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Department of the Treasury 2020 Internal Revenue Service Instructions for Form 1120-C U.S. Income Tax Return for Cooperative Associations Section references are to the Internal Future Developments Temporary suspension of limitations Revenue Code unless otherwise noted. on certain contributions, later. Contents Page For the latest information about developments related to Form 1120-C Increase in limits on contributions Future Developments ...... 1 and its instructions, such as of food inventory. For any What’s New ...... 1 legislation enacted after they were charitable contribution of food during Photographs of Missing Children ....1 published, go to IRS.gov/Form1120c. 2020 and 2021 to which section The Taxpayer Advocate Service .....1 170(e)(3)(C) applies, a cooperative How To Make a Contribution To can deduct qualified contributions of Reduce Debt Held by the What’s New Public ...... 2 up to 25% of their aggregate net New payroll credit for required How To Get Forms and income from all trades or businesses Publications ...... 2 paid sick leave or family leave. from which the contributions were General Instructions ...... 2 Under the Families First Coronavirus made or up to 25% of their taxable Purpose of Form ...... 2 Response Act (FFCRA), as amended, income. See the instructions for Who Must File ...... 2 an eligible employer can take a credit line 17. against payroll taxes owed for Where To File ...... 2 Temporary allowance of 100% for amounts paid for qualified sick leave When To File ...... 2 business meals. A cooperative is or family leave if incurred during the Who Must Sign ...... 3 allowed a 100% deduction for certain allowed period. However, there is no Assembling the Return ...... 3 business meal expenses paid or double tax benefit allowed and the Tax Payments ...... 3 incurred in 2021 and 2022. See amounts claimed are reportable as Estimated Tax Payments ...... 4 Travel, meals, and entertainment. Interest and Penalties ...... 4 income on line 9. See the instructions Accounting Methods ...... 4 for line 9. Modifications to net operating los- ses. Losses that occurred in 2018, Accounting Period ...... 5 New employee retention credit. 2019, and 2020 generally can be Rounding Off to Whole Dollars ...... 5 The Coronavirus Aid, Relief, and carried back up to 5 tax years Recordkeeping ...... 5 Economic Security Act (CARES Act) preceding the year of the loss. Special Other Forms and Statements That allows a new employee retention May Be Required ...... 5 rules apply to farming losses. See the credit for qualified wages. Any Specific Instructions ...... 6 instructions for line 27. Period Covered ...... 6 qualified wages for which an eligible Name and Address ...... 6 employer claims against payroll taxes for the new employee retention credit Photographs of Missing Item A. Identifying Information ...... 6 Children Item B. Employer Identification may not be taken into account for Number (EIN) ...... 7 purposes of determining other credits. The Internal Revenue Service is a proud partner with the National Center Item C. Type of Cooperative ...... 7 Temporary suspension of limita- for Missing & Exploited Children® Item D. Initial Return, Final Return, tions on certain contributions. A Name Change, Address (NCMEC). Photographs of missing cooperative may elect to deduct Change, or Amended Return ....7 children selected by the Center may certain qualified cash contributions Income ...... 7 appear in instructions on pages that made in 2020 and 2021 without Deductions ...... 9 would otherwise be blank. You can regard to the 10% taxable income Tax, Refundable Credits, and help bring these children home by Payments ...... 16 limit. The total amount of the looking at the photographs and calling Schedule C. Dividends, Inclusions, contribution claimed cannot exceed 1-800-THE-LOST (1-800-843-5678) if and Special Deductions ...... 18 25% of the excess of the you recognize a child. Schedule G. Allocation of cooperative's taxable income over all Patronage and Nonpatronage Income and Deductions ...... 20 other allowable charitable The Taxpayer Advocate Schedule H. Deductions and contributions. See the instructions for Adjustments Under Section line 17. Service 1382 ...... 21 The Taxpayer Advocate Service Disaster relief charitable contribu- Schedule J. Tax Computation ..... 22 (TAS) is an independent tions. The 10% limit on the deduction Schedule K. Other Information ..... 24 organization within the IRS that helps Schedule L. Balance Sheets per for charitable contributions does not taxpayers and protects taxpayer Books ...... 26 apply to contributions made after rights. TAS's job is to ensure that Schedule M-1. Reconciliation of December 31, 2019, and before every taxpayer is treated fairly and Income (Loss) per Books With February 26, 2021, to certain Income per Return ...... 26 knows and understands their rights charitable organizations for relief in under the Taxpayer Bill of Rights. Index ...... 31 qualified disaster areas. See

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As a taxpayer, the cooperative has How To Get Forms electric energy or providing telephone rights that the IRS must abide by in its and Publications service to persons in rural areas. dealings with the cooperative. TAS can help the cooperative if: Internet. You can access the IRS Where To File • Problems are causing financial website 24 hours a day, 7 days a If the cooperative's principal business, difficulty for the business; week, at IRS.gov to: office, or agency is located in the • The business is facing an • Download forms, instructions, and United States, file Form 1120-C at the immediate threat of adverse action; or publications; following address: • The cooperative has tried • Order IRS products online; repeatedly to contact the IRS but no • Research your tax questions online; Department of the Treasury one has responded, or the IRS hasn't • Search publications online by topic Internal Revenue Service Center responded by the date promised. or keyword; Ogden, UT 84201-0012 • Use the online Internal Revenue TAS has offices in every state, the Code, regulations, or other official If the cooperative's principal District of Columbia, and Puerto Rico. guidance; business, office, or agency is located The cooperative's local advocate's • View Internal Revenue Bulletins in a foreign country or a U.S. number is in its local directory and at (IRBs) published in the last few years; possession, file Form 1120-C at the TaxpayerAdvocate.IRS.gov. The and following address: cooperative can also call TAS at • Sign up to receive local and 877-777-4778. national tax news by email. Internal Revenue Service Center P.O. Box 409101 TAS also works to resolve Tax forms and publications. The Ogden, UT 84409 large-scale or systemic problems that cooperative can download or print all of the forms and publications it may affect many taxpayers. If the When To File cooperative knows of one of these need on IRS.gov/FormsPubs. broad issues, please report it to TAS Otherwise, the cooperative can go to Generally, a cooperative described in through the Systemic Advocacy IRS.gov/OrderForms to place an section 6072(d) must file its income Management System at IRS.gov/ order and have forms mailed to it. tax return by the 15th day of the 9th SAMS. The IRS will process the order for month after the end of its tax year. forms and publications as soon as Any cooperative not described in For more information, go to possible. section 6072(d) must generally file its IRS.gov/Advocate. tax return by the 15th day of the 4th General Instructions month after the end of its tax year. How To Make a However, a cooperative with a fiscal Contribution To Reduce Purpose of Form tax year ending June 30 must file by Debt Held by the Public Use Form 1120-C, U.S. Income Tax the 15th day of the 3rd month after the To help reduce debt held by the Return for Cooperative Associations, end of its tax year. A cooperative with public, make a check payable to to report income, gains, losses, a short tax year ending anytime in “Bureau of the Fiscal Service.” Send it deductions, credits, and to figure the June will be treated as if the short year to: income tax liability of the cooperative. ended on June 30, and must file by the 15th day of the 3rd month after the Bureau of the Fiscal Service Who Must File end of its tax year. Attn: Dept G Any corporation operating on a If the due date falls on a Saturday, P.O. Box 2188 cooperative basis under section 1381 Sunday, or legal holiday, the Parkersburg, WV 26106-2188 and allocating amounts to patrons on cooperative can file on the next the basis of business done with or for business day. Or, enclose the check with the such patrons should file Form 1120-C corporation's income tax return. In the (including farmers' cooperatives under Private Delivery Services memo section of the check, make a section 521 whether or not it has Cooperatives can use certain private note that it is a gift to reduce the debt taxable income). delivery services (PDS) designated by held by the public. For information on the IRS to meet the “timely mailing as Exceptions. This does not apply to how to make this type of contribution timely filing” rule for tax returns. Go to organizations which are: online, go to www.treasurydirect.gov IRS.gov/PDS for the current list of Exempt from income tax under and click on “How To Make a • designated services. Contribution To Reduce the Debt.” chapter 1 (other than exempt farmers' cooperatives under section 521); The PDS can tell you how to get Do not add the contributions to any • Subject to Part II (section 591 and written proof of the mailing date. following), subchapter H, chapter 1 tax the cooperative may owe. See the For the IRS mailing address to use (relating to mutual savings banks); instructions for line 32 for details on if you’re using PDS, go to IRS.gov/ • Subject to subchapter L (section how to pay any tax the cooperative PDSStreetAddresses. owes. Contributions to reduce debt 801 and following), chapter 1 (relating held by the public are deductible to insurance companies); or subject to the rules and limitations for • Engaged in generating, charitable contributions. transmitting, or otherwise furnishing

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Private Delivery Services can't the “Yes” box in the signature area of Request” instead of completing the ! deliver items to P.O. boxes. the return. This authorization applies entry spaces. If more space is needed CAUTION You must use the U.S. Postal only to the individual whose signature on the forms or schedules, attach Service to mail any item to an IRS appears in the “Paid Preparer Use separate sheets using the same size P.O. box address. Only” section of the cooperative's and format as the printed forms. return. It does not apply to the firm, if If there are supporting statements Extension of Time To File any, shown in that section. and attachments, arrange them in the File Form 7004, Application for If the “Yes” box is checked, the same order as the schedules or forms Automatic Extension of Time To File cooperative is authorizing the IRS to they support and attach them last. Certain Business Income Tax, call the paid preparer to answer any Show the totals on the printed forms. Information, and Other Returns, to questions that may arise during the Enter the cooperative's name and EIN request an extension of time to file. processing of its return. The on each supporting statement or Generally, the cooperative must file cooperative is also authorizing the attachment. Form 7004 by the regular due date of paid preparer to: the return. See the Instructions for • Give the IRS any information that is Tax Payments Form 7004. missing from the return; Generally, the cooperative must pay • Call the IRS for information about any tax due in full no later than the Who Must Sign the processing of the return or the due date for filing its return (not The return must be signed and dated status of any related refund or including extensions). If the due date by: payment(s); and falls on a Saturday, Sunday, or legal • The president, vice president, • Respond to certain IRS notices holiday, the payment is due on the treasurer, assistant treasurer, chief about math errors, offsets, and return next day that isn't a Saturday, accounting officer; or preparation. Sunday, or legal holiday. See the • Any other cooperative officer (such instructions for line 32. as tax officer) authorized to sign. The cooperative is not authorizing the paid preparer to receive any Electronic Deposit If a return is filed on behalf of a refund check, bind the cooperative to Requirement cooperative by a receiver, trustee, or anything (including any additional tax assignee, the fiduciary must sign the Cooperatives must use electronic liability), or otherwise represent the funds transfer to make all federal tax return, instead of the cooperative cooperative before the IRS. officer. Returns and forms signed by a deposits (such as deposits of receiver or trustee in bankruptcy on The authorization will automatically employment, excise, and corporate behalf of a cooperative must be end no later than the due date income tax). Generally, electronic accompanied by a copy of the order (excluding extensions) for filing the funds transfers are made using the or instructions of the court authorizing cooperative's 2021 tax return. If the Electronic Federal Tax Payment signing of the return or form. cooperative wants to expand the paid System (EFTPS). However, if the preparer's authorization or revoke the cooperative does not want to use If an employee of the cooperative authorization before it ends, see Pub. EFTPS, it can arrange for its tax completes Form 1120-C, the paid 947, Practice Before the IRS and professional, financial institution, preparer space should remain blank. Power of Attorney. payroll service, or other trusted third Anyone who prepares Form 1120-C party to make deposits on its behalf. but does not charge the cooperative Assembling the Return Also, it may arrange for its financial should not complete that section. institution to submit a same-day wire To ensure that the cooperative's tax Generally, anyone who is paid to payment (discussed below) on its return is correctly processed, attach prepare the return must sign it and fill behalf. EFTPS is a free service all schedules and other forms after in the “Paid Preparer Use Only” area. provided by the Department of the Form 1120-C, page 5, in the following Treasury. Services provided by a tax The paid preparer must complete order. professional, financial institution, the required preparer information and: 1. Schedule N (Form 1120). payroll service, or other third party • Sign the return in the space 2. Form 4136. may have a fee. provided for the preparer's signature, and 3. Form 8978. To get more information about • Give a copy of the return to the 4. Form 8941. EFTPS or to enroll in EFTPS, visit taxpayer. 5. Form 3800. EFTPS.gov or call 1-800-555-4477 (TTY/TDD 1-800-733-4829). A paid preparer may sign 6. Additional schedules in TIP original or amended returns alphabetical order. Depositing on time. For deposits by rubber stamp, mechanical 7. Additional forms in numerical made by EFTPS to be on time, the device, or computer software order. cooperative must submit the deposit program. by 8 p.m. Eastern time the day before 8. Supporting statements and the date the deposit is due. If the Paid Preparer Authorization attachments. cooperative uses a third party to make If the cooperative wants to allow the Complete every applicable entry deposits on its behalf, they may have IRS to discuss its 2020 tax return with space on Form 1120-C. Do not enter different cutoff times. the paid preparer who signed it, check “See Attached” or “Available Upon

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Same-day wire payment option. If cooperative is subject to the penalty if income, social security, and Medicare the cooperative fails to submit a its tax liability is $500 or more and it taxes that must be collected or deposit transaction on EFTPS by 8 did not timely pay at least the smaller withheld are not collected or withheld, p.m. Eastern time the day before the of: or these taxes are not paid. These date a deposit is due, it can still make • Its tax liability for the current year, taxes are generally reported on: the deposit on time by using the or • Form 720, Quarterly Federal Excise Federal Tax Collection Service • Its prior year's tax. Tax Return; (FTCS). To use the same-day wire Use Form 2220, Underpayment of • Form 941, Employer's payment method, the cooperative will Estimated Tax by Corporations, to QUARTERLY Federal Tax Return; need to make arrangements with its see if the cooperative owes a penalty • Form 943, Employer's Annual financial institution ahead of time and to figure the amount of the Federal Tax Return for Agricultural regarding availability, deadlines, and penalty. If Form 2220 is completed, Employees; costs. The cooperative's financial enter the penalty on line 31. See the • Form 944, Employer's ANNUAL institution may charge a fee for instructions for line 31. Federal Tax Return; or payments made this way. To learn • Form 945, Annual Return of more about the information the Interest and Penalties Withheld Federal Income Tax. cooperative will need to provide to its The trust fund recovery penalty If the cooperative receives a financial institution to make a may be imposed on all persons who notice about penalties after it same-day wire payment, go to ! are determined by the IRS to have CAUTION files its return, send the IRS IRS.gov/SameDayWire. been responsible for collecting, an explanation and we will determine accounting for, or paying over these if the cooperative meets reasonable taxes, and who acted willfully in not Estimated Tax Payments cause criteria. Do not attach an doing so. The penalty is equal to the Generally, the following rules apply to explanation when the cooperative's unpaid trust fund tax. See the the cooperative's payments of return is filed. estimated tax. Instructions for Form 720; Pub. 15 • The cooperative must make Interest. Interest is charged on taxes (Circular E), Employer's Tax Guide; or installment payments of estimated tax paid late even if an extension of time Pub. 51 (Circular A), Agricultural if it expects its total tax for the year to file is granted. Interest is also Employer's Tax Guide, for details, (less applicable credits) to be $500 or charged on penalties imposed for including the definition of responsible more. failure to file, negligence, fraud, persons. • The installments are due by the substantial valuation misstatements, Other penalties. Other penalties can 15th day of the 4th, 6th, 9th, and 12th substantial understatements of tax, be imposed for negligence, months of the tax year. If any due date and reportable transaction substantial understatement of tax, falls on a Saturday, Sunday, or legal understatements from the due date reportable transaction holiday, the payment of the (including extensions) to the date of understatements, and fraud. See installment is due on the next regular payment. The interest charge is sections 6662, 6662A, and 6663. business day. figured at a rate determined under • The cooperative must use section 6621. Accounting Methods electronic funds transfer to make Late filing of return. A cooperative Figure taxable income using the installment payments of estimated method of accounting regularly used tax. that does not file its tax return by the due date, including extensions, may in keeping the cooperative's books • Use Form 1120-W as a worksheet and records. In all cases, the method to compute estimated tax. See the be penalized 5% of the unpaid tax for each month or part of a month the used must clearly show taxable Instructions for Form 1120-W. income. Permissible methods include: • Penalties may apply if the return is late, up to a maximum of 25% of the unpaid tax. The minimum • Cash, cooperative does not make required • Accrual, or estimated tax payment deposits. See penalty for a return that is over 60 days late is the smaller of the tax due • Any other method authorized by the Estimated tax penalty below. Internal Revenue Code. • If the cooperative overpaid or $435. The penalty will not be imposed if the cooperative can show estimated tax, it may be able to get a Certain cooperatives must use an that the failure to file on time was due quick refund by filing Form 4466, accrual method of accounting. An to reasonable cause. See Caution, Corporation Application for Quick exception applies for a small business earlier. Refund of Overpayment of Estimated taxpayer (defined below). Tax. Late payment of tax. Generally, a cooperative that does not pay the tax See Pub. 538, Accounting Periods See the instructions for lines 30b when due may be penalized 1/2 of 1% and Methods, for more information. and 30c. of the unpaid tax for each month or Small business taxpayer. For tax Estimated tax penalty. A part of a month the tax is not paid, up years beginning in 2020, a cooperative that does not make to a maximum of 25% of the unpaid cooperative qualifies as a small estimated tax payments when due tax. See Caution, earlier. business taxpayer if (a) it has average may be subject to an underpayment Trust fund recovery penalty. This annual gross receipts of $26 million or penalty for the period of penalty may apply if certain excise, less for the 3 prior tax years, and (b) it underpayment. Generally, a is not a tax shelter (as defined in

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section 448(d)(3)). A small business exceptions may apply. See the substantially similar to one of the taxpayer can adopt or change its Instructions for Form 1128 and Pub. types of transactions that the IRS has accounting method to account for 538 for more information. determined to be a tax avoidance inventories (a) in the same manner it transaction and identified by notice, would use to adopt or change its Rounding Off to regulation, or other published method of accounting for Whole Dollars guidance as a listed transaction. non-incidental material and supplies, The cooperative may enter decimal 2. Any transaction offered under or (b) to conform to its treatment of points and cents when completing its conditions of confidentiality for which inventories in an applicable financial return. However, the cooperative the cooperative (or a related party) statement (as defined in section should round off cents to whole paid an advisor a fee of at least 451(b)(3)). If it does not have an dollars on its return, forms, and $250,000. applicable financial statement, it can schedules to make completing its 3. Certain transactions for which use the method of accounting used in return easier. The cooperative must the cooperative (or a related party) its books and records prepared either round off all amounts on its has contractual protection against according to its accounting return to whole dollars, or use cents disallowance of the tax benefits. procedures. for all amounts. To round, drop 4. Certain transactions resulting in Change in accounting method. amounts under 50 cents and increase a loss of at least $10 million in any Generally, the cooperative must get amounts from 50 to 99 cents to the single year or $20 million in any IRS consent to change either an next dollar. For example, $8.40 combination of years. overall method of accounting or the rounds to $8 and $8.50 rounds to $9. accounting treatment of any material 5. Any transaction identified by the If two or more amounts must be item for income tax purposes. To IRS by notice, regulation, or other added to figure the amount to enter on obtain consent, the cooperative must published guidance as a “transaction a line, include cents when adding the generally file Form 3115, Application of interest.” amounts and round off only the total. for Change in Accounting Method, For more information, see during the tax year for which the Recordkeeping Regulations section 1.6011-4. Also, change is requested. See the see the Instructions for Form 8886. Instructions for Form 3115 for more Keep the cooperative's records for as information and exceptions. Also, see long as they may be needed for the Penalties. The cooperative may Pub. 538. administration of any provision of the have to pay a penalty if it is required to Internal Revenue Code. Usually, disclose a reportable transaction Section 481(a) adjustment. If the records that support an item of under section 6011 and fails to cooperative's taxable income for the income, deduction, or credit on the properly complete and file Form 8886. current tax year is figured under a return must be kept for 3 years from Penalties may also apply under method of accounting different from the date the return is due or filed, section 6707A if the cooperative fails the method used in the preceding tax whichever is later. Keep records that to file Form 8886 with its cooperative year, the cooperative may have to verify the cooperative's basis in return, fails to provide a copy of Form make an adjustment under section property for as long as they are 8886 to the Office of Tax Shelter 481(a) to prevent amounts of income needed to figure the basis of the Analysis (OTSA), or files a form that or expense from being duplicated or original or replacement property. fails to include all the information omitted. The cooperative should keep required (or includes incorrect If the net section 481(a) adjustment copies of all filed returns. They help in information). Other penalties, such as is positive, report the ratable portion preparing future and amended returns an accuracy-related penalty under on Form 1120-C, line 9, as other and in the calculation of earnings and section 6662A, may also apply. See income. If the net section 481(a) profits. the Instructions for Form 8886 for adjustment is negative, report it on details on these and other penalties. Form 1120-C, line 23, as a deduction. Other Forms and Reportable transactions by materi- al advisors. Material advisors to any Accounting Period Statements That May Be Required reportable transaction must disclose A cooperative must figure its taxable certain information about the income on the basis of a tax year. A Reportable transaction disclosure reportable transaction by filing Form tax year is the annual accounting statement. Disclose information for 8918, Material Advisor Disclosure period a cooperative uses to keep its each reportable transaction in which Statement, with the IRS. For details, records and report its income and the cooperative participated. Form see the Instructions for Form 8918. expenses. Generally, cooperatives 8886, Reportable Transaction Transfers to a cooperative control- can use a calendar year or a fiscal Disclosure Statement, must be filed led by the transferor. Every year. for each tax year that the federal significant transferor (as defined in income tax liability of the cooperative Change of tax year. Generally, a Regulations section 1.351-3(d)) that is affected by its participation in the cooperative must get the consent of receives stock of a cooperative in transaction. The following are the IRS before changing its tax year exchange for property in a reportable transactions. by filing Form 1128, Application to nonrecognition event must include the Adopt, Change, or Retain a Tax Year. 1. Any listed transaction, which is statement required by Regulations However, under certain conditions, a transaction that is the same as or

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section 1.351-3(a) on or with the • The 2021 Form 1120-C isn’t Form 1122 for each new subsidiary transferor's tax return for the tax year available at the time the cooperative is being included in the consolidated of the exchange. The transferee required to file its return. return. cooperative must include the The cooperative must show its If the cooperative is a farmers' statement required by Regulations 2021 tax year on the 2020 Form tax exempt cooperative and section 1.351-3(b) on or with its return ! 1120-C and take into account any tax CAUTION checked Item C, box 1, it for the tax year of the exchange, law changes that are effective for tax cannot file a consolidated return. unless all the required information is years beginning after December 31, included in any statement(s) provided 2020. File supporting statements for each by a significant transferor that is cooperative/corporation included in attached to the same return for the Name and Address the consolidated return. Do not use same section 351 exchange. Enter the cooperative's true name (as Form 1120-C as a supporting Dual consolidated losses. If a set forth in the charter or other legal statement. On the supporting cooperative incurs a dual document creating it), address, and statement, use columns to show the consolidated loss (as defined in EIN on the appropriate lines. Enter the following, both before and after Regulations section 1.1503-2(c)(5)), address of the cooperative's principal adjustments. the cooperative (or consolidated office or place of business. Include 1. Items of gross income and group) may need to attach an elective the suite, room, or other unit number deductions. relief agreement and/or annual after the street address. If the post 2. A computation of taxable certification, as provided in office does not deliver mail to the income. Regulations section 1.1503-2(g)(2). street address and the cooperative 3. Balance sheets as of the Election to reduce basis under has a P.O. box, show the box number beginning and end of the tax year. instead. section 362(e)(2)(C). If property is 4. A reconciliation of income per transferred to a cooperative in Note. Do not use the address of the books with income per return. transfers subject to section 362(e)(2), registered agent for the state in which the transferor and the acquiring 5. A reconciliation of retained the cooperative is incorporated. For earnings. cooperative may elect, under section example, if the cooperative is 362(e)(2)(C), to reduce the incorporated in Delaware or Nevada Enter on Form 1120-C the totals for transferor's basis in the stock received and the cooperative's principal office each item of income, gain, loss, instead of reducing the acquiring is located in Little Rock, Arkansas, the expense, or deduction, net of corporation's basis in the property cooperative should enter the Little eliminating entries for intercompany transferred. Once made, the election Rock address. transactions between cooperatives/ is irrevocable. For more information, corporations within the consolidated see section 362(e)(2) and Regulations If the cooperative receives its mail group. Attach consolidated balance section 1.362-4. If an election is in care of a third party (such as an sheets and a reconciliation of made, a statement must be filed in accountant or an attorney), enter on consolidated retained earnings. accordance with Regulations section the street address line “C/O” followed 1.362-4(d)(3). by the third party's name and street The cooperative does not address or P.O. box. TIP have to provide the Other forms and statements. See information requested in (3), Pub. 542, Corporations, for a list of If the cooperative has a foreign (4), and (5) above if its total receipts other forms and statements that a address, include the city or town, (page 1, lines 1a plus lines 4 through cooperative may need to file in state or province, country, and foreign 9) and its total assets at the end of the addition to the forms and statements postal code. Do not abbreviate the tax year (Schedule L, line 13(d)) are discussed throughout these country name. Follow the country's less than $250,000. See Schedule K, instructions. practice for entering the name of the Question 14. state or province and postal code. For more information on Specific Instructions Item A. Identifying consolidated returns, see the Period Covered Information regulations under section 1502. File the 2020 return for calendar year Consolidated return. Cooperatives Schedule M-3 (Form 1120). A 2020 and fiscal years that begin in filing a consolidated return must cooperative with total assets 2020 and end in 2021. For a fiscal or check box 1, and attach Form 851, (non-consolidated or consolidated for short tax year return, fill in the tax year Affiliations Schedule, and other all cooperatives/corporations included space at the top of the form. supporting statements to the return. with the consolidated tax group) of Also, for the first year a subsidiary $10 million or more on the last day of The 2020 Form 1120-C can also be cooperative is being included in a the tax year must file Schedule M-3 used if: consolidated return, attach Form (Form 1120), Net Income (Loss) • The cooperative has a tax year of 1122, Authorization and Consent of Reconciliation for Corporations With less than 12 months that begins and Subsidiary Corporation To Be Total Assets of $10 Million or More, ends in 2021, and Included in a Consolidated Income instead of Form 1120-C, Tax Return, to the parent's Schedule M-1. A cooperative or group consolidated return. Attach a separate of cooperatives that completes Parts II

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and III of Schedule M-3 (Form 1120) enter “Applied for” and the date you information. Check the “Amended is not required to complete Form applied in the space for the EIN. return” box. 1120-C, Schedule M-1. For more information, see the Note. If a change in address or Cooperatives that (a) are required Instructions for Form SS-4. responsible party occurs after the to file Schedule M-3 (Form 1120) and return is filed, use Form 8822-B, have less than $50 million total assets Item C. Type of Change of Address or Responsible at the end of the tax year, or (b) are Cooperative Party—Business, to notify the IRS of not required to file Schedule M-3 the new address. For more (Form 1120) and voluntarily file Farmers' tax-exempt cooperative. information, see the instructions for Schedule M-3 (Form 1120), must Check the “Farmers' tax-exempt Form 8822-B. either (i) complete Schedule M-3 cooperative” box if the cooperative (Form 1120) entirely or (ii) complete applied for and received status as a Schedule M-3 (Form 1120) through tax-exempt farmers', fruit growers', or Income like association, organized and Part I, and complete Form 1120-C, Except as otherwise provided in the operated on a cooperative basis as Schedule M-1, instead of completing Internal Revenue Code, gross income described in section 521. Parts II and III of Schedule M-3 (Form includes all income from whatever 1120). If the cooperative chooses to If the cooperative has submitted source derived. complete Schedule M-1 instead of Form 1028, Application for completing Parts II and III of Recognition of Exemption, but has not Exception for income from qualify- Schedule M-3, the amount on received a determination letter from ing shipping activities. Gross Schedule M-1, line 1, must equal the the IRS, enter “Application Pending” income does not include income from amount on Schedule M-3, Part I, on Form 1120-C at the top of page 1. qualifying shipping activities if the line 11. See the Instructions for cooperative makes an election under Nonexempt cooperative. All other Schedule M-3 for more details. Also, section 1354 to be taxed on its subchapter T cooperatives including see the instructions for Schedule M-1, notional shipping income (as defined farmers' cooperatives without section later. in section 1353) at the highest 521 exempt status, organized and corporate rate. If the election is made, If you are filing Schedule M-3, operated as described under Who the cooperative may generally not check Item A, box 2, to indicate that Must File, earlier, should check the claim any loss, deduction, or credit Schedule M-3 is attached. “Nonexempt cooperative” box. with respect to qualifying shipping Form 1120 filed previous year. activities. A cooperative making this Check box 3 if the cooperative filed Item D. Initial Return, Final election may also elect to defer gain Form 1120 in a prior year as a Return, Name Change, on the disposition of a qualifying subchapter T cooperative. Address Change, or vessel. Use Form 8902, Alternative Tax on Item B. Employer Amended Return • If this is the cooperative's first Qualifying Shipping Activities, to Identification Number return, check the “Initial return” box. figure the tax. Include the alternative (EIN) • If this is the cooperative's final tax on Schedule J, line 8. Enter the cooperative's EIN. If the return and it will no longer exist, file Line 1. Gross Receipts or Sales Form 1120-C and check the “Final cooperative does not have an EIN, it Enter gross receipts or sales from all return” box. must apply for one. An EIN can be business operations except those that If the cooperative changed its name applied for: • must be reported on lines 4 • Online. Go to IRS.gov/EIN. The EIN since it last filed a return, check the through 9. Special rules apply to is issued immediately once the “Name change” box. Generally, a certain income as discussed below. application information is validated. cooperative must also have amended • By faxing or mailing Form SS-4, its articles of incorporation and filed Advance payments. In general, Application for Employer Identification the amendment with the state in which advance payments are reported in the Number. it was incorporated. year of receipt. For exceptions to this • If the cooperative has changed its general rule for cooperatives that use Cooperatives located in the the accrual method of accounting, see United States or U.S. address since it last filed a return ! (including a change to an “in care of” the following: CAUTION possessions can use the address), check the “Address • To report income from long-term online application. Foreign contracts, see section 460. corporations should call change” box. • If the cooperative must change its • For rules that allow a limited 1-267-941-1099 (not a toll-free deferral of advance payments beyond number) for more information on originally filed return for any year, it should file a new return including any the current tax year, see the obtaining an EIN. See the Instructions "Applicability Dates" discussion in the for Form SS-4. required attachments. Use the revision of the form applicable to the final regulations under section 451(c), T.D. 9941. EIN applied for, but not received. If year being amended. The amended For information on adopting or the cooperative has not received its return must provide all the information • changing to a permissible method for EIN by the time the return is due, called for by the form and instructions, not just the new or corrected reporting certain advance payments for services and certain goods by an

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accrual method cooperative, see the paid on the amount or if there is any Line 6. Gross Rents and Instructions for Form 3115. penalty for failure to timely pay the Royalties amount. See Regulations section Installment sales. Generally, the Enter the gross amount received from 1.448-2 for information on the installment method cannot be used for the rental of property and royalties. nonaccrual experience method, dealer dispositions of property. A Deduct expenses such as repairs, including information on safe harbor “dealer disposition” is any disposition interest, taxes, and depreciation on methods. For information on a book of (a) personal property by a person the applicable lines. who regularly sells or otherwise safe harbor method of accounting for disposes of personal property of the cooperatives that use the nonaccrual Line 9. Other Income same type on the installment plan, or experience method of accounting, see Enter any other taxable income not (b) real property held for sale to Rev. Proc. 2011-46, 2011-42 I.R.B. reported on lines 1 through 8. List the 518, as modified by Rev. Proc. customers in the ordinary course of type and amount of income on an 2016-29, 2016-21 I.R.B. 880. Also, the taxpayer's trade or business. attached statement. If the cooperative see the Instructions for Form 3115 for The restrictions on using the has only one item of other income, procedures to obtain automatic describe it in parentheses on line 9. installment method do not apply to the consent to change to this method or following. Examples of other income to report on make certain changes within this line 9 include the following. • Dispositions of property used or method. produced in the trade or business of Patronage dividends and per-unit Cooperatives that qualify to use the farming. retain allocations. Include on line 9 nonaccrual experience method should • Certain dispositions of timeshares the patronage dividends and per-unit attach a statement showing total and residential lots reported under the retain allocations listed below. Attach gross receipts, the amount not installment method for which the a statement listing the name of each accrued as a result of the application cooperative elects to pay interest declaring association from which the of section 448(d)(5), and the net under section 453(l)(3). cooperative received income from amount accrued. Enter the net patronage dividends and per-unit Enter on line 1a (and carry to line 3) amount on line 1a. the gross profit on collections from retain allocations, and the total installment sales. Attach a statement Line 2. Cost of Goods Sold amount received from each showing the following information for Complete and attach Form 1125-A, association. the current and the 3 preceding years: Cost of Goods Sold, if applicable. Include the items listed below. (a) gross sales, (b) cost of goods sold, Enter on Form 1120-C, line 2, the 1. Patronage dividends received (c) gross profits, (d) percentage of amount from Form 1125-A, line 8. See in: gross profits to gross sales, (e) Form 1125-A and its instructions. • Money, amount collected, and (f) gross profit • Qualified written notices of on the amount collected. Line 4. Dividends and Inclusions allocation, or For sales of timeshares and • Other property (except nonqualified residential lots reported under the See the instructions for Schedule C, written notices of allocation). later. Then, complete Schedule C and installment method, if the cooperative 2. Nonpatronage distributions enter on line 4 the amount from elects to pay interest under section received on a patronage basis from Schedule C, line 19. 453(l)(3), the cooperative's income tax-exempt farmers' cooperatives in: tax is increased by the interest Note. Do not report patronage • Money; payable under section 453(l)(3). dividends received on Schedule C. • Qualified written notices of Report this addition to tax on Report income from patronage allocation; or Schedule J, line 8. dividends and per-unit retain • Other property (except nonqualified Nonaccrual experience method for allocations on line 9. written notices of allocation), based service providers. Cooperatives are on earnings of that cooperative either not required to accrue certain Line 5. Interest from business done with or for the amounts to be received from the Enter taxable interest on U.S. United States or any of its agencies performance of services that, based obligations and on loans, notes, (or from sources other than on their experience, will not be mortgages, bonds, bank deposits, patronage, such as investment collected if: corporate bonds, tax refunds, etc. Do income). • The services are in the fields of not offset interest expense against 3. Qualified written notices of health, law, engineering, architecture, interest income. Special rules apply to allocation at their stated dollar accounting, actuarial science, interest income from certain amounts and property at its fair performing arts, or consulting; or below-market-rate loans. See section market value (FMV). 7872 for details. • The cooperative meets the 4. Amounts received on the definition of a small business taxpayer redemption, sale, or other disposition (discussed earlier). For more details, Note. Report tax-exempt interest income on Schedule K, Item 10. Also, of nonqualified written notices of see section 448(d)(5) and section allocation. 448(c). if required, include the same amount on Schedule M-1, line 7, or Generally, patronage dividends This provision does not apply to Schedule M-3 (Form 1120), Part II, from purchases of capital assets or any amount if interest is required to be line 13, if applicable. depreciable property are not

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includible in income but must be used • The ratable portion of any net property produced or acquired for to reduce the basis of the assets. See positive section 481(a) adjustment. resale. section 1385(b) and the related See Section 481(a) adjustment, The costs required to be regulations. earlier. capitalized under section 263A are • Part or all of the proceeds received 5. Amounts received (or the stated not deductible until the property (to from certain cooperative-owned life dollar value of qualified per-unit retain which the costs relate) is sold, used, insurance contracts issued after certificates received) from the sale or or otherwise disposed of by the August 17, 2006. See section 101(j) redemption of nonqualified per-unit cooperative. The cooperative for details. Form 8925, Report of retain certificates. recovers these costs through Employer-Owned Life Insurance 6. Per-unit retain allocations depreciation, amortization, or costs of Contracts, may also be required. See received (except nonqualified per-unit goods sold. Form 8925 and its instructions. retain certificates). See section 1385. • Income from cancellation of debt Note. A small business taxpayer Note. Payments from the Commodity (COD) for the repurchase of a debt (defined earlier) is not required to Credit Corporation to a farmers' instrument for less than its adjusted capitalize costs under section 263A. A cooperative for certain expenses of issue price. small business taxpayer that wants to the co-op's farmers-producers under • The cooperative's share of the discontinue capitalizing costs under a “reseal” program of the U.S. following income from Form 8621, section 263A must change its method Department of Agriculture are Information Return by a Shareholder of accounting. See section 263A(i) patronage-source income that may of a Passive Foreign Investment and the Instructions for Form 3115. give rise to patronage dividends under Company or Qualified Electing Fund. Also, see Pub. 538. section 1382(b)(1). 1. Ordinary earnings of a qualified For more information on the uniform Other. Examples of other income to electing fund (QEF). capitalization rules, see Pub. 538. report on line 9 include the following. 2. Gain or loss from marking Also, see Regulations sections • Recoveries of bad debts deducted passive foreign investment company 1.263A-1 through 1.263A-3. For more in prior years under the specific (PFIC) stock to market. information on non-small business charge-off method. taxpayers, see Regulations section 3. Gain or loss from sale or other 1.263A-4 . For rules for property • The amount included in income disposition of section 1296 stock. from Form 6478, Biofuel Producer produced in a farming business, see 4. Excess distributions from a Credit. Pub. 225, Farmer's Tax Guide. section 1291 fund allocated to the • The amount included in income current year and pre-PFIC years, if Transactions between related tax- from Form 8864, Biodiesel and any. payers. Generally, an accrual basis Renewable Diesel Fuels Credit. taxpayer can only deduct business • Refunds of taxes deducted in prior See Form 8621 and the expenses and interest owed to a years to the extent they reduced the Instructions for Form 8621 for details. related party in the year payment is amount of tax imposed. See section • The amount of payroll tax credit included in the income of the related 111 and the related regulations. Do taken by an employer on its party. See sections 163(e)(3), 163(j), not offset current year taxes against employment tax returns (Forms 941, and 267(a)(2) for the limitations on any tax refunds. 943, and 944) for qualified paid sick deductions for unpaid interest and • Ordinary income from trade or and qualified paid family leave under expenses. business activities of a partnership FFCRA (both the nonrefundable and Limitations on business interest (from Schedule K-1 (Form 1065)). Do refundable portions). These amounts expense. Business interest expense not offset ordinary losses against must be included in gross income for is limited for tax years beginning after ordinary income. Instead, include the the tax year that includes the last day 2017. See section 163(j) and Form losses on line 23. Show the of the calendar quarter in which the 8990. Also, see Form 1120-C, partnership's name, address, and EIN credit is allowed. on a separate statement attached to Schedule K, Questions 17 and 18, this return. If the amount entered is Deductions later. from more than one partnership, Section 291 limitations. identify the amount from each Limitations on Deductions Cooperatives may be required to partnership. Section 263A uniform capitaliza- adjust deductions for depletion of iron • The transferred loss amount tion rules. The uniform capitalization ore and coal, intangible drilling, identified as "Section 91 Transferred rules of section 263A generally exploration and development costs, Loss Amount," which is required to be require cooperatives to capitalize, or and the amortizable basis of pollution recognized when substantially all the include in inventory, certain costs. control facilities. See section 291 to assets of a foreign branch are Cooperatives subject to the section determine the amount of the transferred to a specified 10%-owned 263A uniform capitalization rules are adjustment, later. foreign corporation (as defined in required to capitalize: Election to deduct business section 245A(b)) with respect to which start-up and organizational costs. the corporation was a U.S. 1. Direct costs of assets produced A cooperative can elect to deduct a shareholder immediately after the or acquired for resale, and limited amount of start-up and transfer. See section 91. 2. Certain indirect costs (including organizational costs it paid or taxes) that are properly allocable to

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incurred. Any remaining costs must closely held cooperatives (defined • Credit for employer social security generally be amortized over a later). and Medicare taxes paid on certain 180-month period. See sections 195 Generally, the two kinds of passive employee tips (Form 8846). and 248 and the related regulations. activities are: • Credit for small employer pension plan start-up costs (Form 8881). Time for making an election. • Trade or business activities in • Credit for employer-provided The cooperative generally elects to which the cooperative did not childcare facilities and services deduct start-up or organizational costs materially participate for the tax year, (Form 8882). by claiming the deduction on its and • Low sulfur diesel fuel production income tax return filed by the due date • Rental activities, regardless of its credit (Form 8896). (including extensions) for the tax year participation. • Mine rescue team training credit in which the active trade or business Cooperatives subject to the (Form 8923). begins. However, for start-up or passive activity limitations must • Credit for employer differential organizational costs paid or incurred complete Form 8810 to compute their wage payments (Form 8932). before September 9, 2008, the allowable passive activity loss and • Credit for small employer health cooperative is required to attach a credit. Before completing Form 8810, insurance premiums (Form 8941). statement to its return to elect to see Temporary Regulations section • Employer credit for paid family and deduct such costs. For more details, 1.163-8T, which provides rules for medical leave (Form 8994). including special rules for costs paid allocating interest expense among or incurred before September 9, 2008, activities. If a passive activity is also If the cooperative has any of the see the Instructions for Form 4562. subject to the at-risk rules of section credits listed above, figure the current Also, see Pub. 535, Business 465, or the tax-exempt use loss rules year credit before figuring the Expenses. of section 470, those rules apply deduction for expenses on which the credit is based. If the cooperative If the cooperative timely filed its before the passive loss rules. capitalized any costs on which it return for the year without making an For more information, see section figured the credit, it may need to election, it can still make an election 469, the related regulations, and Pub. reduce the amount capitalized by the by filing an amended return within 6 925, Passive Activity and At-Risk credit attributable to these costs. months of the due date of the return Rules. (excluding extensions). Clearly See the instructions for the form Closely held cooperatives. A indicate the election on the amended used to figure the applicable credit for cooperative is “closely held” (as return and write “Filed pursuant to more details. defined in section 469(j)(1)) if at any section 301.9100-2” at the top of the time during the last half of the tax year Limitations on deductions related amended return. File the amended more than 50% in value of its to property leased to tax-exempt return at the same address the outstanding stock is owned, directly or entities. If a cooperative leases cooperative filed its original return. indirectly, by or for not more than five property to a governmental or other The election applies when figuring individuals. tax-exempt entity, the cooperative taxable income for the current tax year cannot claim deductions related to the and all subsequent years. Certain organizations are treated property to the extent that they as individuals for purposes of this test. The cooperative can choose to exceed the cooperative's income from See section 542(a)(2). For rules for forgo the elections above by the lease payments. This disallowed determining stock ownership, see affirmatively electing to capitalize its tax-exempt use loss can be carried section 544 (as modified by section start-up or organizational costs on its over to the next tax year and treated 465(a)(3)). income tax return filed by the due date as a deduction with respect to the (including extensions) for the tax year Reducing certain expenses for property for that tax year. See section in which the active trade or business which credits are allowable. If the 470(d) for exceptions. begins. cooperative claims certain credits, it Line 11. Compensation of may need to reduce the otherwise Note. The election to either amortize allowable deductions for expenses Officers or capitalize start-up costs is used to figure the credit. This applies Enter deductible officers' irrevocable and applies to all start-up to credits such as the following. compensation on line 11. Do not costs that are related to the trade or • Work opportunity credit (Form include compensation deductible business. 5884). elsewhere on the return, such as Report the deductible amount of • Employee retention credit (Form amounts included in cost of goods start-up and organizational costs and 5884-A). sold, elective contributions to a any amortization on line 23. For • Credit for increasing research section 401(k) cash or deferred amortization that begins during the activities (Form 6765). arrangement, or amounts contributed current tax year, complete and attach • Orphan drug credit (Form 8820). under a salary reduction SEP Form 4562, Depreciation and • Disabled access credit agreement or a SIMPLE IRA plan. Amortization. (Form 8826). If the cooperative's total receipts • Empowerment zone employment Passive activity limitations. (line 1a plus lines 4 through 9) are credit (Form 8844). Limitations on passive activity losses $500,000 or more, complete Form • Indian employment credit (Form and credits under section 469 apply to 1125-E, Compensation of Officers. On 8845).

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Form 1120-C, enter on line 11 the And the Do not reduce the amount from Form 1125-E, line 4. vehicle's FMV cooperative’s deduction for on the first day social security and Medicare Line 12. Salaries and Wages of the lease taxes by the following amounts Enter the total salaries and wages The lease term began: exceeded: claimed on the its employment tax paid for the tax year. Do not include Cars (excluding Trucks returns: (1) the nonrefundable and salaries and wages deductible and Vans) refundable portions of the CARES Act elsewhere on the return, such as After 12/31/17 but before employee retention credit (ERC), and amounts included in officers' 1/1/21 ...... $50,000 (2) the nonrefundable and refundable compensation, cost of goods sold, After 12/31/12 but before portions of the FFCRA credits for elective contributions to a section 1/1/18 ...... $19,000 qualified sick and family leave wages. 401(k) cash or deferred arrangement, After 12/31/07 but before Instead, item (1) reduces the or amounts contributed under a salary 1/1/13 ...... $18,500 deductions for compensation of reduction SEP agreement or a Trucks and Vans officers and salaries and wages on SIMPLE IRA plan. After 12/31/17 but before lines 11 and 12, and item (2) must be If the cooperative provided taxable 1/1/21 ...... $50,000 reported as income on line 9. fringe benefits to its employees, such After 12/31/13 but before as personal use of a car, do not 1/1/18 ...... $19,500 Line 16. Interest deduct as wages the amount After 12/31/09 but before 1/1/14 ...... $19,000 Note. Do not offset interest income allocated for depreciation and other against interest expense. expenses claimed on lines 18 and 23. After 12/31/08 but before 1/1/10 ...... $18,500 The cooperative must make an If the cooperative claims a After 12/31/07 but before interest allocation if the proceeds of a ! credit for any wages paid or 1/1/09 ...... $19,000 loan were used for more than one CAUTION incurred, it may need to purpose (for example, to purchase a reduce any corresponding deduction portfolio investment and to acquire an for officers' compensation and See Pub. 463, Travel, Gift, and Car interest in a passive activity). See salaries and wages. See Reducing Expenses, for instructions on figuring Temporary Regulations section certain expenses for which credits are the inclusion amount. The inclusion 1.163-8T for the interest allocation allowable, earlier. amount for lease terms beginning in rules. 2021 will be published in the Internal Also, reduce the amounts Revenue Bulletin in early 2021. Do not deduct the following deducted as compensation of interest. officers and salaries and Line 15. Taxes and Licenses • Interest on indebtedness incurred wages by the nonrefundable and Enter taxes paid or accrued during the or continued to purchase or carry refundable portions of the new tax year, but do not include the obligations if the interest is wholly CARES Act employee retention credit following. exempt from income tax. For claimed on the corporation's • Federal income taxes. exceptions, see section 265(b). employment tax return(s). • Foreign or U.S. possession income • For cash basis taxpayers, prepaid taxes if a foreign tax credit is claimed. interest allocable to years following Line 13. Bad Debts • Taxes not imposed on the the current tax year. For example, a Enter the total debts that became cooperative. cash basis calendar year taxpayer worthless in whole or in part during • Taxes, including state or local sales who in 2020 prepaid interest allocable the tax year. A cooperative that uses taxes, that are paid or incurred in to any period after 2020 can deduct the cash method of accounting cannot connection with an acquisition or only the amount allocable to 2020. claim a bad debt deduction unless the disposition of property (these taxes • Interest and carrying charges on amount was previously included in must be treated as part of the cost of straddles. Generally, these amounts income. the acquired property, or in the case must be capitalized. See section of a disposition, as a reduction in the 263(g). Line 14. Rents amount realized on the disposition). • Interest on debt allocable to the If the cooperative rented or leased a • Taxes assessed against local production of designated property by vehicle, enter the total annual rent or benefits that increase the value of the a cooperative for its own use or for lease expense paid or incurred during property assessed (such as for sale. The cooperative must capitalize the year. Also, complete Form 4562, paving, etc.). this interest. Also, capitalize any Part V. If the cooperative leased a • Taxes deducted elsewhere on the interest on debt allocable to an asset vehicle for a term of 30 days or more, return, such as those reflected in cost used to produce the property. See the deduction for vehicle lease of goods sold. section 263A(f) and Regulations expense may have to be reduced by See section 164(d) for the rule on sections 1.263A-8 through 1.263A-15 an amount includible in income called apportionment of taxes on real for definitions and more information. the inclusion amount. The cooperative property between the seller and • Interest paid or incurred on any may have an inclusion amount if: purchaser. portion of an underpayment of tax that is attributable to an understatement arising from an undisclosed listed transaction or an undisclosed

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reportable avoidance transaction deduction on Schedule C, line 15, conservation contributions can be (other than a listed transaction) column (c). carried over to the next 15 years, entered into in tax years beginning • The limitation under section 249 on subject to the 100% limitation. See after October 22, 2004. the deduction for bond premium. section 170(b)(2)(B) and (C). • Any net operating loss (NOL) Special rules apply to: Temporary suspension of limita- carryback to the tax year under Forgone interest on certain tions on certain contributions. The • section 172. below-market-rate loans (see section CARES Act allows a cooperative to • Any capital loss carryback to the tax 7872). elect to deduct qualified cash year under section 1212(a)(1). Original issue discount (OID) on contributions without regard to the • • Any deduction for income certain high yield discount obligations. 10% taxable income limit. Qualified attributable to domestic production See section 163(e)(5) to determine contributions are any qualified activities of specified agricultural or the amount of the deduction for OID contributions that were made during horticultural cooperatives under that is deferred and the amount that is calendar year 2020 or 2021 to an section 199A(g). disallowed on a high yield discount organization described in section obligation. The rules under section Carryover. Charitable contributions 170(b)(1)(A) (other than certain 163(e)(5) do not apply to certain high over the 10% limitation (or the 25% private foundations described in yield discount obligations issued after limitation, if elected, see below) section 509(a)(3) or donor-advised August 31, 2008, and before January cannot be deducted for the tax year funds described in section 4966(d) 1, 2011. See section 163(e)(5)(F). but can be carried over to the next 5 (2)). The total amount of the Also, see Notice 2010-11, 2010-4 tax years. See the exception below for contribution claimed cannot exceed I.R.B. 326. farmers and ranchers and certain 25% of the excess of the • Interest allocable to unborrowed Native Corporations. cooperative's taxable income (as policy cash values of life insurance, Special rules apply if the computed above substituting “25%” endowment, or annuity contracts cooperative has an NOL carryover to for “10%” ) over all other allowable issued after June 8, 1997. See section the tax year. In figuring the charitable charitable contributions. Contributions 264(f). Attach a statement showing contributions deduction for the current over the 25% limitation cannot be the computation of the deduction. tax year, the 10% limit is applied using deducted for the tax year, but can be carried over to the next 5 tax years. Line 17. Charitable the taxable income after taking into account any deduction for the NOL. Contributions Temporary suspension of 10% lim- To figure the amount of any itation for certain disaster-related Enter contributions or gifts actually remaining NOL carryover to later contributions. A cooperative may paid within the tax year to or for the years, taxable income must be elect to deduct qualified cash use of charitable and governmental modified (see section 172(b)). To the contributions without regard to the organizations described in section extent that contributions are used to 10% taxable income limit. Qualified 170(c) and any unused contributions reduce taxable income for this contributions are any charitable carried over from prior years. Special purpose and increase an NOL contributions that were made after rules and limits apply to contributions carryover, a contributions carryover is December 31, 2019, and before to organizations conducting lobbying not allowed. See section 170(d)(2)(B). February 26, 2021, to an organization activities. See section 170(f)(9). described in section 170(b)(1)(A) Suspension of 10% limitation for (other than certain private foundations Cooperatives reporting taxable farmers and ranchers and certain described in section 509(a)(3) or income on the accrual method can Native Corporations. Certain donor-advised funds described in elect to treat as paid during the tax cooperatives can deduct contributions section 4966(d)(2)) for relief efforts in year any contributions paid by the due of qualified conservation property one or more qualified disaster areas. date for filing the cooperative’s return without regard to the general 10% The cooperative must obtain (not including extensions), if the limit. This applies to: contemporaneous written contributions were authorized by the A qualified farmer or rancher (as • acknowledgment (within the meaning board of directors during the tax year. defined in section 170(b)(1)(E)(v)) of section 170(f)(8)) from the qualified Attach a declaration to the return that does not have publicly traded charitable organization that the stating that the resolution authorizing stock; and contribution was used or is to be used the contributions was adopted by the A Native Corporation (as defined in • for disaster relief efforts. board of directors during the tax year. section 170(b)(2)(C)(iii)) that The declaration must include the date contributes property which was land The total amount of the contribution the resolution was adopted. conveyed under the Alaska Native claimed for disaster relief efforts Limitation on deduction. Generally, Claims Settlement Act. cannot exceed 100% of the excess of the cooperative's taxable income (as the total amount claimed cannot be The total amount of the contribution computed above substituting "100%" more than 10% of taxable income claimed for the qualified conservation for "10%" ) over all other allowable (line 27) computed without regard to property cannot exceed 100% of the charitable contributions. Any excess the following. excess of the cooperative's taxable qualified contributions are carried over • Any deduction for contributions. income (as computed above to the next 5 years. • The special deductions on line 26b, substituting “100%” for “10%”) over all other than the section 965(c) other allowable charitable Cash contributions. For contributions. Any excess qualified contributions of cash, check, or other

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monetary gifts (regardless of the contribution of food during 2020 or be found at the Department of Labor amount), the cooperative must 2021 to which section 170(e)(3)(C) website at www.efast.dol.gov. maintain a bank record, or a receipt, applies, a cooperative can deduct letter, or other written communication qualified contributions of up to 25% of Note. Form 5500 and Form 5500-SF from the donee organization indicating their aggregate net income from all must be filed electronically under the the name of the organization, the date trades or businesses from which the computerized ERISA Filing of the contribution, and the amount of contributions were made or up to 25% Acceptance System (EFAST2). For the contribution. of their taxable income. more information, see the EFAST2 website at www.efast.dol.gov. Contributions of $250 or more. A For more information on charitable cooperative can deduct a contribution contributions, including substantiation Form 5500-EZ. Annual Return of of $250 or more only if it gets a written and recordkeeping requirements, see One-Participant (Owners/Partners acknowledgment from the donee section 170 and the related and Their Spouses) Retirement Plan organization that shows the amount of regulations, and Pub. 526. For special or a Foreign Plan. File this form for a cash contributed, describes any rules that apply to corporations, see plan that only covers the owner (or the property contributed (but not its Pub. 542. owner and his or her spouse) or a foreign plan that is required to file an value), and either gives a description Line 18. Depreciation and a good faith estimate of the value annual return and does not file the of any goods or services provided in Include on line 18 depreciation and annual return electronically on Form return for the contribution or states the cost of certain property that the 5500-SF. See the Instructions for that no goods or services were cooperative elected to expense under Form 5500-EZ. provided in return for the contribution. section 179 from Form 4562. Include amounts not claimed on Form 1125-A Line 21. Employee Benefit The acknowledgment must be Programs obtained by the due date (including or elsewhere on the return. See Form extensions) of the cooperative's 4562 and the Instructions for Form Enter contributions to employee return, or, if earlier, the date the return 4562. benefit programs not claimed is filed. Do not attach the Line 20. Pension, elsewhere on the return (for example, insurance or health and welfare acknowledgment to the tax return, but Profit-Sharing, etc., Plans keep it with the cooperative's records. programs) that are not an incidental Enter the deduction for contributions part of a pension, profit-sharing, etc., Contributions of property other to qualified pension, profit-sharing, or plan included on line 20. than cash. If a cooperative other funded deferred compensation contributes property other than cash plans. Generally, employers who Line 22. Section 199A(g) and claims over a $500 deduction for maintain such a plan must file one of Deduction the property, it must attach a the forms listed below unless exempt This deduction applies only to statement to the return describing the from filing under regulations or other specified agricultural and kind of property contributed and the applicable guidance, even if the plan ! CAUTION horticultural cooperatives method used to determine its fair is not a qualified plan under the (specified cooperatives). market value (FMV). Complete and Internal Revenue Code. The filing attach Form 8283, Noncash requirement applies even if the Specified agricultural or horticultural Charitable Contributions, for cooperative does not claim a cooperatives (specified cooperatives) contributions of property (other than deduction for the current tax year. to which Part I of subchapter T applies money) if the total claimed deduction There are penalties for failure to file may qualify for a deduction under for all property contributed was more these forms timely and for overstating section 199A(g). A specified than $5,000. Special rules apply to the the pension plan deduction. See cooperative is a cooperative that contribution of certain property. See sections 6652(e) and 6662(f). Also, markets or is engaged in the the Instructions for Form 8283. see the instructions for the applicable manufacturing, production, growth or Qualified conservation form. extraction of agricultural or contributions. Special rules apply to Form 5500. Annual Return/Report of horticultural products. Specified qualified conservation contributions, Employee Benefit Plan. cooperatives that qualify under including contributions of certain section 521 are considered “exempt” Form 5500-SF. Short Form Annual easements on buildings located in a cooperatives. All other specified Return/Report of Small Employee registered historic district. See section cooperatives are considered Benefit Plan. File this form instead of 170(h) and Pub. 526, Charitable “nonexempt.” Special rules apply to Form 5500, generally if there were Contributions. specified cooperatives with both under 100 participants at the patronage and nonpatronage income Other special rules. The beginning of the plan year. If you are a and losses. cooperative must reduce its deduction small plan (generally under 100 for contributions of certain capital gain participants at the beginning of the A specified cooperative's section property. See sections 170(e)(1) and plan year), you may be eligible to file 199A(g) deduction generally equals 170(e)(5). the Form 5500-SF instead of the Form the lesser of: A larger deduction is allowed for 5500. For more information, see the 1. 9% of qualified production certain contributions. See sections instructions to the Form 5500-SF. activity income (QPAI), or 170(e)(3) and (4). For any charitable Instructions and more information can 2. 9% of taxable income.

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Note. QPAI and taxable income are See Pub. 535 for details on other partnership's name, address, and EIN computed without regard to any deductions that may apply to on a separate statement attached to deductions for patronage dividends, cooperatives. this return. If the amount entered is per-unit retain allocations, or from more than one partnership, nonpatronage distributions under Examples of other deductions identify the amount from each section 1382(b) or (c). include the following. partnership. • Amortization. See Form 4562, Part • Any extraterritorial income A specified cooperative with VI. exclusion (from Form 8873). oil-related QPAI must also reduce the • Certain business start-up and • Any net negative section 481(a) deduction by 3% of the least of the organizational costs (discussed adjustment. See the instructions for following amounts. earlier under Election to deduct line 9. Oil-related QPAI. • business start-up and organizational • Dividends paid in cash on stock QPAI. • costs). held by an employee stock ownership Taxable income figured without the • • Certain costs of a qualified film, plan. deduction. television, or live theatrical production However, a deduction can only be commencing before January 1, 2026 The deduction shall not exceed taken for the dividends above if, (after December 31, 2015, and before 50% of the Form W-2 wages allocable according to the plan, the dividends January 1, 2026, for a live theatrical to domestic production gross receipts are: (DPGR) of the specified cooperative production). See section 181 and the 1. Paid in cash directly to the plan for the tax year. related regulations. participants or beneficiaries; Reporting the deduction. Specified Note. Certain film, television, or live 2. Paid to the plan, which cooperatives may use Form 8903, theatrical productions acquired and distributes them in cash to the plan Domestic Production Activities placed in service after September 27, participants or their beneficiaries no Deduction, to compute the section 2017 (for which a deduction would later than 90 days after the end of the 199A(g) deduction. Write “Specified have been allowable under section plan year in which the dividends are Cooperative Section 199A(g) 181 without regard to the dollar paid; deduction” across the top of Form limitation), are qualified property 3. At the election of such 8903. Form 8903 must be attached to eligible for the special depreciation participants or their beneficiaries (a) the cooperative's return. See the allowance under section 168(k). See payable as provided under (1) or (2) Instructions for Form 8903. the Instructions for Form 4562. above, or (b) paid to the plan and Alternatively, specified cooperatives Reforestation costs. The • reinvested in qualifying employer may create and attach a schedule cooperative can elect to deduct up to securities; or similar to Form 8903 to compute the $10,000 of qualifying reforestation section 199A(g) deduction. expenses for each qualified timber 4. Used to make payments on a loan described in section 404(a)(9). Further guidance. For tax years property. The cooperative can elect to beginning after January 19, 2021, amortize over 84 months any amount See section 404(k) for more details specified cooperatives should apply not deducted. See Pub. 535. and the limitation on certain the final regulations (T.D. 9947) • Depletion. See sections 613 and dividends. published January 19, 2021. 613A for percentage depletion rates applicable to natural deposits. Also, Do not deduct the following. However, a specified cooperative may • Amounts paid or incurred to, or at choose to apply the final rules to tax see section 291 for the limitation on the depletion deduction for iron ore the direction of, a government or years beginning on or before January governmental entity for the violation, 19, 2021, provided the cooperative and coal (including lignite). Attach Form T (Timber), Forest Activities or investigation or inquiry into the follows the rules in their entirety and in potential violation, of a law. See a consistent manner. Alternatively, the Schedule, if a deduction for depletion of timber is taken. See Pub. 535 for section 162(f) for more information cooperative may rely on the proposed and exceptions. regulations (REG-118425-18), more information on depletion. • Insurance premiums. • Any amount that is allocable to a published June 19, 2019, for tax years class of exempt income. See section beginning on or before January 19, • Legal and professional fees. • Repairs and maintenance 265(b) for exceptions. 2021, provided the cooperative • Lobbying expenses. However, see follows the proposed rules in their (discussed later). • Supplies used and consumed in the exceptions(discussed later). entirety and in a consistent manner. • Amounts paid or incurred for any For purposes of the W-2 Wage business. • Travel, meals, and entertainment settlement, payout, or attorney fees Limitation, also see Rev. Proc. related to sexual harassment or 2021-11, 2021-6 I.R.B. 833. expenses. Special rules apply (discussed later). sexual abuse, if such payments are Line 23. Other Deductions • Utilities. subject to a nondisclosure agreement. Attach a statement, listing by type and • Ordinary losses from trade or See section 162(q). amount, all allowable deductions that business activities of a partnership Repairs and maintenance. Include are not deductible elsewhere on Form (from Schedule K-1 (Form 1065)). Do the cost of repairs and maintenance 1120-C. Enter the total on not offset ordinary income against not claimed elsewhere on the return, line 23. ordinary losses. Instead, include the such as labor and supplies, that do income on line 9. Show the not add to the value of the property or

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appreciably prolong its life. See • Meals must not be lavish or recipient and reported on Form W-2, Regulations section 1.162-4. The extravagant, and Wage and Tax Statement, for an cooperative may elect to capitalize • An employee of the cooperative employee or on Form 1099-NEC, certain repair and maintenance costs must be present at the meal. For more Nonemployee Compensation, for an consistent with its books and records. information, see Pub. 535. independent contractor. See Regulations section 1.263(a)-3(n) See section 274(n)(3) for a special However, if the recipient is an for information on how to make the rule that applies to expenses for officer, director, beneficial owner election. meals consumed by individuals (directly or indirectly), or other New buildings, machinery, or subject to the hours of service limits of “specified individual” (as defined in permanent improvements that the Department of Transportation. section 274(e)(2)(B) and Regulations increase the value of the property are section 1.274-9(b)), special rules Qualified transportation fringes not deductible. They must be apply. See section 274(e)(2) and (QTFs). Generally, no deduction is depreciated or amortized. However, Regulations sections 1.274-9 and allowed for QTFs provided by amounts paid for routine maintenance 1.274-10. employers to their employees. QTFs on property, including buildings, may are defined in section 132(f)(1) and Lobbying expenses. Generally, be deductible. See Regulations include: lobbying expenses are not deductible. section 1.263(a)-3(i). • Transportation in a commuter These expenses include amounts Travel, meals, and entertainment. highway vehicle between the paid or incurred in connection with: Subject to limitations and restrictions employee's residence and place of • Influencing legislation, or discussed below, a cooperative can employment, • Any communication with certain deduct ordinary and necessary travel, • Any transit pass, and federal executive branch officials in an meals, and nonentertainment • Qualified parking. attempt to influence the official actions expenses paid or incurred in its trade See section 274, Pub. 15-B, and Pub. or positions of the officials. See or business. Generally, entertainment 535 for more information. Regulations section 1.162-29 for the expenses, membership dues, and definition of “influencing legislation.” facilities used in connection with these Membership dues. The cooperative can deduct amounts paid Dues and other similar amounts activities cannot be deducted. paid to certain tax-exempt Generally, no deduction is allowed for or incurred for membership dues in civic or public service organizations, organizations may not be deductible. qualified transportation fringe If certain in-house expenditures do benefits. Also, special rules apply to professional organizations (such as bar and medical associations), not exceed $2,000, they are deductions for gifts and convention deductible. See section 162(e)(4)(B). expenses. See section 274, Pub. 463, business leagues, trade associations, and Pub. 535 for details. chambers of commerce, boards of Line 25a. Taxable Income trade, and real estate boards. Before Adjustments and Travel. The cooperative cannot However, no deduction is allowed if a Special Deductions deduct travel expenses of any principal purpose of the organization individual accompanying a is to entertain, or provide At-risk rules. Generally, special cooperative officer or employee, entertainment facilities for members at-risk rules under section 465 apply including a spouse or dependent of or their guests. In addition, to closely held cooperatives (see the officer or employee, unless: cooperatives cannot deduct Passive activity limitations., earlier) • That individual is an employee of membership dues in any club engaged in any activity as a trade or the cooperative, and organized for business, pleasure, business or for the production of • His or her travel is for a bona fide recreation, or other social purpose. income. These cooperatives may business purpose and would This includes country clubs, golf and have to adjust the amount on line 25a. otherwise be deductible by that athletic clubs, airline and hotel clubs, (See below.) individual. and clubs operated to provide meals A taxpayer is generally considered under conditions favorable to Meals. Generally, the cooperative “at-risk” for an amount equal to his or business discussion. can deduct only 50% of the amount her investment in the entity. That otherwise allowable for Entertainment facilities. The investment consists of money and nonentertainment related meal cooperative cannot deduct an other property contributed to the entity expenses paid or incurred in its trade expense paid or incurred for a facility and amounts borrowed on behalf of or business. However, the (such as a yacht or hunting lodge) the entity. cooperative can deduct 100% of used for an activity usually considered The at-risk rules do not apply to: business meal expenses for food and entertainment, amusement, or • Holding real property placed in beverages provided by a restaurant. recreation. service by the cooperative before This applies only to amounts paid or 1987; Amounts treated as incurred after December 31, 2020. Equipment leasing under sections compensation. Generally, the • 465(c)(4), (5), and (6); or Meals not separately stated from cooperative may be able to deduct Any qualifying business of a entertainment are generally not otherwise nondeductible • qualified cooperative under section deductible. In addition (subject to entertainment, amusement, or 465(c)(7). exceptions under section 274(k)(2)): recreation expenses if the amounts are treated as compensation to the

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However, the at-risk rules do apply cooperative's taxable income (after the alternative tax election was made. to the holding of mineral property. special deductions). Attach a See section 1358(b)(2). statement showing the computation of If the at-risk rules apply, adjust the For more details on the NOL amount on this line for any section the NOL deduction. Also, complete Schedule K, Item 12, if applicable. deduction, see section 172 and 465(d) losses. These losses are Instructions for Form 1139. limited to the amount for which the The cooperative must attach a cooperative is at risk for each Line 26b. Special Deductions statement separately accounting for separate activity at the close of the tax patronage and nonpatronage-sourced See the instructions for Schedule C. year. If the cooperative is involved in NOLs. Then, complete Schedule C and enter one or more activities, any of which on line 26b the amount from incurs a loss for the year, report the Note. Patronage-sourced NOLs Schedule C, line 24. losses for each activity separately. cannot be used to reduce Line 26c. Total NOL and Special Attach Form 6198, At-Risk nonpatronage-sourced taxable Limitations, showing the amount at income. Deductions risk and gross income and deductions Combine lines 26a and 26b and enter for the activities with the losses. The following special rules apply. the result on line 26c. If the cooperative sells or otherwise • If an ownership change (described disposes of an asset or its interest in section 382(g)) occurs, the amount Tax, Refundable Credits, (either total or partial) in an activity to of the taxable income of a loss and Payments which the at-risk rules apply, cooperative that may be offset by the determine the net profit or loss from pre-change NOL carryovers may be Line 27. Taxable Income the activity by combining the gain or limited. See section 382 and the See Schedule K, Question 14, to loss on the sale or disposition with the related regulations. A loss cooperative determine if the cooperative needs to profit or loss from the activity. If the must include the information complete Schedule G. Taxable cooperative has a net loss, the loss statement as provided in Regulations income reported on line 27 cannot be may be limited because of the at-risk section 1.382-11(a) with its income less than the nonpatronage taxable rules. tax return for each tax year that it is a income shown on Schedule G, loss cooperative in which an Treat any loss from an activity not line 10, column b. ownership shift, equity structures shift, allowed for the current tax year as a or other transaction described in Patronage source losses deduction allocable to the activity in Temporary Regulations section ! cannot be used to offset the next tax year. CAUTION 1.382-2T(a)(2)(i) occurs. If the nonpatronage income. See Cooperatives are required to cooperative makes the the instructions for Schedule G. allocate income and deductions closing-of-the-books election, see Minimum taxable income. The between patronage and Regulations section 1.382-6(b). nonpatronage-related business. cooperative's taxable income cannot The limitations under section 382 Cooperatives with gross receipts and be less than the inversion gain of the do not apply to certain ownership assets of $250,000 or more must cooperative for the tax year, if the changes after February 17, 2009, complete Schedule G. See the cooperative is an expatriated entity or made according to a restructuring instructions for Schedule G. a partner in an expatriated entity. See plan under the Emergency Economic section 7874(a). Line 25b. Deductions and Stabilization Act of 2008. See section Adjustments From 382(n). Net operating loss (NOL). If line 27 (figured without regard to the For guidance in applying section Schedule H minimum taxable income rule stated 382 to loss cooperatives whose Complete Schedule H. Enter on above) is zero or less, the cooperative instruments were acquired by line 25b the amount from Schedule H, may have an NOL that can be carried Treasury under certain programs line 5. See the instructions for back or forward as a deduction to under the Emergency Economic Schedule H. other tax years. Stabilization Act of 2008, see Notice Line 25c. Taxable Income 2010-2, 2010-2 I.R.B. 251. NOLs incurred in tax years Before Net Operating Loss and • If a cooperative acquires control of beginning in 2018, 2019, and 2020 Special Deductions another cooperative (or acquires its can be carried back 5 years preceding assets in a reorganization), the the year of the loss. For NOLs that Subtract line 25b from line 25a and can be carried back, the cooperative enter the result on line 25c. amount of pre-acquisition losses that may offset recognized built-in gain can elect to waive the carryback Line 26a. Net Operating Loss may be limited (see section 384). period and instead carry the NOL Deduction • If a cooperative elects the forward to future tax years. A cooperative can use the NOL alternative tax on qualifying shipping See Special rules for farming loss incurred in one tax year to reduce its activities under section 1354, no NOLs, below. See the instructions for taxable income in another tax year. deduction is allowed for an NOL Schedule K, Item 12 for information Enter on line 26a the total NOL attributable to the qualifying shipping on making the election to waive the carryovers from other tax years, but activities to the extent that the loss is entire carryback period for 2020. See do not enter more than the carried forward from a tax year the Instructions for Form 1139 for preceding the first tax year for which other special rules and elections.

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Special rules for farming loss Line 30d. Net Tax Payments include the amount withheld in the NOLs. If the cooperative has an NOL Combine lines 30a through 30c and total for line 30j. Enter the amount from a farming loss (as defined in enter the result on line 30d. withheld and the words “Backup section 172(b)(1)(B)(ii)) for a tax year withholding” in the blank space above beginning in 2018, 2019, or 2020, the Line 30f line 30j. cooperative can elect to disregard the Credit from Form 2439. Enter any Line 31. Estimated Tax Penalty amendments made by the CARES credit from Form 2439, Notice to Act, section 2303(a) and (b). Generally, the cooperative does not Shareholder of Undistributed have to file Form 2220 because the Merchant Marine capital construc- Long-Term Capital Gains, for the IRS can figure the penalty amount, if tion fund. To take a deduction for cooperative's share of the tax paid by any, and bill the cooperative. amounts contributed to a capital a regulated investment company However, even if the cooperative construction fund (CCF), reduce the (RIC) or a real estate investment trust does not owe the penalty, it must amount that would otherwise be (REIT) on undistributed long-term complete and attach Form 2220 if: entered on line 27 by the amount of capital gains included in the • The annualized income or adjusted the deduction. On the dotted line next cooperative's income. Attach Form seasonal installment method is used, to the entry space, enter “CCF” and 2439. or the amount of the deduction. For more Credit for federal tax on fuels. • The cooperative is a large information, see section 7518. Enter the total income tax credit corporation (as defined in the Line 29 claimed on Form 4136, Credit for Instructions for Form 2220) computing Complete and attach Form 965-B. Federal Tax Paid on Fuels. Attach its first required installment based on Enter the amount from Form 965-B, Form 4136. the prior year's tax. See the Instructions for Form 2220. Part II, column (k), line 4, on Form Credit for tax on ozone-depleting 1120-C, line 29. chemicals. Include on line 30f any If Form 2220 is attached, check the box on line 31, and enter any penalty Line 30a. 2019 Overpayment credit the cooperative is claiming under section 4682(g)(2) for tax on on this line. Credited to 2020 ozone-depleting chemicals. Enter Line 32. Amount Owed Enter the amount of overpayment “ODC” next to the entry space. credited to 2020 from the tax return If the cooperative cannot pay the full filed for 2019. Line 30g amount of tax owed, it can apply for Reserved for future use. an installment agreement online. The Line 30b. Estimated Tax cooperative can apply for an Payments Line 30h. Section 1383 installment agreement online if: Enter any estimated tax payments the Adjustment • It cannot pay the full amount shown cooperative made for the tax year. If the cooperative would pay less total on line 32, tax by claiming the deduction for the • The total amount owed is $25,000 Beneficiaries of trusts. If the redemption of nonqualified written or less, and cooperative is the beneficiary of a notices of allocation or nonqualified • The cooperative can pay the liability trust, and the trust makes a section per-unit retain certificates in the issue in full in 24 months. 643(g) election to credit its estimated year versus the current tax year, tax payments to its beneficiaries, To apply using the Online Payment refigure the tax for the years the include the cooperative's share of the Agreement Application, go to IRS.gov/ nonqualified written notices or payment in the total for line 30b. Enter OPA. Under an installment certificates were originally issued “T” and the amount of the payment in agreement, the cooperative can pay (deducting them in the issue year), the shaded space beside line 30b. what it owes in monthly installments. then enter the amount of the reduction There are certain conditions that must Line 30c. Overpaid Estimated in the issue years' taxes on this line. be met to enter into and maintain an Tax Attach a statement showing how the installment agreement, such as adjustment was figured. This If the cooperative overpaid estimated paying the liability within 24 months adjustment is treated as a payment, tax, it may be able to get a quick and making all required deposits and and any amount that is more than the refund by filing Form 4466. The timely filing tax returns during the tax on line 28 will be refunded. overpayment must be at least 10% of length of the agreement. If the the cooperative's expected income Line 30j. Total Payments, installment agreement is accepted, tax liability and at least $500. File Refundable Credits, Section the cooperative will be charged a fee and it will be subject to penalties and Form 4466 after the end of the 1383 Adjustments, and Net 965 cooperative's tax year, and no later interest on the amount of tax not paid Tax Liability than the due date for filing the by the due date of the return. cooperative’s tax return. Form 4466 Add the amounts on lines 30d through Line 34. Refund must be filed before the cooperative 30i and enter the total on line 30j. Enter the amount of any overpayment files its tax return. See the instructions Backup withholding. If the that should be refunded or applied to for Form 4466. cooperative had federal income tax next year's estimated tax. withheld from any payments it received because, for example, it Note. This election to apply some or failed to give the payer its correct EIN, all of the overpayment amount to the

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cooperative's 2021 estimated tax deduction and certain dividends of reduced by a percentage that is cannot be changed at a later date. Federal Home Loan Banks. See related to the amount of debt incurred Direct deposit of refund. If the section 246(a)(2). to acquire the stock. See section cooperative has a refund of $1 million • Dividends (except those received 246A. Also, see section 245(a) before or more and wants it directly on debt-financed stock acquired after making this computation for an deposited into its checking or savings July 18, 1984) from a RIC. The additional limitation that applies to account at any U.S. bank or other amount of dividends eligible for the certain dividends received from financial institution instead of having a dividends-received deduction under foreign corporations. Attach a check sent to the cooperative, section 243 is limited by section statement to Form 1120-C showing complete Form 8302 and attach it to 854(b). The cooperative should how the amount on line 3, column (c), the cooperative's tax return. receive a notice from the RIC was figured. specifying the amount of dividends that qualify for the deduction. Line 4, Column (a) Schedule C. Enter dividends received on preferred Report so-called dividends or stock of a less-than-20%-owned Dividends, Inclusions, and earnings received from mutual public utility that is subject to income Special Deductions savings banks, etc., as interest. Do tax and is allowed the 23.3% not treat them as dividends. deduction provided in sections 244 Note. Do not report income from Line 2, Column (a) and 247 (as affected by P.L. 113-295, patronage dividends on Schedule C. Div. A, section 221(a)(41)(A), Dec. 19, Enter on line 2: Report income from patronage 2014, 128 Stat. 4043) for dividends Dividends (except those received dividends and per-unit retain • paid. allocations on page 1, line 9. on certain debt-financed stock For purposes of the 20% ownership acquired after July 18, 1984) that are Line 5, Column (a) test on lines 1 through 7, the received from 20%-or-more-owned Enter dividends received on preferred percentage of stock owned by the domestic corporations subject to stock of a 20%-or-more-owned public cooperative is based on voting power income tax and that are subject to the utility that is subject to income tax and and value of the stock. Preferred 65% deduction under section 243(c), is allowed the 26.7% deduction stock described in section 1504(a)(4) and provided in sections 244 and 247 (as is not taken into account. • Taxable distributions from an affected by P.L. 113-295, Div. A, IC-DISC or former DISC that are Consolidated returns. section 221(a)(41)(A), Dec. 19, 2014, considered eligible for the 65% 128 Stat. 4043) for dividends paid. Cooperatives filing a consolidated deduction. return should see Regulations Line 6, Column (a) Line 3, Column (a) sections 1.1502-13, 1.1502-26, and Enter the U.S.-source portion of 1.1502-27 before completing Enter the following. dividends that: Schedule C. • Dividends received on certain • Are received from Cooperatives filing a consolidated debt-financed stock acquired after less-than-20%-owned foreign return must not report as dividends on July 18, 1984, from domestic and corporations, and Schedule C any amounts received foreign corporations subject to income • Qualify for the 50% deduction from corporations within the tax that would otherwise be subject to under section 245(a). To qualify for consolidated group. Such dividends the dividends-received deduction the 50% deduction, the cooperative are eliminated in consolidation rather under section 243(a)(1), 243(c), or must own at least 10% of the stock of than offset by the dividends-received 245(a). Generally, debt-financed the foreign corporation by vote and deduction. stock is stock that the cooperative value. acquired by incurring a debt (for Line 1, Column (a) example, it borrowed money to buy Also, include dividends received Enter dividends (except those the stock). from a less-than-20%-owned foreign received on certain debt-financed • Dividends received from a RIC on sales corporation (FSC) that: stock acquired after July 18, 1984— debt-financed stock. The amount of • Are attributable to income treated see section 246A) that are: dividends eligible for the as effectively connected with the • Received from dividends-received deduction is conduct of a trade or business within less-than-20%-owned domestic limited by section 854(b). The the United States (excluding foreign corporations subject to income tax, cooperative should receive a notice trade income), and and from the RIC specifying the amount of • Qualify for the 50% deduction • Qualified for the 50% deduction dividends that qualify for the under section 245(c)(1)(B). under section 243(a)(1). deduction. Line 7, Column (a) Also, include in line 1 the following. Line 3, Columns (b) and (c) Enter the U.S.-source portion of • Taxable distributions from an Dividends received on certain dividends that: interest charge domestic international debt-financed stock acquired after • Are received from sales corporation (IC-DISC) or former July 18, 1984, are not entitled to the 20%-or-more-owned foreign domestic international sales full 50% or 65% dividends-received corporations, and corporation (former DISC) that are deduction under section 243 or • Qualify for the 65% deduction designated as eligible for the 50% 245(a). The 50% or 65% deduction is under sections 245(a) and 243.

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Also, include dividends received Investment Act of 1958 at the time it Worksheet for Schedule C, line 9 from a 20%-or-more-owned FSC that: (keep for your records) received the dividends. Are attributable to income treated • Line 11, Columns (a) and (c) as effectively connected with the 1. Refigure Form 1120-C, page conduct of a trade or business within 1, line 25a, without any Enter only dividends that qualify under the United States (excluding foreign deduction under section section 243(b) for the 100% trade income), and 199A, any adjustment under dividends-received deduction • Qualify for the 65% deduction section 1059, and without any described in section 243(a)(3). under section 245(c)(1)(B). capital loss carryback to the Cooperatives taking this deduction tax year under section 1212(a) are subject to the provisions of section Line 8, Column (a) (1) ...... 1561. 2. Complete lines 10, 11, 12, 13, Enter dividends received from wholly and 15, column (c) and enter The 100% deduction does not owned foreign subsidiaries that are the total ...... eligible for the 100% deduction under apply to affiliated group members that 3. Subtract line 2 from are joining in the filing of a section 245(b). line 1 ...... 4. Multiply line 3 by 65% consolidated return. In general, the deduction under (0.65) ...... Line 12, Columns (a) and (c) section 245(b) applies to dividends 5. Add lines 2, 5, 7, and 8, paid out of the earnings and profits of column (c) and the part of the Enter in column (a) dividends from a foreign corporation for a tax year deduction on line 3, column FSCs that are attributable to foreign during which: (c), that is attributable to trade income and that are eligible for • All of its outstanding stock is dividends received from the 100% deduction provided in 20%-or-more-owned section 245(c)(1)(A). directly or indirectly owned by the domestic cooperative receiving the corporations ...... 6. Enter the smaller of line 4 or For cooperatives described in dividends, and line 5. If line 5 is greater than section 1381 that are engaged in the • All of its gross income from all line 4, stop here; enter the marketing of agricultural or sources is effectively connected with amount from line 6 on line 9, horticultural products and are the conduct of a trade or business column (c). Do not complete shareholders in a FSC, multiply the the rest of this within the United States. total dividends reported in column (a) worksheet ...... 16 Line 9, Column (c) 7. Enter the total amount of by /23 (or, 0.6957) for the exempt Generally, line 9, column (c), cannot dividends received from portion of the dividends that are exceed the amount from the 20%-or-more-owned attributable to foreign trade income, worksheet below. However, in a year corporations that are included and enter the amount in column (c). on lines 2, 3, 5, 7, and 8, in which an NOL occurs, this limitation See sections 245(c)(2) and 923(a)(4) column (a) ...... (repealed by Pub. L. 106-519, section does not apply even if the loss is 8. Subtract line 7 from created by the dividends-received 2, Nov. 15, 2000) for additional line 3 ...... information. deduction. See sections 172(d) and 9. Multiply line 8 by 50% 246(b). (0.50) ...... Line 13, Column (a) 10. Subtract line 5 from line 9, column (c) ...... Enter the foreign-source portion of 11. Enter the smaller of line 9 or dividends that: line 10 ...... • Are received from a specified 12. Dividends-received 10%-owned foreign corporation (as deduction after limitation defined in section 245A(b)), including (section 246(b)). Add lines 6 gain from the sale of stock of a foreign and 11. Enter the result here corporation that is treated as a and on line 9, column dividend under section 1248(a) and (c) ...... (j); and • Qualify for the section 245A Line 10, Columns (a) and (c) deduction. Small business investment Line 14, Column (a) companies operating under the Small Enter foreign dividends not reportable Business Investment Act of 1958 must on lines 3, 6, 7, 8, 11, 12, or 13 of enter dividends that are received from column (a). domestic corporations subject to income tax even though a deduction Include on line 14 the is allowed for the entire amount of foreign-source portion of any dividend those dividends. To claim the 100% that does not qualify for the section deduction on line 10, column (c), the 245A deduction (for example, hybrid cooperative must file with its return a dividends within the meaning of statement that it was a federal section 245A(e), ineligible amounts of licensee under the Small Business dividends within the meaning of Regulations section 1.245A-5(b), dividends that fail to meet the holding

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period requirement under section Form 8992. Also, if applicable, attach attributable to periods totaling more 246(c) (5), etc.). Form(s) 5471. than 366 days, if such stock was held for less than 91 days during the Also, include on line 14 the Note. Consider the applicability of 181-day period that began 90 days cooperative's share of distributions section 951A with respect to CFCs before the ex-dividend date. When from a section 1291 fund from Form owned by domestic partnerships in counting the number of days the 8621, to the extent that the amounts which the cooperative has an interest. cooperative held the stock, you are taxed as dividends under section Line 18, Column (a) cannot count certain days during 301. See Form 8621 and the which the cooperative's risk of loss Instructions for Form 8621. Include gross-up for taxes deemed was diminished. See section 246(c) paid under sections 902 (for dividends (4) and Regulations section 1.246-5 Attach a statement identifying the paid in pre-2020 tax years of foreign for more details. Preferred dividends amount of each dividend reported on corporations) and 960. attributable to periods totaling less Line 14 and the provision pursuant to Line 19, Column (a) than 367 days are subject to the which a deduction is not allowed with 46-day holding period rule above. respect to such dividend. Enter taxable distributions from an IC-DISC or former DISC that are c. Dividends on any share of stock Line 15, Column (a) designated as not eligible for a to the extent the cooperative is under Enter the 2020 section 965(a) dividends-received deduction. an obligation (including a short sale) inclusion amount from Form 965, to make related payments with No deduction is allowed under line 3. Complete and attach Form 965 respect to positions in substantially section 243 for a dividend from an and any applicable schedules. Also, similar or related property. IC-DISC or former DISC (as defined in complete and attach Form 965-B. section 992(a)) to the extent the 5. Any other taxable dividend Line 15, Column (c) dividend: income not properly reported elsewhere on Schedule C. Enter in column (c) the 2020 section • Is paid out of the cooperative's 965(c) deduction amount from Form accumulated IC-DISC income or Line 21, Column (c) previously taxed income, or 965, line 17. Section 247 (as affected by P.L. Is a deemed distribution under • 113-295, Div. A, section 221(a)(41) Line 16a, Column (a) section 995(b)(1). (A), Dec. 19, 2014, 128 Stat. 4043) Enter the foreign-source portion of Line 20, Column (a) allows public utilities a deduction of any subpart F inclusions attributable 40% of the smaller of (a) dividends to the sale or exchange by a CFC of Include the following. paid on their preferred stock during stock in another foreign corporation 1. Dividends (other than capital the tax year, or (b) taxable income described in section 964(e)(4). This gain distributions reported on computed without regard to this should equal the U.S. shareholder's Schedule D (Form 1120) and deduction. In a year in which an NOL pro rata share of the amount reported exempt-interest dividends) that are occurs, compute the deduction on Form 5471, Schedule I, line 1a. received from RICs and that are not without regard to section 247(a)(1)(B). (Do not include on line 16a any subject to the 50% deduction. portion of such subpart F inclusion 2. Dividends from tax-exempt Line 22, Column (c) that is not eligible for the section 245A organizations. Enter the section 250 deduction deduction pursuant to Regulation 3. Dividends (other than capital claimed for foreign-derived intangible section 1.245A-5(g)(2). Include such gain distributions) received from a income (FDII) and global intangible amounts on Line 16c.) REIT that, for the tax year of the trust low-taxed income (GILTI). This should Line 16b, Column (a) in which the dividends are paid, equal the sum of Form 8993, Part IV, lines 8 and 9. Enter the total subpart F inclusions qualifies under sections 856 through attributable to tiered hybrid dividends. 860. This should equal the sum of the 4. Dividends not eligible for a Schedule G. amounts reported by the U.S. dividends-received deduction, which Allocation of Patronage shareholder on Form(s) 5471, include the following. Schedule I, line 1b. and Nonpatronage Income a. Dividends received on any and Deductions Line 16c, Column (a) share of stock held for less than 46 days during the 91-day period If the cooperative's total receipts Enter all other amounts included in beginning 45 days before the (page 1, line 1a plus lines 4 through 9) income under section 951. This ex-dividend date. When counting the for the tax year and its total assets at should equal the U.S. shareholder's number of days the cooperative held the end of the tax year are less than pro rata share of the sum of the the stock, you cannot count certain $250,000, the cooperative is not amounts on Form 5471, Schedule I, days during which the cooperative's required to complete Schedule G. See lines 1(c) through 1(h), 2, and 4. risk of loss was diminished. See Schedule K, Question 14. Line 17, Column (a) section 246(c)(4) and Regulations Cooperatives are required to Enter amounts included in income section 1.246-5 for more details. allocate income and deductions under section 951A. See Form 8992, b. Dividends received on any between patronage and Part II, line 5, and the Instructions for share of preferred stock, which are nonpatronage business. If the

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transaction producing the income the nonpatronage taxable income incidental income from sources not merely enhances the overall shown on Schedule G, line 10 directly related to: profitability of the cooperative, being (column b). • Marketing, merely incidental to the cooperative's Purchasing, Line 11, Column (a) • operation, the income is from a • Service activities of the nonpatronage source. But if the Combine lines 10(a) and 10(b). cooperative, or source of income or loss is from an • Income from business done with or activity that is an integral part of the Note. Any patronage source losses for the U.S. Government, or any of its cooperative's business (such as (line 10, column (a)) cannot be used agencies. inventory), then the source may be to offset nonpatronage income (line 10, column (b)). See the instructions for line 3b patronage. below for a definition of “qualified Line 12, Column (a) written notice of allocation.” See Special rules also apply if a section 1382(c)(2)(B) for deductibility cooperative has acquired the assets Enter any unused patronage loss from of amounts paid in redemption of of another cooperative under a line 10, column (a). nonqualified written notices of section 381(a) transaction. Line 13, Column (b) allocation. See section 1388(d) for a Cooperatives may elect to net Enter any unused nonpatronage loss definition of a nonqualified written earnings against losses under section from line 10, column (b). notice of allocation. 1388(j) and still be eligible for tax-exempt treatment. Line 3. Patronage Dividends Schedule H. Line 6 To be deductible, patronage Deductions and dividends must be paid during the For agricultural and horticultural payment period that begins on the first cooperatives only, special rules apply Adjustments Under day of the tax year in which the in determining and reporting the Section 1382 patronage occurs and ends on the section 199A(g) deduction. See the 15th day of the 9th month after the instructions for page 1, line 22. Also, Line 1. Dividends Paid on end of that tax year. see the Instructions for Form 8903. Capital Stock (Section 521 Cooperatives Only) See sections 1382(e) and (f) for Line 8, Columns (a) and (b) Enter the amount actually or special rules for the time when Complete Schedule H before entering constructively paid as dividends patronage occurs if products are an amount on this line. Allocate the during the tax year on: marketed under a pooling amount on Schedule H, line 5, • Common stock (whether voting or arrangement, or if earnings are between patronage and nonvoting), includible in the gross income of the nonpatronage. Only farmers' • Preferred stock, cooperative for a tax year after the cooperatives exempt under section • Capital retain certificates, year in which the patronage occurred. 521 are allowed to take a deduction in • Revolving fund certificates, Patronage dividends include any column (b) for nonpatronage • Letters of advice, or distributions under section 1382(c). amount paid to a patron by a • Other documentary evidence of a cooperative based on the quantity or Line 9a, Columns (a) and (b) proprietary interest in the cooperative value of business done with or for that association. Compute and carry back or carry over patron under a pre-existing obligation patronage and nonpatronage NOLs See Regulations section to pay that amount. The amount is separately. Under section 1388(j)(1), 1.1382-3(b) for more information. determined by reference to the net cooperatives can use losses from one earnings of the organization from or more allocation units to offset Line 2. Nonpatronage Income business done with or for its patrons. earnings of one or more other Allocated to Patrons (Section allocation units, as permitted by their 521 Cooperatives Only) Note. Net earnings are not reduced by dividends paid on capital stock of bylaws, but only to the extent that the Enter nonpatronage income allocated earnings and losses are from the organization if there is a legally to patrons. Payment may be in: enforceable agreement that such business done with or for patrons. If a • Money, cooperative exercises this option, it dividends are in addition to amounts • Qualified written notices of otherwise payable to patrons derived must provide the information specified allocation, or in section 1388(j)(3) in a written notice from business done with or for • Other property (except nonqualified patrons. to its patrons. written notices of allocation). Line 9b, Columns (a) and (b) Patronage dividends may be paid The amounts must be paid during in: Allocate the amount of total special the payment period that begins on the Money, deductions reported on Schedule C, • first day of the tax year and ends on Qualified written notices of line 20, between patronage and • the 15th day of the 9th month after the allocation, or nonpatronage business. end of the tax year in which the • Other property (except nonqualified Line 10, Columns (a) and (b) income was earned. written notices of allocation). The taxable income reported on Nonpatronage income. page 1, line 27, may not be less than Nonpatronage income includes

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Line 3b. Qualified written notices year nonqualified written notices of of allocation. A written notice of allocation are redeemed. The Schedule J. allocation means: cooperative is entitled to: Tax Computation • Any capital stock, 1. A deduction in the tax year the Line 1. Members of a Controlled • Revolving fund certificate, nonqualified written notices of Group • Retain certificate, allocation are redeemed (if permitted • Certificate of indebtedness, under section 1382(b)(2) or (4) or If the cooperative is a member of a • Letter of advice, or section 1382(c)(2)(B)), or controlled group, check the box on line 1. Complete and attach • Other written notice, which states 2. A tax credit based on a Schedule O (Form 1120), Consent the dollar amount allocated to the recomputation of tax for the year(s) Plan and Apportionment Schedule for patron by the cooperative and the the nonqualified written notices of a Controlled Group. Component part, if any, which is a patronage allocation were issued. See the members of a controlled group must dividend. instructions for page 2, line 30h. use Schedule O to report the In general, a qualified written notice Amounts paid to patrons are not apportionment of certain tax benefits of allocation is a written notice of patronage dividends if paid: between the members of the group. allocation that is: See Schedule O and the Instructions • Paid as part of a patronage 1. Out of earnings not from for Schedule O (Form 1120) for more dividend, in money or by qualified business done with or for patrons; information. check equal to at least 20% of the 2. Out of earnings from business patronage dividend, and done with or for other patrons to Line 2. Income Tax • One of the following conditions is whom no amounts or smaller amounts Multiply taxable income by 21%. Enter met: are paid for substantially identical this amount on line 2. 1. The patron must have at least transactions; Deferred tax under section 1291. If 90 days from the date the written 3. To redeem capital stock, the cooperative was a shareholder in notice of allocation is paid to redeem it certificates of indebtedness, revolving a PFIC and received an excess in cash, and must receive written fund certificates, retain certificates, distribution or disposed of its notice of the right of redemption at the letters of advice, or other similar investment in the PFIC during the time the patron receives the documents; or year, it must include the increase in allocation; or 4. Without reference to the net taxes due under section 1291(c)(2) 2. The patron must agree to have earnings of the cooperative (from Form 8621) in the total for line 2. the allocation treated as constructively organization from business done with On the dotted line next to line 2, enter received and reinvested in the or for its patrons. “Section 1291” and the amount. cooperative. See section 1388(c)(2) Do not include on line 2 any and the related regulations for Line 4. Section 199A(g) deduction interest due under section 1291(c)(3). information on how this consent must allocated to patrons. For Instead, include the amount of interest be made. agricultural and horticultural cooperatives only, cooperatives owed on Schedule J, line 8, as other Line 3d. Nonqualified written noti- engaged in the marketing or interest. ces of allocation. If a written notice manufacture, production, growth, or For more information on reporting of allocation does not qualify, no extraction of agricultural or the deferred tax and interest, see the deduction is allowable at the time it is horticultural products may be eligible Instructions for Form 8621. issued. However, the cooperative is to compute a deduction under section Increase in tax attributable to part- entitled to a deduction or refund of tax 199A(g). See the instructions for ner's audit liability under section when the nonqualified written notice page 1, line 22. 6226. If the cooperative is filing Form of allocation is finally redeemed, if that An agricultural or horticultural 8978 to report adjustments shown on notice was paid as a patronage cooperative, as defined in section Form 8986 they received from dividend during the payment period 199A(g), must reduce its section 1382 partnerships which have been audited for the tax year during which the deduction by the amount of the and have elected to push out imputed patronage occurred. The deduction or section 199A(g) deduction that was underpayments to their partners, refund is allowed, but only to the passed through to patrons. include any increase in taxes due extent that amounts paid to redeem (positive amount) from Form 8978, the nonqualified written notices of Note. Only include on line 4 the line 14, in the total for Form 1120-C, allocation are paid in money or other portion of the section 199A(g) Schedule J, line 2. On the dotted line property (other than written notices of deduction attributable to the qualified next to line 2, enter "FROM FORM allocation) which do not exceed the payments reported on this schedule. 8978" and the amount. Attach Form stated dollar amounts of the Marketing cooperatives that distribute 8978. If Form 8978, line 14 shows a nonqualified written notices of patronage as per-unit retain decrease in tax, see the instructions allocation. See section 1382(b), allocations must attach a statement for Schedule J, line 6. Regulations section 1.1382-2, and showing the amount of the section section 1383. 199A(g) deduction attributable to the See section 1383 for special rules per-unit retain allocations. for figuring the cooperative's tax in the

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Line 3. Base Erosion Minimum cannot be included on line 5c. Once 8978. If Form 8978, line 14, shows an Tax made, the election cannot be revoked. increase in tax, see the instructions For more information, see the for Schedule J, line 2. If the cooperative had gross receipts instructions for the applicable credit of at least $500 million in any 1 of the form. Also, see the Instructions for Line 8. Other Taxes 3 tax years preceding the current tax Form 3800. For tax associated with a Include any of the following taxes and year, complete and attach Form 8991. decrease in the credit allocated to interest in the total on line 8. Check Enter on line 3 the base erosion patrons, see Other Taxes, later. the appropriate box(es) for the form, if minimum tax amount from Form 8991, any, used to compute the total. Part IV, line 5e. See section 59A and Required allocations to patrons of the Instructions for Form 8991. Also, subchapter T cooperatives. Any Recapture of investment credit. If see Schedule K, Question 16, later. excess of the certain credits that are the cooperative disposed of not used by the cooperative because investment credit property or changed Line 5a. Foreign Tax Credit of the tax liability limitation must be its use before the end of its useful life To find out when a cooperative can passed through to the patrons. This or recovery period, or is required to take the credit for payment of income includes the following credits, if recapture a qualifying therapeutic tax to a foreign country or U.S. applicable. discovery project grant, enter the possession, see Form 1118, Foreign • Work opportunity credit (Form increase in tax from Form 4255, Tax Credit—Corporations. 5884). Recapture of Investment Credit. See the Instructions for Form 4255. Line 5b. Qualified Electric • Empowerment zone employment credit (Form 8844). Vehicle Credit Recapture of low-income housing • Indian employment credit (Form credit. If the cooperative disposed of Enter any qualified electric vehicle 8845). property (or there was a reduction in passive activity credits from prior • Energy efficient appliance credit the qualified basis of the property) for years allowed for the current tax year (Form 8909). which it took the low-income housing from Form 8834, Qualified Electric • Credit for employer differential credit and the cooperative did not Vehicle Credit, line 7. Attach Form wage payments (Form 8932). follow the procedures that would have 8834. • Credit for small employer health prevented recapture of the credit, it Line 5c. General Business insurance premiums (Form 8941). may owe a tax. See Form 8611, Credit These credits cannot be carried back Recapture of Low-Income Housing or over by the cooperative. See the Credit. Enter on line 5c the allowable credit applicable form and related from Form 3800, Part II, line 38. instructions for details. For tax Alternative tax on qualifying ship- associated with a recapture of credit, ping activities. Enter any alternative The cooperative is required to file see Other Taxes, later. tax on qualifying shipping activities Form 3800 to claim any of the from Form 8902. Check the box for business credits. See the Instructions Line 5d. Credit for Prior Year Form 8902. for Form 3800 for exceptions. For a Minimum Tax list of allowable credits, see Form Other. Check the box for “Other” if To figure any allowable minimum tax the cooperative includes any 3800. Also, see the applicable credit credit and any carryforward of that form and its instructions. additional taxes and interest such as credit, use Form 8827. the items discussed below. If the Elective allocations to patrons of Line 5e. Bond Credits cooperative checked the “Other” box, subchapter T cooperatives. The attach a statement showing the cooperative may elect to allocate any Enter allowable credits from Form computation of each item included in or all of certain credits among the 8912, Credit to Holders of Tax Credit the total for line 8 and identify the patrons based on the quantity or value Bonds, line 12. applicable Code section and the type of business done with or for such Line 6. Total Credits of tax or interest. patrons. This includes the following, if Add lines 5a through 5e and enter the • Recapture of Indian employment applicable: total on line 6. credit. Generally, if an employer • Biofuel producer credit (Form terminates the employment of a 6478); Decrease attributable to partner's qualified employee less than 1 year • Renewable electricity, refined coal, audit liability under section 6226. after the date of initial employment, and Indian coal production credit If the cooperative is filing Form 8978 any Indian employment credit allowed (Form 8835); to report adjustments shown on Form for a prior tax year because of wages • Biodiesel and renewable diesel 8986 they received from partnerships paid or incurred to that employee fuels credit (Form 8864); and which have been audited and have must be recaptured. For details, see • Low sulfur diesel fuel production elected to push out imputed Form 8845 and section 45A. credit (Form 8896). underpayments to their partners, • Recapture of new markets credit For the allocation to take effect, the include any decrease in taxes due (see Form 8874, New Markets Credit, cooperative must designate the (negative amount) from Form 8978, and Form 8874-B, Notice of apportionment in a written notice line 14, in the total for Form 1120-C, Recapture Event for New Markets mailed to its patrons before the due Schedule J, line 6. On the dotted line Credit). date of the cooperative's return. The next to line 6, enter "FROM FORM credit amount allocated to patrons 8978" and the amount. Attach Form

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• Recapture of employer-provided applicable to shareholders in a Affiliated group. An affiliated childcare facilities and services credit qualified electing fund in the amount group is one or more chains of (see Form 8882). entered on line 9. See the Instructions includible corporations (section • Interest on deferred tax attributable for Form 8621. 1504(a)) connected through stock to (a) installment sales of certain ownership with a common parent Subtract any deferred tax on the timeshares and residential lots corporation. The common parent must cooperative's share of undistributed (section 453(l)(3)) and (b) certain be an includible corporation and the earnings of a qualified electing fund. nondealer installment obligations following requirements must be met. See the Instructions for Form 8621. (section 453A(c)). 1. The common parent must own • Interest due on deferred gain How to report. If deferring tax, directly stock that represents at least (section 1260(b)). attach a statement showing the 80% of the total voting power and at • Interest due under section 1291(c) computation of each item included in, least 80% of the total value of the (3). See Form 8621 and the or subtracted from, the total for line 9. stock of at least one of the other Instructions for Form 8621. On the dotted line next to line 9, includible corporations, and specify (a) the applicable Code Recapture of elective allocation 2. Stock that represents at least section, (b) the type of tax, and (c) the of credit to patrons. If the amount of 80% of the total voting power and at amount of tax. any of the following elective credits least 80% of the total value of the apportioned to any patron is stock of each of the other decreased, there is a tax imposed on Schedule K. corporations (except for the common the cooperative, not the patron. Other Information parent) must be owned directly by one Biofuel producer credit (Form or more of the other includible • Complete all items and questions that 6478). See section 40(g)(6)(B)(iii). corporations. apply to the cooperative. • Renewable electricity, refined coal, For this purpose, “stock” generally and Indian coal production credit Item 2 does not include any stock that (a) is (Form 8835). See section 45(e)(11) See the list of Principal Business nonvoting, (b) is nonconvertible, (c) is (C). Activity Codes, later. Using the list of limited and preferred as to dividends • Biodiesel and renewable diesel codes and activities, determine from and does not participate significantly fuels credit (Form 8864). See section which activity the cooperative derives in corporate growth, and (d) has 40A(e)(6)(B)(iii). the highest percentage of its total redemption and liquidation rights that • Low sulfur diesel fuel production receipts. Enter on lines 2a, 2b, and 2c do not exceed the issue price of the credit (Form 8896). See section the principal business activity code stock (except for a reasonable 45H(f)(3). number, the cooperative's business redemption or liquidation premium). For details on the recapture of the activity, and a description of the See section 1504(a)(4). credits, see the instructions for the principal product or service of the applicable form. cooperative. Item 7 Enter the cooperative's total assets Recapture of required excess Question 5 (as determined by the accounting credit allocated to patrons. If the Check the “Yes” box for Question 5 if: method regularly used in keeping the cooperative allocated excess credit to 1. The cooperative is a subsidiary cooperative's books and records) at patrons, any credit recapture applies in an affiliated group (defined later), the end of the tax year. If there are no as if the cooperative had claimed the but is not filing a consolidated return assets at the end of the tax year, entire credit. For details, see section for the tax year with that group, or enter -0-. 46(h) (as in effect prior to enactment of the Revenue Reconciliation Act of 2. The cooperative is a subsidiary If the cooperative is required to 1990). This applies to the following in a parent-subsidiary controlled complete Schedule L, enter total credits. group. For a definition of a assets from Schedule L, line 13, • Investment credit (Form 3468). parent-subsidiary controlled group, column (d). If filing a consolidated • Work opportunity credit (Form see the Instructions for Schedule O return, report total consolidated 5884). (Form 1120). assets for all cooperatives and • Empowerment zone employment Any cooperative that meets either corporations joining in the return. credit (Form 8844). of the above requirements should Question 8 • Indian employment credit (Form check the “Yes” box. This applies 8845). even if the cooperative is a subsidiary Check the “Yes” box if one foreign • Energy efficient appliance credit member of one group and the parent person owned at least 25% of (a) the (Form 8909). corporation of another. total voting power of all classes of • Credit for small employer health stock of the cooperative entitled to insurance premiums (Form 8941). Note. If the cooperative is an vote, or (b) the total value of all • Credit for employer differential “excluded member” of a controlled classes of stock of the cooperative. wage payments (Form 8932). group (see definition in the The constructive ownership rules of Line 9. Total Tax Instructions for Schedule O (Form section 318 apply in determining if a 1120)), it is still considered a member cooperative is foreign owned. See Include any deferred tax on the of a controlled group for this purpose. termination of a section 1294 election section 6038A(c)(5) and the related regulations.

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If the cooperative checked “Yes,” Item 12 taxpayer meets certain specified enter on line 8a the percentage Generally, if the cooperative has an exceptions. A taxpayer may elect out owned by the foreign person specified NOL for 2020, it can elect to waive the of the limitation for certain businesses in Question 8. On line 8b, enter the entire carryback period for the NOL otherwise subject to the business name of the owner's country. and instead carry the NOL forward to interest expense limitation. future tax years. To do so, check the Certain real property trades or Note. If there is more than one box in Item 12 and file the return by its businesses and farming businesses 25%-or-more foreign owner, complete due date, including extensions. Do not qualify to make an election not to limit lines 8a and 8b for the foreign person attach the statement described in business interest expense. This is an with the highest percentage of Temporary Regulations section irrevocable election. If you make this ownership. 301.9100-12T. Once made, the election, you are required to use the Foreign person. The term “foreign election is irrevocable. See Special alternative depreciation system to person” means: rules for farming loss NOLs, earlier. depreciate any nonresidential real • An individual who is not a citizen or property, residential rental property, resident of the United States; If the corporation timely filed its and qualified improvement property • An individual who is a citizen or return for the loss year without making for an electing real property trade or resident of a U.S. possession who is the election, it can make the election business, and any property with a not otherwise a citizen or resident of on an amended return filed within 6 recovery period of 10 years or more the United States; months of the due date of the loss for an electing farming business. See • Any partnership, association, year return (excluding extensions). section 168(g)(1)(F). Also, you are not company, or corporation that is not Attach the election to the amended entitled to the special depreciation created or organized in the United return and write “Filed pursuant to allowance for that property. For a States; section 301.9100-2” on the election taxpayer with more than one • Any foreign estate or trust within the statement. See the Instructions for qualifying business, the election is meaning of section 7701(a)(31); or Form 1139. made with respect to each business. • A foreign government (or one of its Cooperatives filing a consolidated Additionally, see Rev. Proc. 2020-22, agencies or instrumentalities) to the return that elect to waive the entire 2020-18 I.R.B. 745, which provides an extent that it is engaged in the carryback period for the group must automatic extension of time for certain conduct of a commercial activity, as check the box in Item 12 and attach taxpayers to file a real property trade described in section 892. the statement required by Regulations or business election or a farming However, the term “foreign person” section 1.1502-21(b)(3) or the business election for tax years 2018, does not include any foreign person election will not be valid. 2019, or 2020. Rev. Proc. 2020-22 also provides an opportunity for who consents to the filing of a joint Item 13 income tax return. certain taxpayers to withdraw a prior Enter the amount of the NOL election. Rev. Proc. 2020-22 does not Owner's country. For individuals, carryover to the tax year from prior apply to utility trades or businesses. the term “owner's country” means the years, even if some of the loss is used country of residence. For all others, it Check “Yes” if the taxpayer has an to offset income on this return. The election in effect to exclude a real is the country where incorporated, amount to enter is the total of all NOLs organized, created, or administered. property trade or business or a generated in prior years but not used farming business from section 163(j). Requirement to file Form 5472. If to offset income (either as a carryback For more information, see section the cooperative checked “Yes,” it may or carryover) in a tax year prior to 163(j) and the Instructions for Form have to file Form 5472, Information 2020. Do not reduce the amount by 8990. Return of a 25% Foreign-Owned U.S. any NOL deduction reported on Corporation or a Foreign Corporation page 1, line 26a. Question 18 Engaged in a U.S. Trade or Business. Question 16 Generally, a taxpayer with a trade or Generally, a 25% foreign-owned business must file Form 8990 to claim cooperative that had a reportable If the cooperative had gross receipts a deduction for business interest. In transaction with a foreign or domestic of at least $500 million in any 1 of the addition, Form 8990 must be filed by related party during the tax year must 3 preceding tax years, complete Form any taxpayer that owns an interest in a file Form 5472. See the Instructions 8991 and attach it to this return. For partnership with current year, or prior for Form 5472 for filing instructions this purpose, the cooperative's gross year carryover, excess business and penalties for failure to file. receipts include the gross receipts of interest expense allocated from the all persons aggregated with the partnership. Item 10 cooperative, as specified in section Show any tax-exempt interest 59A(e)(3). See the Instructions for Exclusions from filing. A taxpayer received or accrued. Include any Form 8991 to determine if the is not required to file Form 8990 if the exempt-interest dividends received as cooperative is subject to the base taxpayer is a small business taxpayer a shareholder in a mutual fund or erosion minimum tax. and does not have excess business interest expense from a partnership. A other RIC. Also, if required, include Question 17 the same amount on Schedule M-1, taxpayer is also not required to file line 7 (or Schedule M-3 (Form 1120), The limitation on business interest Form 8990 if the taxpayer only has Part II, line 13, if applicable). expense applies to every taxpayer business interest expense from these with a trade or business, unless the excepted trades or businesses:

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• An electing real property trade or Line 1. Cash have less than $50 million total assets business, Include certificates of deposit as cash at the end of the tax year, or (b) are • An electing farming business, or on this line. not required to file Schedule M-3 • Certain utility businesses. (Form 1120) and voluntarily file Line 5. Investments Small business taxpayer. A small Schedule M-3 (Form 1120), must business taxpayer is not subject to the Include on this line: either (i) complete Schedule M-3 business interest expense limitation • State and local government (Form 1120) entirely, or (ii) complete and is not required to file Form 8990. obligations, the interest on which is Schedule M-3 (Form 1120) through A small business taxpayer is a excludable from gross income under Part I, and complete Form 1120, taxpayer that (a) is not a tax shelter section 103(a); and Schedule M-1 instead of completing (as defined in section 448(d)(3)) and • Stock in a mutual fund or other RIC Parts II and III of Schedule M-3 (Form (b) meets the gross receipts test of that distributed exempt-interest 1120). If the cooperative chooses to section 448(c), discussed next. dividends during the tax year of the complete Schedule M-1 instead of cooperative. completing Parts II and III of Gross receipts test. A taxpayer Schedule M-3, the amount on meets the gross receipts test if the Line 26. Adjustments to Schedule M-1, line 1, must equal the taxpayer has average annual gross Shareholders' Equity amount on Schedule M-3, Part I, receipts of $26 million or less for the 3 Some examples of adjustments to line 11. See the Instructions for prior tax years. A taxpayer's average report on this line include: Schedule M-3 (Form 1120) for more annual gross receipts for the 3 prior • Unrealized gains and losses on information. tax years is determined by adding the securities held “available for sale.” Line 5c. Travel and gross receipts for the 3 prior tax years • Foreign currency translation and dividing the total by 3. Gross adjustments. Entertainment receipts include the aggregate gross • The excess of additional pension Include any of the following if receipts from all persons treated as a liability over unrecognized prior applicable: single employer, such as a controlled service cost. • Meal expenses not deductible group of corporations, commonly • Guarantees of employee stock under section 274(n). controlled partnerships, or (ESOP) debt. • Entertainment expenses not proprietorships, and affiliated service • Compensation related to employee deductible under section 274(a). groups. See section 448(c) and the stock award plans. • Qualified transportation fringes not Instructions for Form 8990 for deductible under section 274(a)(4). additional information. If the total adjustment to be entered • Expenses for the use of an on line 26 is a negative amount, enter entertainment facility. the amount in parentheses. • The part of business gifts over $25. Schedule L. • Expenses of an individual over Balance Sheets per Books Schedule M-1. $2,000, which are allocable to The balance sheets should agree with conventions on cruise ships. the cooperative's books and records. Reconciliation of Income • Employee achievement awards of (Loss) per Books With non-tangible property or of tangible Cooperatives with total receipts Income per Return property over $400 ($1,600 if part of a (page 1, line 1a plus lines 4 through 9) qualified plan). and total assets at the end of the tax In completing Schedule M-1, the following apply. • Nondeductible club dues. year less than $250,000 are not • The part of luxury water travel required to complete Schedules L, • Cooperatives with total receipts expenses not deductible under M-1, and M-2 if the “Yes” box on (page 1, line 1a plus lines 4 through 9) section 274(m). Schedule K, Question 14, is checked. and total assets at the end of the tax • Expenses for travel as a form of Cooperatives with total assets year less than $250,000 are not education. non-consolidated (or consolidated for required to complete Schedules L, • Other nondeductible expenses for all cooperatives and corporations M-1, and M-2 if the “Yes” box on travel and entertainment. Schedule K, Question 14, is checked. included within the consolidated tax Line 7. Tax-exempt Interest group) of $10 million or more on the • Cooperatives with total assets Report any tax-exempt interest last day of the tax year must file non-consolidated (or consolidated for received or accrued, including any Schedule M-3 (Form 1120). However, all cooperatives/corporations included exempt-interest dividends received as see the instructions for Schedule M-1, with the tax consolidation group) of a shareholder in a mutual fund or later. See the separate Instructions for $10 million or more on the last day of other RIC. Also, report this same Schedule M-3 (Form 1120) for the tax year must file Schedule M-3 amount on Schedule K, Item 10. provisions that also affect Schedule L. (Form 1120) instead of Schedule M-1. • A cooperative filing Form 1120-C If filing a consolidated return, report that is not required to file Paperwork Reduction Act Notice. total consolidated assets, liabilities, Schedule M-3 (Form 1120) may We ask for the information on this and shareholder's equity for all voluntarily file Schedule M-3 instead form to carry out the Internal Revenue cooperatives and corporations joining of Schedule M-1. laws of the United States. You are in the return. See Consolidated return, • Cooperatives that (a) are required required to give us the information. earlier. to file Schedule M-3 (Form 1120) and We need it to ensure that you are

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complying with these laws and to confidential, as required by section or suggestions for making this form allow us to figure and collect the right 6103. simpler, we would be happy to hear amount of tax. from you. You can send us comments The time needed to complete and You are not required to provide the from IRS.gov/FormComments. Click file this form will vary depending on on More Information and then on information requested on a form that individual circumstances. The is subject to the Paperwork Reduction “Give us feedback.” Or write to the estimated burden for business Internal Revenue Service, Tax Forms Act unless the form displays a valid taxpayers filing this form is approved OMB control number. Books or and Publications Division, 1111 under OMB control number Constitution Ave. NW, IR-6526, records relating to a form or its 1545-0123 and is included in the instructions must be retained as long Washington, DC 20224. Do not send estimates shown in the instructions for Form 1120-C to this address. Instead, as their contents may become their business income tax return. material in the administration of any see Where To File, earlier. Internal Revenue law. Generally, tax If you have comments concerning returns and return information are the accuracy of these time estimates

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Form 1120-C Using the list of activities and codes below, considered a manufacturer and must use one of determine from which activity the company derives the manufacturing codes (311110-339900). Principal Business Activity Codes the largest percentage of its “total receipts.” Total Once the principal business activity is This list of principal business activities and their receipts is defined as the sum of gross receipts or sales (page 1, line 1a) plus all other income determined, entries must be made on Form associated codes is designed to classify an 1120-C, Schedule K, lines 2a, 2b, and 2c. On enterprise by the type of activity in which it is (page 1, lines 4 through 10). If the company purchases raw materials and supplies them to a line 2a, enter the six-digit code selected from the engaged to facilitate the administration of the list below. On line 2b, enter the company's Internal Revenue Code. These principal business subcontractor to produce the finished product, but retains title to the product, the company is business activity. On line 2c, enter a brief activity codes are based on the North American description of the principal product or service of Industry Classification System. the company. Agriculture, Forestry, Fishing, 237990 Other Heavy & Civil Paper Manufacturing 333310 Commercial & Service Engineering Construction Industry Machinery Mfg and Hunting 322100 Pulp, Paper, & Paperboard Specialty Trade Contractors Mills 333410 Ventilation, Heating, Crop Production 238100 Foundation, Structure, & 322200 Converted Paper Product Mfg Air-Conditioning, & 111100 Oilseed & Grain Farming Building Exterior Contractors Commercial Refrigeration Printing and Related Support Equipment Mfg 111210 Vegetable & Melon Farming (including framing carpentry, Activities (including potatoes & yams) masonry, glass, roofing, & 333510 Metalworking Machinery Mfg siding) 323100 Printing & Related Support 111300 Fruit & Tree Nut Farming Activities 333610 Engine, Turbine & Power 238210 Electrical Contractors Transmission Equipment Mfg 111400 Greenhouse, Nursery, & Petroleum and Coal Products Floriculture Production 238220 Plumbing, Heating, & Manufacturing 333900 Other General Purpose Air-Conditioning Contractors Machinery Mfg 111900 Other Crop Farming 324110 Petroleum Refineries (including tobacco, cotton, 238290 Other Building Equipment (including integrated) Computer and Electronic Product sugarcane, hay, peanut, Contractors Manufacturing sugar beet, & all other crop 324120 Asphalt Paving, Roofing, & 238300 Building Finishing Saturated Materials Mfg 334110 Computer & Peripheral farming) Contractors (including Equipment Mfg Animal Production drywall, insulation, painting, 324190 Other Petroleum & Coal Products Mfg 334200 Communications Equipment 112111 Beef Cattle Ranching & wallcovering, flooring, tile, & Mfg finish carpentry) Chemical Manufacturing Farming 334310 Audio & Video Equipment 112112 Cattle Feedlots 238900 Other Specialty Trade 325100 Basic Chemical Mfg Mfg Contractors (including site 325200 Resin, Synthetic Rubber, & 112120 Dairy Cattle & Milk Production preparation) 334410 Semiconductor & Other Artificial & Synthetic Fibers & Electronic Component Mfg 112210 Hog & Pig Farming Filaments Mfg Manufacturing 334500 Navigational, Measuring, 112300 Poultry & Egg Production 325300 Pesticide, Fertilizer, & Other Food Manufacturing Electromedical, & Control 112400 Sheep & Goat Farming Agricultural Chemical Mfg Instruments Mfg 112510 Aquaculture (including 311110 Animal Food Mfg 325410 Pharmaceutical & Medicine 311200 Grain & Oilseed Milling 334610 Manufacturing & Reproducing shellfish & finfish farms & Mfg Magnetic & Optical Media hatcheries) 311300 Sugar & Confectionery 325500 Paint, Coating, & Adhesive Product Mfg Electrical Equipment, Appliance, 112900 Other Animal Production Mfg and Component Manufacturing Forestry and Logging 311400 Fruit & Vegetable Preserving 325600 Soap, Cleaning Compound, & & Specialty Food Mfg 335100 Electric Lighting Equipment 113110 Timber Tract Operations Toilet Preparation Mfg Mfg 311500 Dairy Product Mfg 113210 Forest Nurseries & Gathering 325900 Other Chemical Product & 335200 Major Household Appliance of Forest Products 311610 Animal Slaughtering and Preparation Mfg Mfg Processing 113310 Logging Plastics and Rubber Products 335310 Electrical Equipment Mfg 311710 Seafood Product Preparation Manufacturing Fishing, Hunting, and Trapping 335900 Other Electrical Equipment & & Packaging 326100 Plastics Product Mfg 114110 Fishing Component Mfg 311800 Bakeries,Tortilla, & Dry Pasta 326200 Rubber Product Mfg 114210 Hunting & Trapping Mfg Transportation Equipment Nonmetallic Mineral Product Manufacturing Support Activities for Agriculture 311900 Other Food Mfg (including Manufacturing and Forestry coffee, tea, flavorings, & 336100 Motor Vehicle Mfg 327100 Clay Product & Refractory 336210 Motor Vehicle Body & Trailer 115110 Support Activities for Crop seasonings) Mfg Production (including cotton Mfg Beverage and Tobacco Product 327210 Glass & Glass Product Mfg ginning, soil preparation, Manufacturing 336300 Motor Vehicle Parts Mfg planting, & cultivating) 327300 Cement & Concrete Product 312110 Soft Drink & Ice Mfg 336410 Aerospace Product & Parts 115210 Support Activities for Animal Mfg Mfg Production 312120 Breweries 327400 Lime & Gypsum Product Mfg 312130 Wineries 336510 Railroad Rolling Stock Mfg 115310 Support Activities for Forestry 327900 Other Nonmetallic Mineral 336610 Ship & Boat Building 312140 Distilleries Product Mfg Mining 336990 Other Transportation 312200 Tobacco Manufacturing Primary Metal Manufacturing 211120 Crude Petroleum Extraction Equipment Mfg Textile Mills and Textile Product 331110 Iron & Steel Mills & Ferroalloy 211130 Natural Gas Extraction Mills Furniture and Related Product Mfg Manufacturing 212110 Coal Mining 313000 Textile Mills 331200 Steel Product Mfg from 337000 Furniture & Related Product 212200 Metal Ore Mining 314000 Textile Product Mills Purchased Steel Manufacturing 212310 Stone Mining & Quarrying Apparel Manufacturing 331310 Alumina & Aluminum Miscellaneous Manufacturing Production & Processing 212320 Sand, Gravel, Clay, & 315100 Apparel Knitting Mills 339110 Medical Equipment & Ceramic & Refractory 315210 Cut & Sew Apparel 331400 Nonferrous Metal (except Supplies Mfg Minerals Mining & Quarrying Contractors Aluminum) Production & Processing 339900 Other Miscellaneous 212390 Other Nonmetallic Mineral 315220 Men's & Boys' Cut & Sew Manufacturing Mining & Quarrying 331500 Foundries Apparel Mfg Wholesale Trade 213110 Support Activities for Mining 315240 Women's, Girls' and Infants Fabricated Metal Product Manufacturing Utilities Cut & Sew Apparel Mfg Merchant Wholesalers and Durable 332110 Forging & Stamping Goods 221100 Electric Power Generation, 315280 Other Cut & Sew Apparel Mfg 332210 Cutlery & Handtool Mfg 423100 Motor Vehicle & Motor Transmission & Distribution 315990 Apparel Accessories & Other Vehicle Parts & Supplies Apparel Mfg 332300 Architectural & Structural 221210 Natural Gas Distribution 423200 Furniture & Home Furnishings Leather and Allied Product Metals Mfg 221300 Water, Sewage & Other 423300 Lumber & Other Construction Systems Manufacturing 332400 Boiler, Tank, & Shipping Container Mfg Materials 221500 Combination Gas & Electric 316110 Leather & Hide Tanning & Finishing 332510 Hardware Mfg 423400 Professional & Commercial Equipment & Supplies Construction 316210 Footwear Mfg (including 332610 Spring & Wire Product Mfg Construction of Buildings rubber & plastics) 332700 Machine Shops; Turned 423500 Metal & Mineral (except Petroleum) 236110 Residential Building 316990 Other Leather & Allied Product; & Screw, Nut, & Bolt Construction Product Mfg Mfg 423600 Household Appliances and Electrical & Electronic Goods 236200 Nonresidential Building Wood Product Manufacturing 332810 Coating, Engraving, Heat Construction Treating, & Allied Activities 423700 Hardware, Plumbing, Heating 321110 Sawmills & Wood Equipment & Supplies Heavy and Civil Engineering Preservation 332900 Other Fabricated Metal Construction Product Mfg 423800 Machinery, Equipment, & 321210 Veneer, Plywood, & Supplies 237100 Utility System Construction Engineered Wood Product Machinery Manufacturing Mfg 333100 Agriculture, Construction, & 423910 Sporting & Recreational 237210 Land Subdivision Goods & Supplies 237310 Highway, Street, & Bridge 321900 Other Wood Product Mfg Mining Machinery Mfg Construction 333200 Industrial Machinery Mfg

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Form 1120-C (Continued)

423920 Toy & Hobby Goods & 446190 Other Health & Personal Care 485990 Other Transit & Ground 522298 All Other Nondepository Supplies Stores Passenger Transportation Credit Intermediation 423930 Recyclable Materials Gasoline Stations Pipeline Transportation Activities Related to Credit 423940 Jewelry, Watch, Precious 447100 Gasoline Stations (including 486000 Pipeline Transportation Intermediation Stone, & Precious Metals convenience stores with gas) Scenic & Sightseeing 522300 Activities Related to Credit 423990 Other Miscellaneous Durable Clothing and Clothing Accessories Transportation Intermediation (including loan Goods Stores brokers, check clearing, & 487000 Scenic & Sightseeing money transmitting) Merchant Wholesalers and 448110 Men's Clothing Stores Transportation Nondurable Goods Securities, Commodity Contracts, 448120 Women's Clothing Stores Support Activities for and Other Financial Investments 424100 Paper & Paper Products 448130 Children's & Infants' Clothing Transportation and Related Activities 424210 Drugs & Druggists' Sundries Stores 488100 Support Activities for Air 523110 Investment Banking & 424300 Apparel, Piece Goods, & 448140 Family Clothing Stores Transportation Securities Dealing Notions 448150 Clothing Accessories Stores 488210 Support Activities for Rail 523120 Securities Brokerage Transportation 424400 Grocery & Related Products 448190 Other Clothing Stores 523130 Commodity Contracts 424500 Farm Product Raw Materials 488300 Support Activities for Water Dealing 448210 Shoe Stores Transportation 424600 Chemical & Allied Products 523140 Commodity Contracts 448310 Jewelry Stores 488410 Motor Vehicle Towing 424700 Petroleum & Petroleum 448320 Luggage & Leather Goods Brokerage Products 488490 Other Support Activities for 523210 Securities & Commodity Stores Road Transportation 424800 Beer, Wine, & Distilled Sporting Goods, Hobby, Book, and Exchanges Alcoholic Beverages 488510 Freight Transportation 523900 Other Financial Investment Music Stores Arrangement 424910 Farm Supplies 451110 Sporting Goods Stores Activities (including portfolio 488990 Other Support Activities for management & investment 424920 Book, Periodical, & 451120 Hobby, Toy, & Game Stores Transportation Newspapers advice) 451130 Sewing, Needlework, & Piece Couriers and Messengers Insurance Carriers and Related 424930 Flower, Nursery Stock, & Goods Stores Florists' Supplies 492110 Couriers Activities 451140 Musical Instrument & 424940 Tobacco & Tobacco Products 492210 Local Messengers & Local 524140 Direct Life, Health, and Supplies Stores Delivery Medical Insurance & 424950 Paint, Varnish, & Supplies 451211 Book Stores Warehousing and Storage Reinsurance Carriers 424990 Other Miscellaneous 451212 News Dealers & Newsstands 524150 Direct Insurance and Nondurable Goods 493100 Warehousing & Storage General Merchandise Stores (except lessors of Reinsurance (except life, Wholesale Electronic Markets and health, and medical) Carriers 452200 Department Stores miniwarehouses & Agents and Brokers self-storage units) 524210 Insurance Agencies & 425110 Business to Business 452300 General Merchandise Stores, Brokerages Electronic Markets incl. Warehouse Clubs and Information Supercenters 524290 Other Insurance Related 425120 Wholesale Trade Agents & Publishing Industries (except Activities (including Brokers Miscellaneous Store Retailers Internet) third-party administration of 453110 Florists Retail Trade 511110 Newspaper Publishers insurance and pension funds) 453210 Office Supplies & Stationery 511120 Periodical Publishers Funds, Trusts, and Other Financial Motor Vehicle and Parts Dealers Stores 511130 Book Publishers Vehicles 441110 New Car Dealers 453220 Gift, Novelty, & Souvenir 525100 Insurance & Employee Stores 511140 Directory & Mailing List 441120 Used Car Dealers Publishers Benefit Funds 453310 Used Merchandise Stores 441210 Recreational Vehicle Dealers 511190 Other Publishers 525910 Form 1120-RIC, Open-End 453910 Pet & Pet Supplies Stores Investment Funds 441222 Boat Dealers 511210 Software Publishers 441228 Motorcycle, ATV, and All 453920 Art Dealers 525920 Trusts, Estates, & Agency Motion Picture and Sound Accounts Other Motor Vehicle Dealers 453930 Manufactured (Mobile) Home Recording Industries Dealers 525990 Other Financial Vehicles 441300 Automotive Parts, 512100 Motion Picture & Video Accessories, & Tire Stores 453990 All Other Miscellaneous Store (including mortgage REITs & Industries (except video closed-end investment funds) Furniture and Home Furnishings Retailers (including tobacco, rental) candle, & trophy shops) “Offices of Bank Holding Stores 512200 Sound Recording Industries Companies” and “Offices of Nonstore Retailers 442110 Furniture Stores Broadcasting (except Internet) Other Holding Companies” 442210 Floor Covering Stores 454110 Electronic Shopping & are located under Mail-Order Houses 515100 Radio & Television Management of Companies 442291 Window Treatment Stores Broadcasting 454210 Vending Machine Operators (Holding Companies), later. 442299 All Other Home Furnishings 515210 Cable & Other Subscription Stores 454310 Fuel Dealers (including Programming Real Estate, Rental, and Electronics and Appliance Stores Heating Oil and Liquefied Leasing Petroleum) Telecommunications 443141 Household Appliance Stores 454390 Other Direct Selling 517000 Telecommunications Real Estate 443142 Electronics Stores (including Establishments (including (including paging, cellular, 531110 Lessors of Residential Audio, Video, Computer, and door-to-door retailing, frozen satellite, cable & other Buildings & Dwellings Camera Stores) food plan providers, party program distribution, (including equity REITs) Building Material and Garden plan merchandisers, & resellers, other 531120 Lessors of Nonresidential Equipment and Supplies Dealers coffee-break service telecommunications, & internet service providers) Buildings (except 444110 Home Centers providers) Miniwarehouses) (including Data Processing Services 444120 Paint & Wallpaper Stores Transportation and equity REITs) 518210 Data Processing, Hosting, & 531130 Lessors of Miniwarehouses & 444130 Hardware Stores Warehousing Related Services Self-Storage Units (including 444190 Other Building Material Air, Rail, and Water Transportation Other Information Services equity REITs) Dealers 481000 Air Transportation 519100 Other Information Services 531190 Lessors of Other Real Estate 444200 Lawn & Garden Equipment & 482110 Rail Transportation (including news syndicates, Property (including equity Supplies Stores REITs) 483000 Water Transportation libraries, internet publishing & Food and Beverage Stores broadcasting) 531210 Offices of Real Estate Agents Truck Transportation 445110 Supermarkets and Other Finance and Insurance & Brokers Grocery (except 484110 General Freight Trucking, 531310 Real Estate Property Convenience) Stores Local Depository Credit Intermediation Managers 445120 Convenience Stores 484120 General Freight Trucking, 522110 Commercial Banking 531320 Offices of Real Estate 445210 Meat Markets Long-distance 522120 Savings Institutions Appraisers 445220 Fish & Seafood Markets 484200 Specialized Freight Trucking 522130 Credit Unions 531390 Other Activities Related to 445230 Fruit & Vegetable Markets Transit and Ground Passenger 522190 Other Depository Credit Real Estate Transportation Intermediation 445291 Baked Goods Stores Rental and Leasing Services 485110 Urban Transit Systems Nondepository Credit 445292 Confectionery & Nut Stores 532100 Automotive Equipment Rental 485210 Interurban & Rural Bus Intermediation & Leasing 445299 All Other Specialty Food Transportation 522210 Credit Card Issuing Stores 532210 Consumer Electronics & 485310 Taxi and Ridesharing 522220 Sales Financing Appliances Rental 445310 Beer, Wine, & Liquor Stores Services 522291 Consumer Lending 532281 Formal Wear & Costume Health and Personal Care Stores 485320 Limousine Service 522292 Real Estate Credit (including Rental 446110 Pharmacies & Drug Stores 485410 School & Employee Bus mortgage bankers & 532282 Video Tape & Disc Rental 446120 Cosmetics, Beauty Supplies, Transportation originators) 532283 Home Health Equipment & Perfume Stores 485510 Charter Bus Industry 522293 International Trade Financing Rental 446130 Optical Goods Stores 522294 Secondary Market Financing 532284 Recreational Goods Rental

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Form 1120-C (Continued)

532289 All Other Consumer Goods 551112 Offices of Other Holding Outpatient Care Centers 721199 All Other Traveler Rental Companies 621410 Family Planning Centers Accommodation 532310 General Rental Centers Administrative and Support, 621420 Outpatient Mental Health & 721210 RV (Recreational Vehicle) Parks & Recreational Camps 532400 Commercial & Industrial Waste Management, and Substance Abuse Centers Machinery & Equipment 621491 HMO Medical Centers 721310 Rooming & Boarding Houses, Rental & Leasing Remediation Services Dormitories & Workers’ 621492 Kidney Dialysis Centers Lessors of Nonfinancial Intangible Administrative and Support Camps Assets (except copyrighted works) Services 621493 Freestanding Ambulatory Food Services and Drinking Places Surgical & Emergency 533110 Lessors of Nonfinancial 561110 Office Administrative Centers 722300 Special Food Services Intangible Assets (except Services (including food service copyrighted works) 621498 All Other Outpatient Care contractors & caterers) 561210 Facilities Support Services Centers Professional, Scientific, and 561300 Employment Services 722410 Drinking Places (Alcoholic Medical and Diagnostic Beverages) Technical Services 561410 Document Preparation Laboratories Services 722511 Full-Service Restaurants Legal Services 621510 Medical & Diagnostic 561420 Telephone Call Centers 722513 Limited-Service Restaurants 541110 Offices of Lawyers Laboratories 561430 Business Service Centers 722514 Cafeterias and Buffets 541190 Other Legal Services Home Health Care Services (including private mail centers 621610 Home Health Care Services 722515 Snack and Non-alcoholic Accounting, Tax Preparation, & copy shops) Beverage Bars Bookkeeping, and Payroll Services Other Ambulatory Health Care 561440 Collection Agencies Services Other Services 541211 Offices of Certified Public 561450 Credit Bureaus Accountants 621900 Other Ambulatory Health Repair and Maintenance 561490 Other Business Support Care Services (including 811110 Automotive Mechanical & 541213 Tax Preparation Services Services (including ambulance services & blood 541214 Payroll Services repossession services, court Electrical Repair & & organ banks) Maintenance 541219 Other Accounting Services reporting, & stenotype Hospitals services) 811120 Automotive Body, Paint, Architectural, Engineering, and 622000 Hospitals Interior, & Glass Repair Related Services 561500 Travel Arrangement & Reservation Services Nursing and Residential Care 811190 Other Automotive Repair & 541310 Architectural Services Facilities 561600 Investigation & Security Maintenance (including oil 541320 Landscape Architecture Services 623000 Nursing & Residential Care change & lubrication shops & Services Facilities car washes) 561710 Exterminating & Pest Control 541330 Engineering Services Services Social Assistance 811210 Electronic & Precision 541340 Drafting Services 624100 Individual & Family Services Equipment Repair & 561720 Janitorial Services Maintenance 541350 Building Inspection Services 561730 Landscaping Services 624200 Community Food & Housing, 541360 Geophysical Surveying & & Emergency & Other Relief 811310 Commercial & Industrial 561740 Carpet & Upholstery Cleaning Services Machinery & Equipment Mapping Services Services (except Automotive & 541370 Surveying & Mapping (except 624310 Vocational Rehabilitation Electronic) Repair & 561790 Other Services to Buildings & Services Geophysical) Services Dwellings Maintenance 624410 Child Day Care Services 541380 Testing Laboratories 561900 Other Support Services 811410 Home & Garden Equipment & Specialized Design Services (including packaging & Arts, Entertainment, and Appliance Repair & Maintenance 541400 Specialized Design Services labeling services, & Recreation (including interior, industrial, convention & trade show 811420 Reupholstery & Furniture graphic, & fashion design) organizers) Performing Arts, Spectator Sports, Repair and Related Industries Computer Systems Design and Waste Management and 811430 Footwear & Leather Goods Related Services Remediation Services 711100 Performing Arts Companies Repair 541511 Custom Computer 562000 Waste Management & 711210 Spectator Sports (including 811490 Other Personal & Household Programming Services Remediation Services sports clubs & racetracks) Goods Repair & Maintenance 541512 Computer Systems Design Educational Services 711300 Promoters of Performing Arts, Personal and Laundry Services Services Sports, & Similar Events 812111 Barber Shops 611000 Educational Services 711410 Agents & Managers for 541513 Computer Facilities (including schools, colleges, 812112 Beauty Salons Management Services Artists, Athletes, Entertainers, & universities) & Other Public Figures 812113 Nail Salons 541519 Other Computer Related Services Health Care and Social 711510 Independent Artists, Writers, 812190 Other Personal Care Services & Performers (including diet & weight Other Professional, Scientific, and Assistance reducing centers) Technical Services Offices of Physicians and Dentists Museums, Historical Sites, and Similar Institutions 812210 Funeral Homes & Funeral 541600 Management, Scientific, & 621111 Offices of Physicians (except Services Technical Consulting mental health specialists) 712100 Museums, Historical Sites, & Services Similar Institutions 812220 Cemeteries & Crematories 621112 Offices of Physicians, Mental 812310 Coin-Operated Laundries & 541700 Scientific Research & Health Specialists Amusement, Gambling, and Recreation Industries Drycleaners Development Services 621210 Offices of Dentists 713100 Amusement Parks & Arcades 812320 Drycleaning & Laundry 541800 Advertising & Related Offices of Other Health Services (except Services Practitioners 713200 Gambling Industries Coin-Operated) 541910 Marketing Research & Public 621310 Offices of Chiropractors 713900 Other Amusement & Opinion Polling Recreation Industries 812330 Linen & Uniform Supply 621320 Offices of Optometrists 541920 Photographic Services (including golf courses, skiing 812910 Pet Care (except Veterinary) 621330 Offices of Mental Health facilities, marinas, fitness Services 541930 Translation & Interpretation Practitioners (except centers, & bowling centers) 812920 Photofinishing Services Physicians) 541940 Veterinary Services Accommodation and Food 812930 Parking Lots & Garages 621340 Offices of Physical, 812990 All Other Personal Services 541990 All Other Professional, Occupational & Speech Services Scientific, & Technical Therapists, & Audiologists Accommodation Religious, Grantmaking, Civic, Services Professional, and Similar 621391 Offices of Podiatrists 721110 Hotels (except Casino Hotels) Organizations & Motels Management of Companies 621399 Offices of All Other 813000 Religious, Grantmaking, (Holding Companies) Miscellaneous Health 721120 Casino Hotels Civic, Professional, & Similar Practitioners 551111 Offices of Bank Holding 721191 Bed & Breakfast Inns Organizations (including Companies condominium and homeowners associations)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Index

Dividends 8 A Dividends and special M Q Accounting methods 4 deductions 18 Merchant Marine capital Qualified written notice of Accounting period 5 Dividends-received construction fund: allocation 22 Address change 7 deduction 20 Deduction for Qualifying shipping activities, Advance payments 7 Domestic production activities contributions 17 Income from 7 Affiliated group 24 deduction allocation 22 Minimum tax: Allocation of patronage and Dues, membership and other 15 Prior year, credit for 23 nonpatronage income and R deductions 20 Reconciliation of income (Sch Allocations to patrons: E N M-1) 26 Elective 23 Electronic Federal Tax Payment Name and address 6 Recordkeeping 5 Recapture of elective System (EFTPS) 3 Name change 7 Refund 17 allocation of credit to Employee benefit programs 13 Net operating loss 16, 25 Refundable credits 17 patrons 24 Employer identification number Nonaccrual experience Related taxpayer transactions 9 Recapture of required excess (EIN) 7 method 8 Rents (expense) 11 credit allocated to Estimated tax 4 Nonpatronage income 21 patrons 24 Overpaid 17 Payments 17 Required 23 S Amended return 7 Penalty 4 Extension of time to file 3 O Salaries and wages 11 Amortization 9 Other deductions: Schedule: Assembling the return 3 Amortization 14 C 18 At-risk rules 15 Depletion 14 G 20 F Entertainment expenses 14 H 21 Final return 7 Insurance premiums 14 J 22 B Foreign person (defined) 25 Legal and professional K 24 Backup withholding 17 Foreign tax credit 23 fees 14 L 26 Bad debts 11 Forms and publications, how to Organizational costs 14 M-1 26 Balance sheets per books 26 get 2 Reforestations costs 14 M-3 (Form 1120) 6 Bond credits 23 Repairs and maintenance 14 O 22 Business start-up expenses 9 Start-up costs 14 Section 1382, deductions and G Supplies 14 adjustments 16 General business credit 23 Travel expenses 14 Section 1383 adjustment 17 C General instructions 2 Utilities 14 Section 263A costs 9 Capital construction Gross receipts 7 Other income 8 Shareholders' equity fund (See Merchant Marine Gross rents and royalties 8 Other information 24 adjustments 26 capital construction fund) Other taxes: Signature 3 Charitable contributions 12 Recapture 23 Specific instructions 6 Closely held cooperatives 10 I Overpaid estimated tax 17 Compensation of officers 10 Identifying information 6 Consolidated return 25 Income 7 T Contributions, charitable 12 Income from qualifying shipping P Tax computation 22 Contributions to reduce debt activities 7 Paid preparer authorization 3 Taxes and licenses 11 held by the public 2 Initial return 7 Partnership income (loss) 14 Tax-exempt securities 26 Controlled group: Installment sales 8 Passive activity limitations 10 Tax issues, unresolved 1 Member of 22 Interest: Patronage dividends 8, 21 Taxpayer Advocate 1 Cost of goods sold 8 Income 8 Payment, depository methods Travel, meals, and Credits: Interest and penalties 4 of 3 entertainment 15 Foreign tax 23 Interest due: Penalties 17 Travel and entertainment 26 Form 2439 17 Late payment of tax 4 Late filing of return 4 Trust fund recovery penalty 4 Form 4136 17 Interest expense 11 Late payment of tax 4 Type of cooperative 7 General business 23 Interest expense (relating to Trust fund recovery Recapture of 23 section 263A) 9 penalty 4 Reducing expenses 10 Interest income: Penalty: W Tax-exempt 25, 26 Estimated tax 17 When to file 2 Inventory: Late filing 4 Where to file 2 D Section 263A uniform Late payment 4 Who must file 2 Deductions 9 capitalization rules 9 Pension, profit-sharing, etc., Who must sign 3 Deductions and adjustments plans 13 Worksheet: under section 1382 21 Per-unit retain allocations 8 Schedule C Depletion 14 L Preparer, tax return 3 Written notice of allocation: Depository methods of tax Limitations on deductions 9, 12 Principal business activity Nonqualified 22 payment 3 Lobbying expenses, codes 28 Qualified 22 Depreciation 13 nondeductibility 15 Private delivery services 2 Disclosure statement, reportable transaction 5

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