T are as follows:
Taxpayer: |
Example, Inc. & Subsidiaries |
EIN: |
NN-NNNNNNN |
Year End: |
December 31, 200X |
2007 Taxable Income: |
$20,000,000 |
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Taxpayer: |
Life Insurance Co. |
EIN: |
33-3333333 |
Year End: |
December 31, 200X |
2007 Taxable Income: |
$20,500,000 |
The Controlled Group HAS NOT allocated any applicable tax brackets or tax benefits pursuant to Temp. Reg. Section 1.1561-1T because:
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Each Component Member currently pays tax at the highest corporate rate (35%) for the entire amount of its taxable income
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Each Component Member is not subject to the Alternative Minimum Tax
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Each Component Member is not entitled to any deductions under IRC Section 179
Return to: e-file for Large and Mid-Size Corporations
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Page Last Reviewed or Updated: December 03, 2008