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Department of the Treasury 2018 Internal Revenue Service Instructions for Form 1120 U.S. Corporation Income Tax Return

Section references are to the Internal Revenue enacted after they were published, go to the Instructions for Form 8992 for more Code unless otherwise noted. IRS.gov/Form1120. information. Contents Page Foreign-derived intangible income Future Developments ...... 1 What's New (FDII). New section 250 allows a What's New ...... 1 Tax rates. For tax years beginning after domestic corporation a deduction for the Photographs of Missing Children ....2 2017, the Tax Cuts and Jobs Act (P.L. eligible percentage of FDII and GILTI. The Taxpayer Advocate Service .....2 115-97) replaced the graduated corporate Section 250 is effective for tax years Direct Deposit of Refund ...... 2 tax structure with a flat 21% corporate tax beginning after December 31, 2017. Use Form 8993 to figure the amount of the How To Make a Contribution To rate. See the instructions for Schedule J, Reduce Debt Held by the Part I, line 2. eligible deduction for FDII and GILTI under Public ...... 2 section 250. See section 250 and Form Alternative minimum tax. The How To Get Forms and 8993 for more information. alternative minimum tax does not apply to Publications ...... 2 Deduction for foreign-source portion General Instructions ...... 2 corporations for tax years beginning after December 31, 2017. In addition, of dividends received by domestic cor- Purpose of Form ...... 2 corporations may treat a portion of their porations from specified 10%-owned Who Must File ...... 2 prior year alternative minimum tax credit foreign corporations. P.L. 115-97 When To File ...... 3 carryover as refundable. See Form 8827. enacted new section 245A. Section 245A Where To File ...... 4 Also see the instructions for Schedule J, permits certain domestic corporations that Who Must Sign ...... 3 Part III, line 20c. are U.S. shareholders of specified Paid Preparer Authorization ...... 4 10%-owned foreign corporations a 100% Base erosion minimum tax. If the Assembling the Return ...... 5 deduction for the foreign source portion of corporation had gross receipts of at least Tax Payments ...... 5 any dividend received from that specified $500 million in any one of the 3 tax years 10%-owned foreign corporation. Section Estimated Tax Payments ...... 5 preceding the current tax year, complete 245A applies to all dividend distributions Interest and Penalties ...... 5 Form 8991. See section 59A and the after December 31, 2017. See new Accounting Methods ...... 6 Instructions for Form 8991. Also see the section 245A. Accounting Period ...... 6 instructions for Schedule J, Part I, line 3, Rounding Off to Whole Dollars ...... 6 and the instructions for Schedule K, Treatment of deferred foreign income Recordkeeping ...... 6 Question 22. upon transition to participation ex- emption system of taxation. U.S. Other Forms and Statements That Small business taxpayers. Effective for May Be Required ...... 6 shareholders of certain specified foreign tax years beginning after 2017, P.L. Specific Instructions ...... 7 corporations (as defined under section 115-97 expanded the eligibility of small 965(e), as amended by P.L. 115-97) may Period Covered ...... 7 business taxpayers to use the cash have an inclusion under section 965 Name and Address ...... 8 method. See Accounting Methods, later. based on the accumulated post-1986 Identifying Information ...... 8 deferred foreign income of the specified Employer Identification Number Address change for filing returns. The filing address for certain returns filed after foreign corporations determined as of (EIN) ...... 9 November 2, 2017, or December 31, Total Assets ...... 9 June 17, 2019, has changed. See Where To File, later. 2017. The U.S shareholders may elect to Initial Return, Final Return, Name pay the liability under section 965 in eight Change, or Address Change ....9 Limitation on business interest ex- installments. See section 965, as Income ...... 9 pense. For tax years beginning after amended. Deductions ...... 10 2017, taxpayers who deduct business Schedule C. Dividends, Inclusions, interest are required to file Form 8990, Domestic production activities deduc- and Special Deductions ...... 17 Limitation on Business Interest Expense tion (DPAD). The DPAD has been Schedule J. Tax Computation and Under Section 163(j), unless an exception repealed for tax years beginning after Payment ...... 19 for filing is met. See the instructions for 2017 with limited exceptions. See Line 26. Schedule K. Other Information ..... 21 Schedule K, Questions 23 and 24. For Other Deductions, later. Schedule L. Balance Sheets per more information, see Form 8990 and the Net operating loss. The 2-year Books ...... 23 Instructions for Form 8990. carryback rule does not apply to NOLs Schedule M-1. Reconciliation of arising in tax years ending after December Income (Loss) per Books With Global intangible low-taxed income (GILTI). P.L. 115-97 enacted new section 31, 2017. Exceptions apply to certain Income per Return ...... 23 farming losses and NOLs of insurance Principal Business Activity Codes ... 26 951A, which requires U.S. shareholders of controlled foreign corporations (CFCs) to companies other than life insurance Index ...... 29 include in gross income the shareholder's companies. See section 172(b). Also see GILTI for years in which they are U.S. Net operating loss (NOL), later. Future Developments shareholders of CFCs for tax years of Related party amounts paid or ac- For the latest information about CFCs beginning after December 31, 2017. crued in hybrid transactions or with developments related to Form 1120 and Use Form 8992 to figure the domestic hybrid entities. A deduction for certain its instructions, such as legislation corporation's GILTI. See section 951A and interest or royalty paid or accrued to a

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related party pursuant to a hybrid • The corporation has tried repeatedly to forms and publications it may need on transaction or by, or to, a hybrid entity may contact the IRS but no one has IRS.gov/FormsPubs. Otherwise, the be disallowed to the extent the related responded, or the IRS hasn't responded corporation can go to IRS.gov/ party, under its tax laws, does not include by the date promised. OrderForms to place an order and have the amount in income or is allowed a forms mailed to it. The corporation should deduction with respect to the amount. See The TAS tax toolkit at receive its order within 10 business days. section 267A for more information. Also TaxpayerAdvocate.IRS.gov can help the corporation understand these rights. see the instructions for Schedule K, General Instructions Question 21. TAS has offices in every state, the Special rules for eligible gains inves- District of Columbia, and Puerto Rico. Purpose of Form ted in Qualified Opportunity Funds. Local advocates' numbers are in their Use Form 1120, U.S. Corporation Income Effective December 22, 2017, section local directories and at Tax Return, to report the income, gains, 1400Z-2 provides shareholders investing TaxpayerAdvocate.IRS.gov. The losses, deductions, credits, and to figure eligible gains in Qualified Opportunity corporation can also call TAS at the income tax liability of a corporation. Funds (QOFs) tax-favored investments. If 1-877-777-4778. the corporation is operating as a QOF, TAS also works to resolve large-scale Who Must File Form 8996 may be required. See Form or systemic problems that affect many Unless exempt under section 501, all 8996 and the Instructions for Form 8996. taxpayers. If the corporation knows of one domestic corporations (including Also see Form 1120, Schedule K, of these broad issues, please report it to corporations in bankruptcy) must file an Question 25. TAS through the Systemic Advocacy income tax return whether or not they Management System at IRS.gov/SAMS. Credit for paid family and medical have taxable income. Domestic leave. Corporations may qualify for a For more information, go to IRS.gov/ corporations must file Form 1120, unless credit for wages paid in tax years Advocate. they are required, or elect to file a special beginning after 2017 to qualifying return. See Special Returns for Certain employees on family and medical leave. Organizations below. See section 45S. Also see Form 8994 and Direct Deposit of Refund its instructions. To request a direct deposit of the Entities electing to be taxed as corpo- corporation's income tax refund into an rations. A domestic entity electing to be At the time these instructions went account at a U.S. bank or other financial classified as an association taxable as a ! to print, several credits and institution, attach Form 8050, Direct corporation must file Form 1120, unless it CAUTION deductions available to Deposit of Corporate Tax Refund. See the is required to or elects to file a special corporations expired December 31, 2017. instructions for line 36. return listed under Special Returns for To find out if legislation extended the Certain Organizations below. The entity credits and deductions and made them How To Make a also must file Form 8832, Entity available for 2018, go to IRS.gov/ Classification Election, and attach a copy FormsUpdates. Contribution To Reduce of Form 8832 to Form 1120 (or the Debt Held by the Public applicable return) for the year of the Photographs of To help reduce debt held by the public, election. For more information, see Form make a check payable to “Bureau of the 8832 and its instructions. Missing Children Public Debt.” Send it to: Bureau of the Limited liability companies (LLC). If an The Internal Revenue Service is a proud Public Debt, Department G, P.O. Box entity with more than one owner was partner with the National Center for 2188, Parkersburg, WV 26106-2188. Or, formed as an LLC under state law, it Missing & Exploited Children® (NCMEC). enclose a check with the income tax generally is treated as a partnership for Photographs of missing children selected return. by the Center may appear in instructions federal income tax purposes and files on pages that would otherwise be blank. Do not add the contributions to any tax Form 1065, U.S. Return of Partnership You can help bring these children home the corporation may owe. Contributions to Income. Generally, a single-member LLC by looking at the photographs and calling reduce debt held by the public are is disregarded as an entity separate from 1-800-THE-LOST (1-800-843-5678) if you deductible subject to the rules and its owner and reports its income and recognize a child. limitations for charitable contributions. deductions on its owner's federal income tax return. The LLC can file a Form 1120 How To Get Forms only if it has filed Form 8832 to elect to be The Taxpayer Advocate treated as an association taxable as a Service and Publications corporation. For more information about The Taxpayer Advocate Service (TAS) is Internet. You can access the IRS website LLCs, see Pub. 3402, Taxation of Limited an independent organization within the 24 hours a day, 7 days a week, at IRS.gov Liability Companies. IRS that helps taxpayers and protects to: Corporations engaged in farming. A taxpayer rights. TAS's job is to ensure that • Download forms, instructions, and corporation (other than a corporation that every taxpayer is treated fairly and knows publications; is a subchapter T cooperative) that and understands their rights under the • Order IRS products online; engages in farming should use Form 1120 Taxpayer Bill of Rights. • Research your tax questions online; to report the income (loss) from such Search publications online by topic or As a taxpayer, the corporation has • activities. Enter the income and keyword; rights that the IRS must abide by in its deductions of the corporation according to View Internal Revenue Bulletins (IRBs) dealings with the corporation. TAS can • the instructions for lines 1 through 10 and published in recent years; and help the corporation if: 12 through 29. Sign up to receive local and national tax A problem is causing financial difficulty • • news by email. Ownership interest in a Financial As- for the business. set Securitization Investment Trust • The business is facing an immediate Tax forms and publications. The (FASIT). Special rules apply to a FASIT in threat of adverse action. corporation can download or print all of the

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existence on October 22, 2004, to the does not, however, apply to certain extent that regular interests issued by the Subchapter T returns. cooperative association FASIT before October 22, 2004, continue 1120-C (including a farmers' to remain outstanding in accordance with Certain corporations with total assets of cooperative) their original terms. $10 million or more that file at least 250 returns a year are required to e-file Form If a corporation holds an ownership Entity that elects to be 1120. See Regulations section interest in a FASIT to which these special treated as a real estate 301.6011-5. However, these corporations rules apply, it must report all items of mortgage investment 1066 can request a waiver of the electronic filing income, gain, deductions, losses, and conduit (REMIC) under section 860D requirements. See Notice 2010-13, credits on the corporation's income tax 2010-4 I.R.B. 327. return (except as provided in section Interest charge domestic 860H). Show a breakdown of the items on international sales 1120-IC-DISC For more information, visit IRS.gov/ an attached statement. For more corporation (section 992) Businesses. information, see sections 860H and 860L (repealed with certain exceptions). Foreign corporation (other than life or When To File Foreign-owned domestic disregarded property and casualty 1120-F Generally, a corporation must file its entities. If a foreign person, including a insurance company filing income tax return by the 15th day of the foreign corporation, wholly owns a Form 1120-L or Form 4th month after the end of its tax year. A domestic disregarded entity (DE), the 1120-PC) new corporation filing a short-period return domestic DE is treated as a domestic Foreign sales generally must file by the 15th day of the 1120-FSC corporation separate from its owner (the corporation (section 922) 4th month after the short period ends. A foreign corporation) for the limited corporation that has dissolved generally purposes of the requirements under Condominium must file by the 15th day of the 4th month section 6038A that apply to 25% management, residential after the date it dissolved. foreign-owned domestic corporations. real estate While a DE is not required to file a U.S. management, or However, a corporation with a fiscal tax income tax return, a DE covered by these timeshare association 1120-H year ending June 30 must file by the 15th rules may be required to file a pro forma that elects to be treated day of the 3rd month after the end of its Form 1120 with Form 5472 attached by as a homeowners tax year. A corporation with a short tax association under year ending anytime in June will be the due date (including extensions) of the section 528 return. See the Instructions for Form 5472 treated as if the short year ended on June for additional information and coordination Life insurance company 30, and must file by the 15th day of the 3rd 1120-L with Form 5472 reporting by the domestic (section 801) month after the end of its tax year. DE. Fund set up to pay for If the due date falls on a Saturday, nuclear Special Returns for 1120-ND Sunday, or legal holiday, the corporation decommissioning costs can file on the next business day. Certain Organizations (section 468A) Private Delivery Services Instead of filing Form 1120, certain organizations, Property and casualty Corporations can use certain private as shown below, file special returns. insurance company 1120-PC (section 831) delivery services (PDS) designated by the If the organization is a: File Form IRS to meet the “timely mailing as timely ▼ ▼ Political organization filing” rule for tax returns. Go to IRS.gov/ 1120-POL (section 527) PDS. Exempt organization with unrelated trade or 990-T Real estate investment The PDS can tell you how to get written 1120-REIT business income trust (section 856) proof of the mailing date.

Religious or apostolic Regulated investment 1120-RIC For the IRS mailing address to use if organization exempt 1065 company (section 851) you’re using a PDS, go to IRS.gov/ under section 501(d) PDSstreetAddresses. S corporation (section 1120S Entity formed as a 1361) Private delivery services can't limited liability company deliver items to P.O. boxes. You under state law and Settlement fund ! 1065 1120-SF CAUTION must use the U.S. Postal Service treated as a partnership (section 468B) to mail any item to an IRS P.O. box for federal income tax purposes address. Electronic Filing Extension of Time To File Corporations generally can electronically File Form 7004, Application for Automatic file (e-file) Form 1120, related forms, Extension of Time To File Certain schedules, and attachments; Form 7004 Business Income Tax, Information, and (automatic extension of time to file); and Other Returns, to request an extension of Forms 940, 941, and 944 (employment tax time to file. Generally, the corporation returns). If there is a balance due, the must file Form 7004 by the regular due corporation can authorize an electronic date of the return. See the Instructions for funds withdrawal while e-filing. Form 1099 Form 7004. and other information returns also can be electronically filed. The option to e-file Who Must Sign The return must be signed and dated by:

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Where To File • The president, vice president, treasurer, assistant treasurer, chief accounting File the corporation's return at the applicable IRS address listed below. officer; or • Any other corporate officer (such as tax If the corporation's principal And the total assets at officer) authorized to sign. business, office, or agency the end of the tax year If a return is filed on behalf of a is located in: are: Use the following address: corporation by a receiver, trustee, or For returns filed January 1, 2019, through June 17, 2019 assignee, the fiduciary must sign the return, instead of the corporate officer. Connecticut, Delaware, District Less than $10 million Department of the Treasury Returns and forms signed by a receiver or of Columbia, Florida, Indiana, and Schedule M-3 is not Internal Revenue Service Center trustee in bankruptcy on behalf of a Maine, Maryland, filed Cincinnati, OH 45999-0012 Massachusetts, New corporation must be accompanied by a $10 million or more, or Department of the Treasury Hampshire, New Jersey, New copy of the order or instructions of the less than $10 million and Internal Revenue Service Center York, North Carolina, Ohio, court authorizing signing of the return or Schedule M-3 is filed Ogden, UT 84201-0012 Pennsylvania, Rhode Island, form. South Carolina, Vermont, If an employee of the corporation Virginia, West Virginia completes Form 1120, the paid preparer Georgia, Illinois, Kentucky, Less than $10 million Department of the Treasury space should remain blank. Anyone who Michigan, Tennessee, and Schedule M-3 is not Internal Revenue Service Center prepares Form 1120 but does not charge Wisconsin filed Kansas City, MO 64999-0012 the corporation should not complete that section. Generally, anyone who is paid to $10 million or more, or Department of the Treasury prepare the return must sign it and fill in less than $10 million and Internal Revenue Service Center the “Paid Preparer Use Only” area. Schedule M-3 is filed Ogden, UT 84201-0012 The paid preparer must complete the Alabama, Alaska, Arizona, required preparer information and: Arkansas, California, • Sign the return in the space provided Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, for the preparer's signature. Department of the Treasury Mississippi, Missouri, • Give a copy of the return to the Any amount Internal Revenue Service Center Montana, Nebraska, Nevada, taxpayer. Ogden, UT 84201-0012 New Mexico, North Dakota, A paid preparer may sign original Oklahoma, Oregon, South TIP or amended returns by rubber Dakota, Texas, Utah, stamp, mechanical device, or Washington, Wyoming computer software program. A foreign country or U.S. Internal Revenue Service Center possession Any amount P.O. Box 409101 Paid Preparer Ogden, UT 84409 Authorization For returns filed after June 17, 2019 If the corporation wants to allow the IRS to Connecticut, Delaware, District Less than $10 million Department of the Treasury discuss its 2018 tax return with the paid of Columbia, Georgia, Illinois, and Schedule M-3 is not Internal Revenue Service Center preparer who signed it, check the “Yes” Indiana, Kentucky, Maine, filed Kansas City, MO 64999-0012 box in the signature area of the return. Maryland, Massachusetts, $10 million or more, or Department of the Treasury This authorization applies only to the Michigan, New Hampshire, less than $10 million and Internal Revenue Service Center individual whose signature appears in the New Jersey, New York, North Schedule M-3 is filed Ogden, UT 84201-0012 “Paid Preparer Use Only” section of the Carolina, Ohio, Pennsylvania, return. It does not apply to the firm, if any, Rhode Island, South Carolina, shown in that section. Tennessee, Vermont, Virginia, If the “Yes” box is checked, the West Virginia, Wisconsin corporation is authorizing the IRS to call Alabama, Alaska, Arizona, the paid preparer to answer any questions Arkansas, California, that may arise during the processing of its Colorado, Florida, Hawaii, return. The corporation is also authorizing Idaho, Iowa, Kansas, the paid preparer to: Louisiana, Minnesota, Department of the Treasury • Give the IRS any information that is Mississippi, Missouri, Any amount Internal Revenue Service Center missing from the return, Montana, Nebraska, Nevada, Ogden, UT 84201-0012 • Call the IRS for information about the New Mexico, North Dakota, processing of the return or the status of Oklahoma, Oregon, South any related refund or payment(s), and Dakota, Texas, Utah, • Respond to certain IRS notices about Washington, Wyoming math errors, offsets, and return A foreign country or U.S. Internal Revenue Service Center preparation. possession Any amount P.O. Box 409101 The corporation is not authorizing the Ogden, UT 84409 paid preparer to receive any refund check, bind the corporation to anything (including any additional tax liability), or otherwise A group of corporations with members located in more than one service center area will represent the corporation before the IRS. often keep all the books and records at the principal office of the managing corporation. The authorization will automatically end In this case, the tax returns of the corporations may be filed with the service center for no later than the due date (excluding the area in which the principal office of the managing corporation is located.

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extensions) for filing the corporation's Electronic Deposit • Use Form 1120-W, Estimated Tax for 2019 tax return. If the corporation wants to Requirement Corporations, as a worksheet to compute expand the paid preparer's authorization estimated tax. See the Instructions for or revoke the authorization before it ends, Corporations must use electronic funds Form 1120-W. see Pub. 947, Practice Before the IRS and transfer to make all federal tax deposits • Penalties may apply if the corporation Power of Attorney. (such as deposits of employment, excise, does not make required estimated tax and corporate income tax). Generally, payment deposits. See Estimated tax Assembling the Return electronic funds transfers are made using penalty below. the Electronic Federal Tax Payment • If the corporation overpaid estimated To ensure that the corporation's tax return System (EFTPS). However, if the is correctly processed, attach all tax, it may be able to get a quick refund by corporation does not want to use EFTPS, filing Form 4466, Corporation Application schedules and other forms after page 6 of it can arrange for its tax professional, Form 1120 in the following order. for Quick Refund of Overpayment of financial institution, payroll service, or Estimated Tax. See the instructions for 1. Schedule N (Form 1120). other trusted third party to make deposits Schedule J, Part III, line 15, later. 2. Schedule D (Form 1120). on its behalf. Also, it may arrange for its financial institution to submit a same-day Estimated tax penalty. A corporation 3. Schedule O (Form 1120). payment (discussed below) on its behalf. that does not make estimated tax 4. Form 8050. EFTPS is a free service provided by the payments when due may be subject to an 5. Form 1125-A. Department of the Treasury. Services underpayment penalty for the period of underpayment. Generally, a corporation is 6. Form 4136. provided by a tax professional, financial institution, payroll service, or other third subject to the penalty if its tax liability is 7. Form 8941. party may have a fee. $500 or more and it did not timely pay at 8. Form 3800. least the smaller of: To get more information about EFTPS Its tax liability for the current year, or 9. Additional schedules in • or to enroll in EFTPS, visit www.eftps.gov Its prior year's tax. alphabetical order. • or call 1-800-555-4477 (TTY/TDD Use Form 2220, Underpayment of 10. Additional forms in numerical order. 1-800-733-4829). Estimated Tax by Corporations, to see if 11. Supporting statements and Depositing on time. For any deposit the corporation owes a penalty and to attachments. made by EFTPS to be on time, the figure the amount of the penalty. If Form Complete every applicable entry space corporation must submit the deposit by 8 2220 is completed, enter the penalty on on Form 1120. Do not enter “See p.m. Eastern time the day before the date line 34. See the instructions for line 34. Attached” or “Available Upon Request” the deposit is due. If the corporation uses instead of completing the entry spaces. If a third party to make deposits on its Interest and Penalties more space is needed on the forms or behalf, they may have different cutoff times. If the corporation receives a notice schedules, attach separate sheets using about penalties after it files its the same size and format as the printed ! Same-day wire payment option. If the CAUTION return, send the IRS an forms. corporation fails to submit a deposit explanation and we will determine if the If there are supporting statements and transaction on EFTPS by 8 p.m. Eastern corporation meets reasonable-cause attachments, arrange them in the same time the day before the date a deposit is criteria. Do not attach an explanation order as the schedules or forms they due, it can still make its deposit on time by when the corporation's return is filed. support and attach them last. Show the using the Federal Tax Collection Service totals on the printed forms. Enter the (FTCS). To use the same-day wire Interest. Interest is charged on taxes corporation's name and EIN on each payment method, the corporation will need paid late even if an extension of time to file supporting statement or attachment. to make arrangements with its financial is granted. Interest is also charged on institution ahead of time regarding penalties imposed for failure to file, Note. If the corporation had tax withheld availability, deadlines, and costs. negligence, fraud, substantial valuation under Chapter 3 or 4 of the Internal Financial institutions may charge a fee for misstatements, substantial Revenue Code and received a Form payments made this way. To learn more understatements of tax, and reportable 1042-S, Form 8805, or Form 8288-A about the information the corporation will transaction understatements from the due showing the amount of income tax need to provide to its financial institution to date (including extensions) to the date of withheld, attach such form(s) to the make a same-day wire payment, go to payment. The interest charge is figured at corporation’s income tax return to claim a IRS.gov/SameDayWire. a rate determined under section 6621. withholding credit. The corporation should Late filing of return. A corporation that report the tax withheld on Schedule J, Part Estimated Tax Payments does not file its tax return by the due date, III, line 20d. See the instructions for Generally, the following rules apply to the including extensions, may be penalized Schedule J, Part III, line 20d. corporation's payments of estimated tax. 5% of the unpaid tax for each month or • The corporation must make installment part of a month the return is late, up to a Tax Payments payments of estimated tax if it expects its maximum of 25% of the unpaid tax. The Generally, the corporation must pay any total tax for the year (less applicable minimum penalty for a return that is over tax due in full no later than the due date for credits) to be $500 or more. 60 days late is the smaller of the tax due filing its tax return (not including • The installments are due by the 15th or $210. The penalty will not be imposed if extensions). See the instructions for day of the 4th, 6th, 9th, and 12th months the corporation can show that the failure to line 35. If the due date falls on a Saturday, of the tax year. If any date falls on a file on time was due to reasonable cause. Sunday, or legal holiday, the payment is Saturday, Sunday, or legal holiday, the See Caution above. due on the next day that isn't a Saturday, installment is due on the next regular Late payment of tax. A corporation that Sunday, or legal holiday. business day. does not pay the tax when due generally The corporation must use electronic • may be penalized 1/2 of 1% of the unpaid funds transfer to make installment tax for each month or part of a month the payments of estimated tax.

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tax is not paid, up to a maximum of 25% of • Dealers in securities must use the service corporations, however, must use a the unpaid tax. See Caution above. mark-to-market accounting method. calendar year unless they meet one of the Dealers in commodities and traders in exceptions discussed later under Personal Trust fund recovery penalty. This securities and commodities can elect to Service Corporation. penalty may apply if certain excise, use the mark-to-market accounting income, social security, and Medicare Change of tax year. Generally, a method. See section 475. taxes that must be collected or withheld corporation, including a personal service are not collected or withheld, or these Small business taxpayer. A small corporation, must get the consent of the taxes are not paid. These taxes are business taxpayer is a taxpayer that (a) IRS before changing its tax year by filing generally reported on: has average annual gross receipts of $25 Form 1128, Application To Adopt, • Form 720, Quarterly Federal Excise million or less for the 3 prior tax years, and Change, or Retain a Tax Year. However, Tax Return; (b) is not a tax shelter (as defined in exceptions may apply. See the • Form 941, Employer's QUARTERLY section 448(d)(3)). Instructions for Form 1128 and Pub. 538 Federal Tax Return; A small business taxpayer can adopt or for more information. • Form 943, Employer's Annual Federal change its accounting method to account Tax Return for Agricultural Employees; for inventories (a) in the same manner as Rounding Off to • Form 944, Employer's ANNUAL materials and supplies that are Federal Tax Return; or Whole Dollars nonincidental, or (b) to conform to its The corporation can round off cents to • Form 945, Annual Return of Withheld treatment of inventories in an applicable Federal Income Tax. whole dollars on its return and schedules. financial statement (as defined in section If the corporation does round to whole The trust fund recovery penalty may be 451(b)(3)). If it does not have an dollars, it must round all amounts. To imposed on all persons who are applicable financial statement, it can use round, drop amounts under 50 cents and determined by the IRS to have been the method of accounting used in its increase amounts from 50 to 99 cents to responsible for collecting, accounting for, books and records prepared according to the next dollar. For example, $1.39 or paying over these taxes, and who acted its accounting procedures. becomes $1 and $2.50 becomes $3. willfully in not doing so. The penalty is Change in accounting method. equal to the full amount of the unpaid trust If two or more amounts must be added Generally, the corporation must get IRS fund tax. See the Instructions for Form to figure the amount to enter on a line, consent to change either an overall 720, Pub. 15 (Circular E), Employer's Tax include cents when adding the amounts method of accounting or the accounting Guide, or Pub. 51 (Circular A), Agricultural and round off only the total. treatment of any material item. To do so, Employer's Tax Guide, for details, the corporation generally must file Form including the definition of responsible 3115, Application for Change in Recordkeeping persons. Accounting Method. See the Instructions Keep the corporation's records for as long Other penalties. Other penalties can be for Form 3115 and Pub. 538 for more as they may be needed for the imposed for negligence, substantial information and exceptions. administration of any provision of the understatement of tax, reportable Internal Revenue Code. Usually, records transaction understatements, and fraud. Section 481(a) adjustment. If the that support an item of income, deduction, See sections 6662, 6662A, and 6663. corporation's taxable income for the or credit on the return must be kept for 3 current tax year is figured under a method years from the date the return is due or of accounting different from the method filed, whichever is later. Keep records that Accounting Methods used in the preceding tax year, the verify the corporation's basis in property corporation may have to make an for as long as they are needed to figure Figure taxable income using the method of adjustment under section 481(a) to the basis of the original or replacement accounting regularly used in keeping the prevent amounts of income or expense property. corporation's books and records. In all from being duplicated or omitted. The cases, the method used must clearly show section 481(a) adjustment period is The corporation should keep copies of taxable income. Permissible methods generally 1 year for a net negative all filed returns. They help in preparing include cash, accrual, or any other method adjustment and 4 years for a net positive future and amended returns and in the authorized by the Internal Revenue Code. adjustment. However, in some cases, a calculation of earnings and profits. corporation can elect to modify the section Generally, the following rules apply. For 481(a) adjustment period. The corporation more information, see Pub. 538, Other Forms and may have to complete the appropriate Accounting Periods and Methods. Statements That May Be lines of Form 3115 to make an election. • A corporation, other than a qualified See the Instructions for Form 3115 for Required personal service corporation (defined in more information and exceptions. section 448(d)(2)), must use the accrual Amended return. Use Form 1120X, method if it is not a small business If the net section 481(a) adjustment is Amended U.S. Corporation Income Tax taxpayer (defined below). However, see positive, report it on Form 1120, line 10, as Return, to correct a previously filed Form Nonaccrual experience method for service other income. If the net section 481(a) 1120. providers in the instructions for line 1a. adjustment is negative, report it on line 26 as a deduction. Reportable transaction disclosure • Unless it is a small business taxpayer statement. Disclose information for each (defined below), a corporation must use reportable transaction in which the an accrual method for sales and Accounting Period corporation participated. Form 8886, purchases of inventory items. See the A corporation must figure its taxable Reportable Transaction Disclosure instructions for Form 1125-A. income on the basis of a tax year. A tax Statement, must be filed for each tax year • A corporation engaged in farming must year is the annual accounting period a that the federal income tax liability of the use an accrual method. For exceptions, corporation uses to keep its records and corporation is affected by its participation see section 447 and Pub. 225. report its income and expenses. in the transaction. The following are • Special rules apply to long-term Generally, corporations can use a reportable transactions. contracts. See section 460. calendar year or a fiscal year. Personal

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1. Any listed transaction, which is a transferor that is attached to the same For more information on reporting the transaction that is the same as or return for the same section 351 exchange. deferred COD income, see the substantially similar to one of the types of If the transferor or transferee corporation instructions for line 10. transactions that the IRS has determined is a controlled foreign corporation, each Annual information reporting by speci- to be a tax avoidance transaction and U.S. shareholder (within the meaning of fied domestic entities under section identified by notice, regulation, or other section 951(b)) must include the required 6038D. For tax years beginning after published guidance as a listed statement on or with its return. December 31, 2015, domestic transaction. Distributions under section 355. Every corporations that are formed or availed of 2. Any transaction offered under corporation that makes a distribution of to hold specified foreign financial assets conditions of confidentiality for which the stock or securities of a controlled (“specified domestic entities”) must file corporation (or a related party) paid an corporation, as described in section 355 Form 8938. Form 8938 must be filed each advisor a fee of at least $250,000. (or so much of section 356 as it relates to year the value of the corporation's 3. Certain transactions for which the section 355), must include the statement specified foreign financial assets meets or corporation (or a related party) has required by Regulations section exceeds the reporting threshold. For more contractual protection against 1.355-5(a) on or with its return for the year information on domestic corporations that disallowance of the tax benefits. of the distribution. A significant distributee are specified domestic entities and the 4. Certain transactions resulting in a (as defined in Regulations section types of foreign financial assets that must loss of at least $10 million in any single 1.355-5(c)) that receives stock or be reported, see the Instructions for Form year or $20 million in any combination of securities of a controlled corporation must 8938, generally, and in particular, Who years. include the statement required by Must File, Specified Domestic Entity, Regulations section 1.355-5(b) on or with Reporting Thresholds, Specified Foreign 5. Any transaction identified by the its return for the year of receipt. If the Financial Assets, Interests in Specified IRS by notice, regulation, or other distributing or distributee corporation is a Foreign Financial Assets, Assets Not published guidance as a “transaction of controlled foreign corporation, each U.S. Required To Be Reported, and Exceptions interest.” shareholder (within the meaning of section to Reporting. For more information, see Regulations 951(b)) must include the statement on or In addition, a domestic corporation section 1.6011-4. Also see the Instructions with its return. required to file Form 8938 with its Form for Form 8886. Dual consolidated losses. If a domestic 1120 for the taxable year should check “Yes” to Schedule N (Form 1120), Penalties. The corporation may have corporation incurs a dual consolidated loss (as defined in Regulations section Question 8, and also include that schedule to pay a penalty if it is required to disclose with its Form 1120. a reportable transaction under section 1.1503-2(c)(5)), the corporation (or 6011 and fails to properly complete and consolidated group) may need to attach Form 8975. Certain U.S. persons that are file Form 8886. Penalties also may apply an elective relief agreement and/or an the ultimate parent entity of a U.S. under section 6707A if the corporation annual certification as provided in multinational enterprise group with annual fails to file Form 8886 with its corporate Regulations section 1.1503-2(g)(2). revenue for the preceding reporting period return, fails to provide a copy of Form Election to reduce basis under section of $850 million or more are required to file 8886 to the Office of Tax Shelter Analysis 362(e)(2)(C). If property is transferred to Form 8975. Form 8975 and Schedule A (OTSA), or files a form that fails to include a corporation subject to section 362(e)(2), (Form 8975) must be filed with the income all the information required (or includes the transferor and the acquiring tax return of the ultimate parent entity of a incorrect information). Other penalties, corporation may elect, under section U.S. multinational enterprise group for the such as an accuracy-related penalty under 362(e)(2)(C), to reduce the transferor's tax year in or within which the reporting section 6662A, also may apply. See the basis in the stock received instead of period covered by Form 8975 ends. For Instructions for Form 8886 for details on reducing the acquiring corporation's basis more information, see Form 8975, these and other penalties. in the property transferred. Once made, Schedule A (Form 8975) and the the election is irrevocable. For more Instructions for Form 8975 and Reportable transactions by material Schedule A (Form 8975). advisors. Material advisors to any information, see section 362(e)(2) and reportable transaction must disclose Regulations section 1.362-4. If an election Other forms and statements. See Pub. certain information about the reportable is made, a statement must be filed in 542, Corporations, for a list of other forms transaction by filing Form 8918, Material accordance with Regulations section and statements a corporation may need to Advisor Disclosure Statement, with the 1.362-4(d)(3). file in addition to the forms and statements IRS. For details, see the Instructions for Annual information statement for elec- discussed throughout these instructions. Form 8918. tions under section 108(i). If the Transfers to a corporation controlled corporation made an election in 2009 or Specific Instructions by the transferor. Every significant 2010 to defer income from cancellation of transferor (as defined in Regulations debt (COD) in connection with the Period Covered section 1.351-3(d)) that receives stock of reacquisition of an applicable debt File the 2018 return for calendar year 2018 a corporation in exchange for property in a instrument, the corporation must attach a and fiscal years that begin in 2018 and nonrecognition event must include the statement to its return beginning with the end in 2019. For a fiscal or short tax year statement required by Regulations section tax year following the tax year for which return, fill in the tax year space at the top 1.351-3(a) on or with the transferor's tax the corporation made the election, and of the form. return for the tax year of the exchange. ending the first tax year all income deferred has been included in income. In The transferee corporation must include The 2018 Form 1120 also can be used addition, the corporation must annually the statement required by Regulations if: include a copy of the election statement it section 1.351-3(b) on or with its return for The corporation has a tax year of less filed to make the election to defer the • the tax year of the exchange, unless all the than 12 months that begins and ends in income. required information is included in any 2019, and statement(s) provided by a significant

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• The 2019 Form 1120 is not available at 1. Items of gross income and year or tax year elected under section the time the corporation is required to file deductions. 444; its return. 2. A computation of taxable income. • It can establish a business purpose for The corporation must show its 2019 tax a different tax year and obtains the year on the 2018 Form 1120 and take into 3. Balance sheets as of the beginning approval of the IRS (see the Instructions account any tax law changes that are and end of the tax year. for Form 1128 and Pub. 538); or effective for tax years beginning after 4. A reconciliation of income per • It elects under section 444 to have a tax December 31, 2018. books with income per return. year other than a calendar year. To make 5. A reconciliation of retained the election, use Form 8716, Election To Name and Address earnings. Have a Tax Year Other Than a Required Tax Year. Enter the corporation's true name (as set Enter on Form 1120 the totals for each forth in the charter or other legal document item of income, gain, loss, expense, or If a corporation makes the section 444 creating it), address, and EIN on the deduction, net of eliminating entries for election, its deduction for certain amounts appropriate lines. Enter the address of the intercompany transactions between paid to employee–owners may be limited. corporation's principal office or place of corporations within the consolidated See Schedule H (Form 1120), Section business. Include the suite, room, or other group. Attach consolidated balance 280H Limitations for a Personal Service unit number after the street address. If the sheets and a reconciliation of Corporation (PSC), to figure the maximum post office does not deliver mail to the consolidated retained earnings. deduction. street address and the corporation has a P.O. box, show the box number instead. The corporation does not have to If a section 444 election is terminated TIP provide the information requested and the termination results in a short tax Note. Do not use the address of the in (3), (4), and (5), above, if its year, type or print at the top of the first registered agent for the state in which the total receipts (line 1a plus lines 4 through page of Form 1120 for the short tax year corporation is incorporated. For example, 10 on page 1 of the return) and its total “SECTION 444 ELECTION if a business is incorporated in Delaware assets at the end of the tax year TERMINATED.” or Nevada and the corporation's principal (Schedule L, line 15(d)) are less than office is located in Little Rock, Arkansas, $250,000. See Schedule K, question 13. Schedule M-3 (Form 1120) the corporation should enter the Little A corporation with total assets Rock address. For more information on consolidated (nonconsolidated or consolidated for all returns, see the regulations under section corporations included within a If the corporation receives its mail in 1502. consolidated tax group) of $10 million or care of a third party (such as an more on the last day of the tax year must accountant or an attorney), enter on the Life–Nonlife Consolidated file Schedule M-3 (Form 1120), Net street address line “C/O” followed by the Return Income (Loss) Reconciliation for third party's name and street address or Corporations With Total Assets of $10 If Item A, box 1a, is checked and the P.O. box. Million or More, instead of Schedule M-1. corporation is the common parent of a A corporation filing Form 1120 that is not consolidated group that includes a life If the corporation has a foreign required to file Schedule M-3 may insurance company, also check box 1b. address, include the city or town, state or voluntarily file Schedule M-3 instead of See Regulations section 1.1502-47(s) for province, country, and foreign postal Schedule M-1. code. Do not abbreviate the country the filing requirements of a life–nonlife name. Follow the country's practice for consolidated return. Corporations that (a) are required to file entering the name of the state or province Personal Holding Company Schedule M-3 (Form 1120) and have less and postal code. than $50 million total assets at the end of A personal holding company must check the tax year, or (b) are not required to file Item A. Identifying Item A, box 2, and attach Schedule PH Schedule M-3 (Form 1120) and voluntarily (Form 1120), U.S. Personal Holding file Schedule M-3 (Form 1120), must Information Company (PHC) Tax. See the Instructions either (i) complete Schedule M-3 (Form Consolidated Return for Schedule PH (Form 1120) for details. 1120) entirely or (ii) complete Personal Service Corporation Schedule M-3 (Form 1120) through Part I, Corporations filing a consolidated return and complete Form 1120, Schedule M-1, must check Item A, box 1a, and attach If the corporation is a personal service instead of completing Parts II and III of Form 851, Affiliations Schedule, and other corporation, check Item A, box 3. A Schedule M-3 (Form 1120). If the supporting statements to the return. Also, personal service corporation is a corporation chooses to complete for the first year a subsidiary corporation is corporation whose principal activity for the Schedule M-1 instead of completing Parts being included in a consolidated return, testing period is the performance of II and III of Schedule M-3, the amount on attach Form 1122, Authorization and personal services. The testing period for a Schedule M-1, line 1, must equal the Consent of Subsidiary Corporation To Be tax year is generally the prior tax year amount on Schedule M-3, Part I, line 11. Included in a Consolidated Income Tax unless the corporation has just been See the Instructions for Schedule M-3 Return, to the parent's consolidated formed. Personal services include any (Form 1120) for more details. Also, see return. Attach a separate Form 1122 for activity performed in the fields of the instructions for Schedule M-1, later. each new subsidiary being included in the accounting, actuarial science, consolidated return. architecture, consulting, engineering, If you are filing Schedule M-3, check health, law, and the performing arts. The Item A, box 4, to indicate that File supporting statements for each services must be substantially performed Schedule M-3 is attached. corporation included in the consolidated by employee–owners. return. Do not use Form 1120 as a supporting statement. On the supporting A personal service corporation must statement, use columns to show the use a calendar tax year unless: following, both before and after • It elects to use a 52-53-week tax year adjustments. that ends with reference to the calendar

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Item B. Employer • If the corporation has changed its corporation, see the Instructions for Form address since it last filed a return 3115. Identification Number (including a change to an “in care of” (EIN) address), check the “Address change” Installment sales. Generally, the box. installment method cannot be used for Enter the corporation's EIN. If the dealer dispositions of property. A “dealer corporation does not have an EIN, it must disposition” is any disposition of: (a) apply for one. An EIN can be applied for: Note. If a change in address or responsible party occurs after the return is personal property by a person who • Online—Go to IRS.gov/EIN. The EIN is regularly sells or otherwise disposes of issued immediately once the application filed, use Form 8822-B, Change of Address or Responsible Party— personal property of the same type on the information is validated. installment plan, or (b) real property held • By faxing or mailing Form SS-4, Business, to notify the IRS. See the instructions for Form 8822-B for details. for sale to customers in the ordinary Application for Employer Identification course of the taxpayer's trade or business. Number. The restrictions on using the Corporations located in the United Income installment method do not apply to the ! States or U.S. possessions can Except as otherwise provided in the following. CAUTION use the online application. Foreign Internal Revenue Code, gross income • Dispositions of property used or corporations should call 1-267-941-1099 includes all income from whatever source produced in the trade or business of (not a toll free number) for more derived. farming. information on obtaining an EIN. See the • Certain dispositions of timeshares and Exception for income from qualifying Instructions for Form SS-4. residential lots reported under the shipping activities. Gross income does installment method for which the not include income from qualifying EIN applied for, but not received. If the corporation elects to pay interest under shipping activities if the corporation makes corporation has not received its EIN by the section 453(I)(3). time the return is due, enter “Applied For” an election under section 1354 to be taxed Enter on line 1a (and carry to line 3), and the date the corporation applied in the on its notional shipping income (as the gross profit on collections from these space for the EIN. However, if the defined in section 1353) at the highest installment sales. Attach a statement corporation is filing its return electronically, corporate tax rate. If the election is made, showing the following information for the an EIN is required at the time the return is the corporation generally may not claim current and the 3 preceding years: (a) filed. An exception applies to subsidiaries any loss, deduction, or credit with respect gross sales, (b) cost of goods sold, (c) of corporations whose returns are filed to qualifying shipping activities. A gross profits, (d) percentage of gross with the parent's electronically filed corporation making this election also may profits to gross sales, (e) amount consolidated Form 1120. These elect to defer gain on the disposition of a collected, and (f) gross profit on the subsidiaries should enter “Applied For” in qualifying vessel. amount collected. the space for the EIN on their returns. The Use Form 8902, Alternative Tax on subsidiaries' returns are identified under Qualifying Shipping Activities, to figure the For sales of timeshares and residential the parent corporation's EIN. tax. Include the alternative tax on lots reported under the installment Schedule J, Part I, line 9e. method, if the corporation elects to pay For more information, see the interest under section 453(I)(3), the Instructions for Form SS-4. Line 1. Gross Receipts or Sales corporation's income tax is increased by the interest payable under section 453(l) Item D. Total Assets Line 1a. Gross receipts or sales. Enter on line 1a gross receipts or sales from all (3). Report this addition to the tax on Enter the corporation's total assets (as business operations, except for amounts Schedule J, Part I, line 9f. determined by the accounting method that must be reported on lines 4 through Nonaccrual experience method for regularly used in keeping the corporation's 10. books and records) at the end of the tax service providers. Accrual method year. If there are no assets at the end of Special rules apply to certain income, corporations are not required to accrue the tax year, enter -0-. as discussed below. certain amounts to be received from the performance of services that, based on If the corporation is required to Advance payments. In general, their experience, will not be collected, if: complete Schedule L, enter on page 1, advance payments are reported in the • The services are in the fields of health, Item D. Total assets from Schedule L, year of receipt. For exceptions to this law, engineering, architecture, accounting, line 15, column (d). If filing a consolidated general rule for corporations that use the actuarial science, performing arts, or return, report total consolidated assets for accrual method of accounting, see the consulting; or all corporations joining in the return. following. • The corporation's average annual gross • To report income from long-term receipts for any prior 3-tax-year period Item E. Initial Return, Final contracts, see section 460. does not exceed $25 million. For more • For rules that allow a limited deferral of details, see section 448(d)(5). Return, Name Change, or advance payments beyond the current tax year, see Rev. Proc. 2004-34, 2004-22 This provision does not apply to any Address Change amount if interest is required to be paid on • If this is the corporation's first return, I.R.B. 991, and Notice 2018-35, 2018-18 I.R.B. 520 (or any successors). For rules the amount or if there is any penalty for check the “Initial return” box. failure to timely pay the amount. See • If this is the corporation's final return for the deferral of advance payments from the sale of certain gift cards and more Regulations section 1.448-2 for and it will no longer exist, check the “Final information on the nonaccrual experience return” box. information on the tax treatments of advance payments, see Pub. 538. method, including information on safe • If the corporation changed its name harbor methods. For information on a since it last filed a return, check the “Name • For information on adopting or changing to a permissible method for book safe harbor method of accounting for change” box. Generally, a corporation also corporations that use the nonaccrual must have amended its articles of reporting advance payments for services and certain goods by an accrual method experience method of accounting, see incorporation and filed the amendment Rev. Proc. 2011-46, 2011-42 I.R.B. 518, with the state in which it was incorporated.

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as modified by Rev. Proc. 2016-29, Examples of other income to report on Form 8925, Report of Employer-Owned 2016-21 I.R.B. 880. Also, see the line 10 include the following. Life Insurance Contracts. See section Instructions for Form 3115 for procedures • Recoveries of bad debts deducted in 101(j) for details. to obtain automatic consent to change to prior years under the specific charge-off • Income from cancellation of debt (COD) this method or make certain changes method. from the repurchase of a debt instrument within this method. • The amount included in income from for less than its adjusted issue price. Corporations that qualify to use the Form 6478, Biofuel Producer Credit, if • Any COD income deferred from 2009 or nonaccrual experience method should applicable. 2010 that is includible in income in 2018. attach a statement showing total gross • The amount included in income from See section 108(i) and Rev. Proc. receipts, the amount not accrued because Form 8864, Biodiesel and Renewable 2009-37. If the corporation is a direct or of the application of section 448(d)(5), and Diesel Fuels Credit, if applicable. indirect partner in a partnership, other the net amount accrued. Enter the net • Refunds of taxes deducted in prior special rules apply. See Regulations amount on line 1a. years to the extent they reduced the section 1.108(i)-2. amount of tax imposed. See section 111 • The corporation's share of the following Line 1b. Returns and allowances. and the related regulations. Do not offset income from Form 8621, Information Enter cash and credit refunds the current year taxes against tax refunds. Return by a Shareholder of a Passive corporation made to customers for • Ordinary income from trade or business Foreign Investment Company or Qualified returned merchandise, rebates, and other activities of a partnership (from Electing Fund. allowances made on gross receipts or Schedule K-1 (Form 1065)). Do not offset 1. Ordinary earnings of a qualified sales. ordinary losses against ordinary income. electing fund. Line 2. Cost of Goods Sold Instead, include the losses on line 26. Show the partnership's name, address, 2. Gain or loss from marking passive Complete and attach Form 1125-A, Cost and EIN on a separate statement attached foreign investment company (PFIC) stock of Goods Sold, if applicable. Enter on to this return. If the amount entered is from to market. Form 1120, line 2, the amount from Form more than one partnership, identify the 3. Gain or loss from sale or other 1125-A, line 8. See Form 1125-A and its amount from each partnership. disposition of section 1296 stock. instructions. • Reduction amount that is includible in 4. Excess distributions from a section Line 4. Dividends and income if the corporation made an election 1291 fund allocated to the current year under section 965(n). See Line 29a. Net and pre-PFIC years, if any. Inclusions Operating Loss Deduction below. See Form 8621 and the Instructions for See the instructions for Schedule C, later. • The transferred loss amount identified Form 8621 for details. Then, complete Schedule C and enter on as “Section 91 Transferred Loss Amount,” line 4 the amount from Schedule C, which is required to be recognized when line 23, column (a). substantially all the assets of a foreign Deductions Line 5. Interest branch are transferred to a foreign corporation with respect to which the Limitations on Deductions Enter taxable interest on U.S. obligations corporation was a U.S. shareholder and on loans, notes, mortgages, bonds, immediately after the transfer. See section Uniform capitalization rules. The bank deposits, corporate bonds, tax 91. uniform capitalization rules of section refunds, etc. Do not offset interest • Any LIFO recapture amount under 263A require corporations to capitalize expense against interest income. Special section 1363(d). The corporation may certain costs to inventory or other rules apply to interest income from certain have to include a LIFO recapture amount property. Corporations subject to the below-market-rate loans. See section in income if it: section 263A uniform capitalization rules 7872 for details. are required to capitalize: 1. Used the LIFO inventory method for its last tax year before the first tax year 1. Direct costs of assets produced or Note. Report tax-exempt interest on acquired for resale, and Schedule K, item 9. Also, if required, for which it elected to become an S include the same amount on corporation, or 2. Certain indirect costs (including Schedule M-1, line 7, or Schedule M-3 2. Transferred LIFO inventory assets taxes) that are properly allocable to (Form 1120), Part II, line 13, if applicable. to an S corporation in a nonrecognition property produced or property acquired for transaction in which those assets were resale. Line 6. Gross Rents transferred basis property. The corporation cannot deduct the costs Enter the gross amount received for the The LIFO recapture amount is the required to be capitalized under section rental of property. Deduct expenses such 263A until it sells, uses, or otherwise as repairs, interest, taxes, and amount by which the C corporation's inventory under the FIFO method exceeds disposes of the property (to which the depreciation on the proper lines for costs relate). The corporation recovers deductions. A rental activity held by a the inventory amount under the LIFO method at the close of the corporation's these costs through depreciation, closely held corporation or a personal amortization, or cost of goods sold. service corporation may be subject to the last tax year as a C corporation (or for the year of the transfer, if (2) above applies). passive activity loss rules. See Passive Note. A small business taxpayer (defined activity limitations, later. Also see the instructions for Schedule J, Part I, line 11. earlier) is not required to capitalize costs Line 10. Other Income • Any net positive section 481(a) under section 263A. A small business taxpayer that wants to discontinue Enter any other taxable income not adjustment. • Part or all of the proceeds received capitalizing costs under section 263A reported on lines 1 through 9. List the type must change its method of accounting. and amount of income on an attached from certain corporate-owned life insurance contracts issued after August See section 263A(i). Also see Change in statement. If the corporation has only one accounting method, earlier. item of other income, describe it in 17, 2006. Corporations that own one or parentheses on line 10. more employer-owned life insurance For more information on the uniform contracts issued after this date must file capitalization rules, see Pub. 538. For information on non-small business

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taxpayers, see Regulations sections the current tax year and all subsequent claims certain credits, it may need to 1.263A-1 through 1.263A-3. See section years. reduce the otherwise allowable 263A(d), Regulations section 1.263A-4, The corporation can choose to forgo deductions for expenses used to figure the and Pub. 225 for rules for property the elections above by affirmatively credit. This applies to credits such as the produced in a farming business. electing to capitalize its start-up or following. Work opportunity credit (Form 5884). Transactions between related taxpay- organizational costs on its income tax • Credit for increasing research activities ers. Generally, an accrual basis taxpayer return filed by the due date (including • (Form 6765). can only deduct business expenses and extensions) for the tax year in which the Orphan drug credit (Form 8820). interest owed to a related party in the year active trade or business begins. • Disabled access credit (Form 8826). the payment is included in the income of • Empowerment zone employment credit the related party. See sections 163(e)(3) Note. The election to either amortize or • (Form 8844), if applicable. and 267(a)(2) for limitations on deductions capitalize start-up costs is irrevocable and Indian employment credit (Form 8845), for unpaid interest and expenses. applies to all start-up costs that are related • to the trade or business. if applicable. Limitations on business interest ex- Credit for employer social security and Report the deductible amount of • pense. Business interest expense is Medicare taxes paid on certain employee start-up and organizational costs and any limited for tax years beginning after tips (Form 8846). amortization on line 26. For amortization December 31, 2017. See section 163(j) Credit for small employer pension plan that begins during the current tax year, • and Form 8990. Also see Form 1120, start-up costs (Form 8881). complete and attach Form 4562, Schedule K, Questions 23 and 24, later. Credit for employer-provided childcare Depreciation and Amortization. • facilities and services (Form 8882). Section 291 limitations. Corporations Passive activity limitations. Limitations Low sulfur diesel fuel production credit may be required to adjust deductions for • on passive activity losses and credits (Form 8896). depletion of iron ore and coal, intangible under section 469 apply to personal Mine rescue team training credit (Form drilling and exploration and development • service corporations (defined earlier) and 8923), if applicable. costs, certain deductions for financial closely held corporations (defined later). Credit for employer differential wage institutions, and the amortizable basis of • payments (Form 8932). pollution control facilities. See section 291 Generally, the two kinds of passive Credit for small employer health to determine the amount of the activities are: • insurance premiums (Form 8941). adjustment. • Trade or business activities in which the corporation did not materially participate • Employer credit for paid family and Election to deduct business start-up for the tax year; and medical leave (Form 8994). and organizational costs. A corporation • Rental activities, regardless of its If the corporation has any of these can elect to deduct a limited amount of participation. credits, figure the current year credit start-up and organizational costs it paid or For exceptions, see Form 8810, Corporate before figuring the deduction for expenses incurred. Any remaining costs generally Passive Activity Loss and Credit on which the credit is based. If the must be amortized over a 180-month Limitations. corporation capitalized any costs on which period. See sections 195 and 248 and the it figured the credit, it may need to reduce related regulations. Corporations subject to the passive activity limitations must complete Form the amount capitalized by the credit Time for making an election. The 8810 to compute their allowable passive attributable to these costs. corporation generally elects to deduct activity loss and credit. Before completing See the instructions for the form used start-up or organizational costs by Form 8810, see Temporary Regulations to figure the applicable credit for more claiming the deduction on its income tax section 1.163-8T, which provides rules for details. return filed by the due date (including allocating interest expense among Limitations on deductions related to extensions) for the tax year in which the activities. If a passive activity is also property leased to tax-exempt entities. active trade or business begins. However, subject to the at-risk rules of section 465 If a corporation leases property to a for start-up or organizational costs paid or or the tax-exempt use loss rules of section governmental or other tax-exempt entity, incurred before September 9, 2008, the 470, those rules apply before the passive the corporation cannot claim deductions corporation is required to attach a loss rules. related to the property to the extent that statement to its return to elect to deduct For more information, see section 469, they exceed the corporation's income from such costs. the related regulations, and Pub. 925, the lease payments. This disallowed For more details, including special Passive Activity and At-Risk Rules. tax-exempt use loss can be carried over to rules for costs paid or incurred before the next tax year and treated as a September 9, 2008, see the Instructions Closely held corporations. A corporation is a closely held corporation if: deduction with respect to the property for for Form 4562. Also see Pub. 535, that tax year. See section 470(d) for Business Expenses. • At any time during the last half of the tax year more than 50% in value of its exceptions. If the corporation timely filed its return outstanding stock is directly or indirectly Limitation on tax benefits for remuner- for the year without making an election, it owned by or for not more than five ation under the Patient Protection and can still make an election by filing an individuals, and Affordable Care Act. The $1 million amended return within 6 months of the • The corporation is not a personal compensation limit is reduced to $500,000 due date of the return (excluding service corporation. for remuneration for services provided by extensions). Clearly indicate the election Certain organizations are treated as individuals for or on behalf of certain on the amended return and write “Filed health insurance providers in tax years pursuant to section 301.9100-2” at the top individuals for purposes of this test. See section 542(a)(2). For rules for beginning after December 31, 2009. The of the amended return. File the amended $500,000 limitation applies to return at the same address the corporation determining stock ownership, see section 544 (as modified by section 465(a)(3)). remuneration that is deductible in the tax filed its original return. The election year during which the services were applies when figuring taxable income for Reducing certain expenses for which performed and remuneration for services credits are allowable. If the corporation during the year that is deductible in a

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future tax year (called "deferred deduction expenses. These expenses must be in the Internal Revenue Bulletin in early remuneration"). The $500,000 limitation is capitalized and depreciated or amortized. 2019. reduced by any amounts disallowed as However, amounts paid for routine excess parachute payments. See section maintenance on property, including Line 17. Taxes and Licenses 162(m)(6) and Regulations section buildings, may be deductible. See Enter taxes paid or accrued during the tax 1.162-31 for definitions and other special Regulations section 1.263(a)-3(i). year, but do not include the following. rules. Also see Notice 2011-2, 2011-2 • Federal income taxes. I.R.B. 260. Line 15. Bad Debts • Foreign or U.S. possession income Enter the total debts that became taxes if a foreign tax credit is claimed. Line 12. Compensation of worthless in whole or in part during the tax • Taxes not imposed on the corporation. Officers year. A small bank or thrift institution using • Taxes, including state or local sales Enter deductible officers' compensation the reserve method of section 585 should taxes, that are paid or incurred in on line 12. Do not include compensation attach a statement showing how it figured connection with an acquisition or deductible elsewhere on the return, such the current year's provision. A corporation disposition of property (these taxes must as amounts included in cost of goods sold, that uses the cash method of accounting be treated as a part of the cost of the elective contributions to a section 401(k) cannot claim a bad debt deduction unless acquired property or, in the case of a cash or deferred arrangement, or amounts the amount was previously included in disposition, as a reduction in the amount contributed under a salary reduction SEP income. realized on the disposition). agreement or a SIMPLE IRA plan. • Taxes assessed against local benefits Line 16. Rents that increase the value of the property If the corporation's total receipts If the corporation rented or leased a assessed (such as for paving, etc.). (line 1a, plus lines 4 through 10) are vehicle, enter the total annual rent or lease • Taxes deducted elsewhere on the $500,000 or more, complete Form expense paid or incurred during the year. return, such as those reflected in cost of 1125-E, Compensation of Officers. Enter Also complete Part V of Form 4562. If the goods sold. on Form 1120, line 12, the amount from corporation leased a vehicle for a term of See section 164(d) for information on Form 1125-E, line 4. 30 days or more, the deduction for vehicle apportionment of taxes on real property lease expense may have to be reduced by between seller and purchaser. Line 13. Salaries and Wages an amount includible in income called the Enter the total salaries and wages paid for inclusion amount. The corporation may Line 18. Interest the tax year. Do not include salaries and have an inclusion amount if: wages deductible elsewhere on the return, Note. Do not offset interest income such as amounts included in officers' And the vehicle's against interest expense. compensation, cost of goods sold, FMV on the first The corporation must make an interest elective contributions to a section 401(k) day of the lease allocation if the proceeds of a loan were cash or deferred arrangement, or amounts The lease term began: exceeded: used for more than one purpose (for contributed under a salary reduction SEP example, to purchase a portfolio agreement or a SIMPLE IRA plan. Cars (excluding trucks and vans) investment and to acquire an interest in a If the corporation provided taxable passive activity). See Temporary After 12/31/17 but before Regulations section 1.163-8T for the fringe benefits to its employees, such as 1/1/19 ...... $50,000 personal use of a car, do not deduct as interest allocation rules. wages the amount allocated for After 12/31/12 but before 1/1/18 ...... $19,000 Mutual savings banks, building and depreciation and other expenses claimed loan associations, and cooperative banks on lines 20 and 26. After 12/31/07 but before can deduct the amounts paid or credited 1/1/13 ...... $18,500 If the corporation claims a credit to the accounts of depositors as ! for any wages paid or incurred, it Trucks and vans dividends, interest, or earnings. See CAUTION section 591. may need to reduce any After 12/31/17 but before corresponding deduction for officers' 1/1/19 ...... $50,000 Do not deduct the following interest. compensation and salaries and wages. After 12/31/13 but before • Interest on indebtedness incurred or See Reducing certain expenses for which 1/1/18 ...... $19,500 continued to purchase or carry obligations credits are allowable, earlier. if the interest is wholly exempt from After 12/31/09 but before income tax. See section 265(b) for special 1/1/14 ...... $19,000 Line 14. Repairs and rules and exceptions for financial Maintenance After 12/31/08 but before institutions. Also see section 265(b)(7) for 1/1/10 ...... $18,500 Enter the cost of repairs and maintenance a de minimis exception for financial not claimed elsewhere on the return, such After 12/31/07 but before institutions for certain tax-exempt bonds as labor and supplies, that do not add to 1/1/09 ...... $19,000 issued in 2009 and 2010. the value of the property or appreciably • For cash basis taxpayers, prepaid prolong its life. See Regulations section interest allocable to years following the 1.162-4. The corporation may elect to current tax year. For example, a cash capitalize certain repair and maintenance basis calendar year taxpayer who in 2018 costs consistent with its books and prepaid interest allocable to any period records. See Regulations section after 2018 can deduct only the amount 1.263(a)-3(n) for information on how to See Pub. 463, Travel, Gift, and Car allocable to 2018. make the election. Expenses, for instructions on figuring the • Interest and carrying charges on inclusion amount. straddles. Generally, these amounts must New buildings, machinery, or be capitalized. See section 263(g). permanent improvements that increase Note. The inclusion amount for lease • Interest on debt allocable to the the value of the property are not terms beginning in 2019 will be published production of designated property by a deductible as repair and maintenance corporation for its own use or for sale. The

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corporation must capitalize this interest. return stating that the resolution butions. A corporation may elect to Also capitalize any interest on debt authorizing the contributions was adopted deduct qualified cash contributions allocable to an asset used to produce the by the board of directors during the tax without regard to the 10% taxable income property. See section 263A(f) and year. The declaration must include the limit. Qualified contributions are Regulations sections 1.263A-8 through date the resolution was adopted. See contributions that were made after 1.263A-15 for definitions and more section 170(a)(2)(B). October 7, 2017, and before January 1, information. 2019, to a qualified charitable organization Limitation on deduction. The total Interest paid or incurred on any portion (other than certain private foundations • amount claimed cannot be more than 10% of an underpayment of tax that is described in section 509(a)(3) or donor of taxable income (line 30) computed attributable to an understatement arising advised funds described in section without regard to the following. from an undisclosed listed transaction or 4966(d)(2)) for relief efforts in the Any deduction for contributions. an undisclosed reportable avoidance • California wildfire disaster area. The The special deductions on line 29b. transaction (other than a listed • corporation must obtain contemporaneous The limitation under section 249 on the transaction) entered into in tax years • written acknowledgment (within the deduction for bond premium. beginning after October 22, 2004. meaning of section 170(f)(8)) from the Any net operating loss (NOL) carryback • qualified charitable organization that the Special rules apply to: to the tax year under section 172. contribution was used or is to be used for • Forgone interest on certain Any capital loss carryback to the tax • disaster relief efforts. below-market-rate loans (see section year under section 1212(a)(1). 7872). • Any domestic production activities The total amount of the contribution • Original issue discount (OID) on certain deduction. claimed for disaster relief efforts cannot high yield discount obligations. See exceed 100% of the excess of the Carryover. Charitable contributions over section 163(e)(5) to determine the amount corporation's taxable income (as the 10% limitation cannot be deducted for of the deduction for OID that is deferred computed above substituting “100%” for the tax year but can be carried over to the and the amount that is disallowed on a “10%” ) over all other allowable charitable next 5 tax years. See the exception below high yield discount obligation. The rules contributions. Any excess qualified for farmers and ranchers and certain under section 163(e)(5) do not apply to contributions are carried over to the next 5 Native Corporations. certain high yield discount obligations years. See Pub. 976. Special rules apply if the corporation issued after August 31, 2008, and before Cash contributions. For contributions of has an NOL carryover to the tax year. In January 1, 2011. See section 163(e)(5) cash, check, or other monetary gifts figuring the charitable contributions (F). Also see Notice 2010-11, 2010-4 (regardless of the amount), the deduction for the current tax year, the 10% I.R.B. 326. corporation must maintain a bank record, limit is applied using the taxable income • Interest which is allocable to or a receipt, letter, or other written after taking into account any deduction for unborrowed policy cash values of life communication from the donee the NOL. insurance, endowment, or annuity organization indicating the name of the contracts issued after June 8, 1997. See To figure the amount of any remaining organization, the date of the contribution, section 264(f). Attach a statement NOL carryover to later years, taxable and the amount of the contribution. showing the computation of the deduction. income must be modified (see section • Section 108(i) OID deduction. If the 172(b)). To the extent that contributions Contributions of $250 or more. A corporation issued a debt instrument with are used to reduce taxable income for this corporation can deduct a contribution of OID that is subject to section 108(i)(2) purpose and increase an NOL carryover, a $250 or more only if it gets a written because of an election to defer the income contributions carryover is not allowed. See acknowledgment from the donee from the cancellation of debt (COD), the section 170(d)(2)(B). organization that shows the amount of interest deduction for this OID is deferred cash contributed, describes any property until the COD is includible in income. The Suspension of 10% limitation for farm- contributed (but not its value), and either accrued OID is allowed as a deduction ers and ranchers and certain Native gives a description and a good faith ratably over the 5-year period that the Corporations. Certain corporations can estimate of the value of any goods or income from COD is includible in income. deduct contributions of qualified services provided in return for the The deduction is limited to the amount of conservation property without regard to contribution or states that no goods or COD subject to the section 108(i) election. the general 10% limit. This applies to: services were provided in return for the • A qualified farmer or rancher (as contribution. The acknowledgment must Line 19. Charitable defined in section 170(b)(1)(E)(v)) that be obtained by the due date (including Contributions does not have publicly traded stock; and extensions) of the corporation's return, or, • A Native Corporation (as defined in if earlier, the date the return is filed. Do not Enter contributions or gifts actually paid section 170(b)(2)(C)(iii)) that contributes within the tax year to or for the use of attach the acknowledgment to the tax property which was land conveyed under return, but keep it with the corporation's charitable and governmental the Alaska Native Claims Settlement Act. organizations described in section 170(c) records. and any unused contributions carried over The total amount of the contribution Contributions of property other than from prior years. Special rules and limits claimed for the qualified conservation cash. If a corporation (other than a apply to contributions to organizations property cannot exceed 100% of the closely held or personal service conducting lobbying activities. See section excess of the corporation's taxable corporation) contributes property other 170(f)(9). income (as computed above substituting than cash and claims over a $500 “100%” for “10%” ) over all other allowable deduction for the property, it must attach a Corporations reporting taxable income charitable contributions. Any excess on the accrual method can elect to treat as statement to the return describing the kind qualified conservation contributions can of property contributed and the method paid during the tax year any contributions be carried over to the next 15 years, paid by the due date for filing the used to determine its FMV. Closely held subject to the 100% limitation. See corporations and personal service corporation’s tax return (not including sections 170(b)(2)(B) and (C). extensions), if the contributions were corporations must complete Form 8283, authorized by the board of directors during Temporary suspension of 10% limita- Noncash Charitable Contributions, and the tax year. Attach a declaration to the tion for certain disaster-related contri- attach it to their returns. All other

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corporations generally must complete and See Pub. 535 for more information on 1, 2018, for a live theatrical production), if attach Form 8283 to their returns for depletion. the aggregate cost of the production does contributions of property (other than not exceed $15 million. There is a higher money) if the total claimed deduction for Line 23. Pension, dollar limitation for production in certain all property contributed was more than Profit-Sharing, etc., Plans areas. See section 181 and the related $5,000. Special rules apply to the Enter the deduction for contributions to regulations. contribution of certain property. See the qualified pension, profit-sharing, or other Note. Certain film, television, or live Instructions for Form 8283. funded deferred compensation plans. theatrical productions acquired and Employers who maintain such a plan placed in service after September 27, Qualified conservation 2017 (for which a deduction would have contributions. Special rules apply to generally must file one of the forms listed below unless exempt from filing under been allowable under section 181 without qualified conservation contributions, regard to the dollar limitation), are including contributions of certain regulations or other applicable guidance, even if the plan is not a qualified plan qualified property eligible for the special easements on buildings located in a depreciation allowance under section registered historic district. See section under the Internal Revenue Code. The filing requirement applies even if the 168(k). See the Instructions for Form 170(h) and Pub. 526, Charitable 4562. Contributions. corporation does not claim a deduction for the current tax year. There are penalties • Certain business start-up and Other special rules. The corporation for failure to file these forms on time and organizational costs (discussed earlier, must reduce its deduction for contributions for overstating the pension plan deduction. under Limitations on Deductions). of certain capital gain property. See See sections 6652(e) and 6662(f). Also • Reforestation costs. The corporation sections 170(e)(1) and 170(e)(5). see the instructions for the applicable can elect to deduct up to $10,000 of qualifying reforestation expenses for each A larger deduction is allowed for certain form. qualified timber property. The corporation contributions including: Form 5500, Annual Return/Report of can elect to amortize over 84 months any • Inventory and other property to certain Employee Benefit Plan. amount not deducted. See Pub. 535. organizations for use in the care of the ill, Insurance premiums. needy, or infants (see section 170(e)(3)), Form 5500-SF, Short Form Annual • Legal and professional fees. including qualified contributions of Return/Report of Small Employee Benefit • Supplies used and consumed in the “apparently wholesome food” (see section Plan. File this form instead of Form 5500 • business. 170(e)(3)(C)); and generally if there were under 100 Travel, meals, and entertainment • Scientific equipment used for research participants at the beginning of the plan • expenses. Special rules apply (discussed to institutions of higher learning or to year. below). certain scientific research organizations Utilities. (other than by personal holding Note. Form 5500 and Form 5500-SF • Ordinary losses from trade or business companies and service organizations). must be filed electronically under the • activities of a partnership (from See section 170(e)(4). computerized ERISA Filing Acceptance System (EFAST2). For more information, Schedule K-1 (Form 1065)). Do not offset For more information on charitable see the EFAST2 website at ordinary income against ordinary losses. contributions, including substantiation and www.efast.dol.gov. Instead, include the income on line 10. Show the partnership's name, address, recordkeeping requirements, see section Form 5500-EZ, Annual Return of and EIN on a separate statement attached 170 and the related regulations and Pub. One-Participant (Owners and Their to this return. If the amount is from more 526. For other special rules that apply to Spouses) Retirement Plan. File this form than one partnership, identify the amount corporations, see Pub. 542. for a plan that only covers the owner (or from each partnership. the owner and his or her spouse) but only Line 20. Depreciation • Any extraterritorial income exclusion if the owner (or the owner and his or her (from Form 8873). Include on line 20 depreciation and the spouse) owns the entire business. cost of certain property that the • Any net negative section 481(a) corporation elected to expense under Line 24. Employee Benefit adjustment. See Section 481(a) section 179 from Form 4562. Include Programs adjustment, earlier. amounts not claimed on Form 1125-A or • Any applicable deduction under section Enter contributions to employee benefit elsewhere on the return. See Form 4562 179D for costs of energy efficient programs not claimed elsewhere on the and the Instructions for Form 4562. commercial building property. return (for example, insurance or health • Dividends paid in cash on stock held by Line 21. Depletion and welfare programs) that are not an an employee stock ownership plan. incidental part of a pension, profit-sharing, See sections 613 and 613A for However, a deduction may be taken for etc., plan included on line 23. percentage depletion rates applicable to these dividends only if, according to the natural deposits. Also see section 291 for Line 26. Other Deductions plan, the dividends are: the limitation on the depletion deduction Attach a statement, listing by type and 1. Paid in cash directly to the plan for iron ore and coal (including lignite). amount, all allowable deductions that are participants or beneficiaries; 2. Paid to the plan, which distributes Attach Form T (Timber), Forest not deductible elsewhere on Form 1120. them in cash to the plan participants or Activities Schedule, if a deduction for Enter the total on line 26. their beneficiaries no later than 90 days depletion of timber is taken. Examples of other deductions include after the end of the plan year in which the the following. See Pub. 535 for details on dividends are paid; Foreign intangible drilling costs and other deductions that may apply to foreign exploration and development costs corporations. 3. At the election of such participants must either be added to the corporation's • Amortization. See Part VI of Form 4562. or their beneficiaries (a) payable as basis for cost depletion purposes or be • Certain costs of a qualified film, provided under (1) or (2) above, or (b) deducted ratably over a 10-year period. television, or live theatrical production paid to the plan and reinvested in See sections 263(i), 616, and 617 for commencing before January 1, 2018 (after qualifying employer securities; or details. December 31, 2015, and before January

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4. Used to make payments on a loan associations), business leagues, trade Dues and other similar amounts paid to described in section 404(a)(9). associations, chambers of commerce, certain tax-exempt organizations may not boards of trade, and real estate boards. be deductible. If certain in-house lobbying See section 404(k) for more details and This includes country clubs, golf and expenditures do not exceed $2,000, they the limitation on certain dividends. athletic clubs, airline and hotel clubs, and are deductible. clubs operated to provide meals under Do not deduct expenses such as the Domestic production activities deduc- conditions favorable to business following. tion. If the corporation is a recipient of the discussion. • Fines or penalties paid to a government domestic production activities deduction for violating any law. However, see Entertainment facilities. The from a flow-through entity such as a exceptions discussed below. corporation cannot deduct an expense partnership, estate, trust, or cooperative • Any amount that is allocable to a class paid or incurred for a facility (such as a with a tax year beginning before January of exempt income. See section 265(b) for yacht or hunting lodge) used for an activity 1, 2018, the deduction can be taken in exceptions. usually considered entertainment, limited circumstances. See Form 8903 • Lobbying expenses. However, see amusement, or recreation. and the Instructions for Form 8903 for exceptions discussed below. details. • Amounts paid or incurred for any Amounts treated as compensation. settlement, payout, or attorney fees Generally, the corporation may be able to Line 28. Taxable Income Before related to sexual harassment or sexual deduct otherwise nondeductible NOL Deduction and Special abuse, if such payments are subject to a entertainment, amusement, or recreation Deductions nondisclosure agreement. See new expenses if the amounts are treated as section 162(q). compensation to the recipient and At-risk rules. Generally, special at-risk reported on Form W-2 for an employee or rules under section 465 apply to closely Travel, meals, and entertainment. on Form 1099-MISC for an independent held corporations (see Passive activity Subject to limitations and restrictions contractor. limitations, earlier) engaged in any activity discussed below, a corporation can However, if the recipient is an officer, as a trade or business or for the deduct ordinary and necessary travel, director, beneficial owner (directly or production of income. These corporations meal, and non-entertainment expenses indirectly), or other “specified individual” may have to adjust the amount on line 28. paid or incurred in its trade or business. (as defined in section 274(e)(2)(B) and (See below.) Generally, entertainment expenses, Regulations section 1.274-9(b)), special membership dues, and facilities used in The at-risk rules do not apply to: rules apply. See section 274(e)(2) and connection with these activities cannot be • Holding real property placed in service Regulations sections 1.274-9 and deducted. Also, special rules apply to by the taxpayer before 1987; 1.274-10. deductions for gifts, luxury water travel, • Equipment leasing under sections and convention expenses. See section Fines and penalties. Generally, no 465(c)(4), (5), and (6); or 274 and Pub. 463 for details. deduction is allowed for fines and • Any qualifying business of a qualified penalties paid to a government or corporation under section 465(c)(7). Travel. The corporation cannot deduct specified nongovernmental entity for the However, the at-risk rules do apply to travel expenses of any individual violation of any law except: the holding of mineral property. accompanying a corporate officer or • Amounts that constitute restitution, If the at-risk rules apply, adjust the employee, including a spouse or • Amounts paid to come into compliance dependent of the officer or employee, amount on this line for any section 465(d) with the law, losses. These losses are limited to the unless: • Amounts paid or incurred as the result • That individual is an employee of the amount for which the corporation is at risk of certain court orders in which no for each separate activity at the close of corporation, and government or specified nongovernmental • His or her travel is for a bona fide the tax year. If the corporation is involved agency is a party, and in one or more activities, any of which business purpose and would otherwise be • Amounts paid or incurred for taxes due. deductible by that individual. incurs a loss for the year, report the losses No deduction is allowed for the for each activity separately. Attach Form Meals. Generally, the corporation can restitution amount or amount paid to come 6198, At-Risk Limitations, showing the deduct only 50% of the amount otherwise into compliance with the law unless the amount at risk and gross income and allowable for non-entertainment related amounts are specifically identified in the deductions for the activities with the meal expenses paid or incurred in its trade settlement agreement or court order. Also, losses. or business. Entertainment-related meals any amount paid or incurred as If the corporation sells or otherwise generally are not deductible. In addition reimbursement to the government for the disposes of an asset or its interest (either (subject to exceptions under section costs of any investigation or litigation are total or partial) in an activity to which the 274(k)(2)): not eligible for the exceptions and are at-risk rules apply, determine the net profit • Meals must not be lavish or nondeductible. or loss from the activity by combining the extravagant, and Lobbying expenses. Generally, gain or loss on the sale or disposition with • An employee of the corporation must the profit or loss from the activity. If the be present at the meal. lobbying expenses are not deductible. These expenses include: corporation has a net loss, it may be See section 274(n)(3) for a special rule • Amounts paid or incurred in connection limited because of the at-risk rules. that applies to expenses for meals with influencing federal, state, or local Treat any loss from an activity not consumed by individuals subject to the legislation; or allowed for the tax year as a deduction hours of service limits of the Department • Amounts paid or incurred in connection allocable to the activity in the next tax of Transportation. with any communication with certain year. federal executive branch officials in an Membership dues. The corporation Line 29a. Net Operating Loss cannot deduct amounts paid or incurred attempt to influence the official actions or for membership dues in civic or public positions of the officials. See Regulations Deduction service organizations, professional section 1.162-29 for the definition of A corporation can use the NOL incurred in organizations (such as bar and medical “influencing legislation.” one tax year to reduce its taxable income

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in another tax year. Enter on line 29a the • If a corporation elects the alternative tax and the amount of the deduction. For total NOL carryovers from other tax years, on qualifying shipping activities under more information, see section 7518. but do not enter more than the section 1354, no deduction is allowed for corporation's taxable income (after special an NOL attributable to the qualifying Line 34. Estimated Tax Penalty deductions). Attach a statement showing shipping activities to the extent that the Generally, the corporation does not have the computation of the NOL deduction. loss is carried forward from a tax year to file Form 2220 because the IRS can Complete item 12 on Schedule K. preceding the first tax year for which the figure the penalty amount, if any, and bill alternative tax election was made. See the corporation. However, even if the The following special rules apply. section 1358(b)(2). corporation does not owe the penalty, it • The corporation may elect under must complete and attach Form 2220 if: section 965(n) to determine the amount of For more details on the NOL deduction, • The annualized income or adjusted the NOL for a tax year and the amount of see section 172 and the Instructions for method is used, or taxable income to be reduced by NOL Form 1139. • The corporation is a large corporation carryovers or carrybacks to that tax year (as defined in the Instructions for Form without regard to the reduction amount. Line 29b. Special Deductions 2220) computing its first required The reduction amount is equal to the See the instructions for Schedule C. installment based on the prior year's tax. amount of the section 965(a) inclusions for such tax year (net of the section 965(c) Line 30. Taxable Income If Form 2220 is attached, check the box deduction) plus, in the case of a domestic Minimum taxable income. The on line 34, and enter any penalty on this corporation that claims a credit for corporation's taxable income cannot be line. deemed paid foreign taxes, the section 78 less than the largest of the following Line 35. Amount Owed gross ups with respect to the foreign taxes amounts. If the corporation cannot pay the full deemed paid with respect to the section • The inversion gain of the corporation for amount of tax owed, it can apply for an 965(a) inclusions. If, as a result of an the tax year, if the corporation is an installment agreement online. The election under section 965(n), the amount expatriated entity or a partner in an corporation can apply for an installment of the NOL for the tax year is determined expatriated entity. See section 7874(a). agreement online if: without regard to the reduction amount, • The sum of the corporation's excess It cannot pay the full amount shown on the reduction amount is included in other inclusions from its residual interest in a • line 35, income on line 10. If, as a result of an REMIC from Schedules Q (Form 1066), The total amount owed is $25,000 or election under 965(n), the taxable income line 2c, and the corporation's taxable • less, and reduced by NOL carryovers or carrybacks income determined solely with respect to The corporation can pay the liability in is reduced, the NOL deduction on line 29a its ownership and high-yield interests in • full in 24 months. is reduced by the reduction amount. See FASITs. See sections 860E(a) and 860J To apply using the Online Payment section 965(n) for more information. (repealed). • If an ownership change (described in Agreement Application, go to IRS.gov/ section 382(g)) occurs, the amount of the Net operating loss (NOL). If line 30 OPA. taxable income of a loss corporation that (figured without regard to the items listed may be offset by the pre-change NOL above under minimum taxable income) is Under an installment agreement, the carryovers may be limited. See section zero or less, the corporation may have an corporation can pay what it owes in 382 and the related regulations. A loss NOL that can be carried back or forward monthly installments. There are certain corporation must include the information as a deduction to other tax years. conditions that must be met to enter into and maintain an installment agreement, statement as provided in Regulations NOLs incurred in tax years ending after section 1.382-11(a) with its income tax such as paying the liability within 24 2017 generally can only be carried months and making all required deposits return for each tax year that it is a loss forward. Exceptions apply to NOLs from a corporation in which an ownership shift, and timely filing tax returns during the farming loss and NOLs of insurance length of the agreement. equity structure shift, or other transaction companies, other than life insurance described in Temporary Regulations companies, which can be carried back 2 If the installment agreement is section 1.382-2T(a)(2)(i) occurs. If the years. For NOLs that can be carried back, accepted, the corporation will be charged corporation makes the the corporation can elect to waive the a fee and it will be subject to penalties and closing-of-the-books election, see carryback period and instead carry the interest on the amount of tax not paid by Regulations section 1.382-6(b). NOL forward to future tax years. See the the due date of the return. The limitations under section 382 do instructions for Schedule K, item 11, for not apply to certain ownership changes information on making the election to Line 37 after February 17, 2009, made pursuant to waive the entire carryback period for Enter the amount of any overpayment that a restructuring plan under the Emergency farming losses. See the Instructions for should be refunded or applied to next Economic Stabilization Act of 2008. See Form 1139 for other special rules and year's estimated tax. section 382(n). elections. Note. This election to apply some or all of For guidance in applying section 382 to Note. The NOL is limited to 80% of the overpayment amount to the loss corporations whose instruments were taxable income (determined without corporation's 2019 estimated tax cannot acquired by Treasury under certain regard to the net operating loss) for losses be changed at a later date. programs under the Emergency Economic arising in tax years beginning after Direct deposit of refund. If the Stabilization Act of 2008, see Notice December 31, 2017. 2010-2, 2010-2 I.R.B. 251. corporation wants its refund directly • If a corporation acquires control of Merchant Marine capital construction deposited into its checking or savings another corporation (or acquires its assets fund. To take a deduction for amounts account at any U.S. bank or other financial in a reorganization), the amount of contributed to a capital construction fund institution instead of having a check sent pre-acquisition losses that may offset (CCF), reduce the amount that would to the corporation, complete Form 8050, recognized built-in gain may be limited otherwise be entered on line 30 by the Direct Deposit of Corporate Tax Refund, (see section 384). amount of the deduction. On the dotted and attach it to the corporation's tax line next to the entry space, enter “CCF” return.

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Line 3, Column (a) Also include dividends received from a less-than-20%-owned FSC that: Schedule C. Dividends, Enter the following. Are attributable to income treated as Inclusions, and Special • Dividends received on certain • effectively connected with the conduct of a debt-financed stock acquired after July 18, Deductions trade or business within the United States 1984, from domestic and foreign For purposes of the 20% ownership test (excluding foreign trade income), and corporations subject to income tax that on lines 1 through 7, the percentage of Qualify for the 50% deduction under would otherwise be subject to the • stock owned by the corporation is based section 245(c)(1)(B). on voting power and value of the stock. dividends-received deduction under Preferred stock described in section section 243(a)(1), 243(c), or 245(a). Line 7, Column (a) 1504(a)(4) is not taken into account. Generally, debt-financed stock is stock Enter the U.S.-source portion of dividends that the corporation acquired by incurring that: Consolidated returns. Corporations a debt (for example, it borrowed money to Are received from 20%-or-more-owned filing a consolidated return should see • buy the stock). foreign corporations, and Regulations sections 1.1502-13, Dividends received from a RIC on • • Qualify for the 65% deduction under 1.1502-26, and 1.1502-27 before debt-financed stock. The amount of sections 243 and 245(a). completing Schedule C. dividends eligible for the Corporations filing a consolidated dividends-received deduction is limited by Also include dividends received from a return must not report as dividends on section 854(b). The corporation should 20%-or-more-owned FSC that: receive a notice from the RIC specifying Schedule C any amounts received from • Are attributable to income treated as corporations within the consolidated the amount of dividends that qualify for the deduction. effectively connected with the conduct of a group. Such dividends are eliminated in trade or business within the United States consolidation rather than offset by the Line 3, Columns (b) and (c) (excluding foreign trade income), and dividends-received deduction. Dividends received on certain • Qualify for the 65% deduction under Line 1, Column (a) debt-financed stock acquired after July 18, section 245(c)(1)(B). Enter dividends (except those received on 1984, are not entitled to the full 50% or Line 8, Column (a) certain debt-financed stock acquired after 65% dividends-received deduction under section 243 or 245(a). The 50% or 65% Enter dividends received from wholly July 18, 1984—see section 246A) that owned foreign subsidiaries that are are: deduction is reduced by a percentage that is related to the amount of debt incurred to eligible for the 100% deduction under • Received from less-than-20%-owned section 245(b). domestic corporations subject to income acquire the stock. See section 246A. Also tax, and see section 245(a) before making this In general, the deduction under section • Qualified for the 50% deduction under computation for an additional limitation 245(b) applies to dividends paid out of the section 243(a)(1). that applies to certain dividends received earnings and profits of a foreign from foreign corporations. Attach a corporation for a tax year during which: Also include on line 1 the following. statement to Form 1120 showing how the • All of its outstanding stock is directly or • Taxable distributions from an IC-DISC amount on line 3, column (c), was figured. indirectly owned by the domestic or former DISC that are designated as Line 4, Column (a) corporation receiving the dividends, and eligible for the 50% deduction and certain • All of its gross income from all sources dividends of Federal Home Loan Banks. Enter dividends received on preferred is effectively connected with the conduct See section 246(a)(2). stock of a less-than-20%-owned public of a trade or business within the United • Dividends (except those received on utility that is subject to income tax and is States. certain debt-financed stock acquired after allowed the 23.3% deduction provided in July 18, 1984) from a regulated sections 244 and 247 (as affected by Line 9, Column (c) investment company (RIC). The amount of P.L.113-295, Div. A, section 221(a)(41) Generally, line 9, column (c), cannot dividends eligible for the (A), Dec. 19, 2014, 128 Stat. 4043) for exceed the amount from the Worksheet dividends-received deduction under dividends paid. for Schedule C, line 9. However, in a year section 243 is limited by section 854(b). Line 5, Column (a) in which an NOL occurs, this limitation The corporation should receive a notice does not apply even if the loss is created from the RIC specifying the amount of Enter dividends received on preferred by the dividends-received deduction. See dividends that qualify for the deduction. stock of a 20%-or-more-owned public sections 172(d) and 246(b). utility that is subject to income tax and is Report so-called dividends or earnings allowed the 26.7% deduction provided in Line 10, Columns (a) and (c) received from mutual savings banks, etc., sections 244 and 247 (as affected by Small business investment companies as interest. Do not treat them as P.L.113-295, Div. A, section 221(a)(41) dividends. operating under the Small Business (A), Dec. 19, 2014, 128 Stat. 4043) for Investment Act of 1958 (see 15 U.S.C. Line 2, Column (a) dividends paid. 661 and following) must enter dividends Enter on line 2: Line 6, Column (a) that are received from domestic corporations subject to income tax even • Dividends (except those received on Enter the U.S.-source portion of dividends certain debt-financed stock acquired after though a deduction is allowed for the that: entire amount of those dividends. To claim July 18, 1984) that are received from • Are received from 20%-or-more-owned domestic the 100% deduction on line 10, column less-than-20%-owned foreign (c), the company must file with its return a corporations subject to income tax and corporations, and that are subject to the 65% deduction statement that it was a federal licensee • Qualify for the 50% deduction under under the Small Business Investment Act under section 243(c), and section 245(a). To qualify for the 50% • Taxable distributions from an IC-DISC of 1958 at the time it received the deduction, the corporation must own at dividends. or former DISC that are considered least 10% of the stock of the foreign eligible for the 65% deduction. corporation by vote and value.

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Line 16c, Column (a) Enter all other amounts included in income Worksheet for Schedule C, line 9 Keep for Your Records under section 951. This should equal the 1. Refigure Form 1120, page 1, line 28, without any domestic production U.S. shareholder's pro rata share of the activities deduction or adjustment under section 1059 and without any sum of the amounts reported on Form capital loss carryback to the tax year under section 1212(a)(1) ...... 1. 5471, Schedule I, lines 1(c), 2, 3, and 4. 2. Complete lines 10, 11, 12, and 13, column (c), and enter the total here ...... 2. Line 17, Column (a) Enter amounts included in income under 3. Subtract line 2 from line 1 ...... 3. section 951A. See Form 8992, Part II, 4. Multiply line 3 by 65% (0.65) ...... 4. line 3, and the Instructions for Form 8992. 5. Add lines 2, 5, 7, and 8, column (c), and the part of the deduction on Also, if applicable, attach Form(s) 5471. line 3, column (c), that is attributable to dividends from 20%-or-more-owned corporations ...... 5. Note. Consider the applicability of section 6. Enter the smaller of line 4 or line 5. If line 5 is greater than line 4, stop 951A with respect to CFCs owned by here; enter the amount from line 6 on line 9, column (c), and do not domestic partnerships in which the complete the rest of this worksheet ...... 6. corporation has an interest. 7. Enter the total amount of dividends from 20%-or-more-owned corporations that are included on lines 2, 3, 5, 7, and 8, column Line 18, Column (a) (a) ...... 7. Include gross-up for taxes deemed paid 8. Subtract line 7 from line 3 ...... 8. under sections 902 (for dividends paid in pre-2018 tax years of foreign 9. Multiply line 8 by 50% (0.50) ...... 9. corporations) and 960. 10. Subtract line 5 from line 9, column (c) ...... 10. Line 19, Column (a) 11. Enter the smaller of line 9 or line 10 ...... 11. 12. Dividends-received deduction after limitation (sec. 246(b)). Add Enter taxable distributions from an lines 6 and 11. Enter the result here and on line 9, column (c) ...... 12. IC-DISC or former DISC that are designated as not eligible for a dividends-received deduction. Line 11, Columns (a) and (c) imposed by any foreign country or No deduction is allowed under section possession of the United States. Enter only dividends that qualify under 243 for a dividend from an IC-DISC or former DISC (as defined in section 992(a)) section 243(b) for the 100% Also include on line 14 the to the extent the dividend: dividends-received deduction described in corporation's share of distributions from a Is paid out of the corporation's section 243(a)(3). Corporations taking this section 1291 fund from Form 8621, to the • accumulated IC-DISC income or deduction are subject to the provisions of extent that the amounts are taxed as previously taxed income, or section 1561. dividends under section 301. See Form Is a deemed distribution under section 8621 and the Instructions for Form 8621. • The 100% deduction does not apply to 995(b)(1). affiliated group members that are joining in Line 15, Column (a) Line 20, Column (a) the filing of a consolidated return. Enter the 2018 section 965(a) inclusion Include the following. Line 12, Column (a) amount from Form 965, line 3. Complete and attach Form 965 and any applicable 1. Dividends (other than capital gain Enter dividends from FSCs that are schedules. Also complete and attach distributions reported on Schedule D attributable to foreign trade income and Form 965-B. (Form 1120) and exempt-interest that are eligible for the 100% deduction dividends) that are received from RICs provided in section 245(c)(1)(A). Line 15, Column (c) and that are not subject to the 50% Line 13, Column (a) Enter in column (c) the 2018 section deduction. 965(c) deduction amount from Form 965, 2. Dividends from tax-exempt Enter the foreign-source portion of line 17. dividends that: organizations. • Are received from specified Line 16a, Column (a) 3. Dividends (other than capital gain 10%-owned foreign corporations (as Enter the foreign-source portion of any distributions) received from a REIT that, defined in section 245A(b)), including gain subpart F inclusions attributable to the for the tax year of the trust in which the from the sale of stock of a foreign sale or exchange by a CFC of stock in dividends are paid, qualifies under corporation that is treated as a dividend another foreign corporation described in sections 856 through 860. under sections 1248(a) and (j); and section 964(e)(4). This should equal the 4. Dividends not eligible for a • Qualify for the section 245A deduction. U.S. shareholder’s pro rata share of the dividends-received deduction, which Line 14, Column (a) amount reported on Form 5471, include the following. Schedule I, line 1a. Enter foreign dividends not reportable on a. Dividends received on any share of line 3, 6, 7, 8, 11, 12, or 13 of column (a). Line 16b, Column (a) stock held for less than 46 days during the 91-day period beginning 45 days before Include on line 14 any hybrid dividends Enter the pro rata share of subpart F the ex-dividend date. When counting the from a controlled foreign corporation inclusions attributable to hybrid dividends number of days the corporation held the (CFC). Hybrid dividends generally are of tiered corporations under section stock, you cannot count certain days dividends received from a CFC that would 245A(e)(2). This should equal the U.S. during which the corporation's risk of loss otherwise be reported on line 13 except shareholder's pro rata share of the amount was diminished. See section 246(c)(4) that the CFC receives a deduction (or reported on Form 5471, Schedule I, and Regulations section 1.246-5 for more other tax benefit) with respect to any line 1b. details. income, war profits, or excess profit taxes

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b. Dividends attributable to periods Line 2 amount from Form 8991, Part IV, line 5e. totaling more than 366 days that the See section 59A and the Instructions for corporation received on any share of For tax years beginning in 2018, Form 8991. Also see Schedule K, preferred stock held for less than 91 days corporations (including qualified personal Question 22, later. during the 181-day period that began 90 service corporations) multiply taxable income by 21%. Enter this amount on days before the ex-dividend date. When Line 5 counting the number of days the line 2. corporation held the stock, you cannot Mutual savings bank conducting life Line 5a. To find out when a corporation count certain days during which the insurance business. The tax under can take the credit for payment of income corporation's risk of loss was diminished. section 594 consists of the sum of (a) a tax to a foreign country or U.S. See section 246(c)(4) and Regulations partial tax computed on Form 1120 on the possession, see Form 1118, Foreign Tax section 1.246-5 for more details. Preferred taxable income of the bank, determined Credit—Corporations. dividends attributable to periods totaling without regard to income or deductions Line 5b. Enter any qualified electric less than 367 days are subject to the allocable to the life insurance department, vehicle passive activity credits from prior 46-day holding period rule discussed and (b) a partial tax on the taxable income years allowed for the current tax year from above. computed on Form 1120-L of the life Form 8834, Qualified Electric Vehicle insurance department. Enter the c. Dividends on any share of stock to Credit, line 7. Attach Form 8834. the extent the corporation is under an combined tax on line 2. Attach Form obligation (including a short sale) to make 1120-L as a schedule (and identify it as Line 5c. Enter on line 5c the allowable related payments with respect to positions such), together with the annual statements credit from Form 3800, Part II, line 38. in substantially similar or related property. and schedules required to be filed with The corporation is required to file Form Form 1120-L. See Regulations section 5. Any other taxable dividend income 3800, General Business Credit, to claim 1.6012-2(c)(1)(ii). not properly reported elsewhere on any of the business credits. See the Schedule C. Exception for insurance companies Instructions for Form 3800 for exceptions. filing their federal income tax returns For a list of allowable credits, see Form If patronage dividends or per-unit retain electronically. If an insurance company 3800. Also, see the applicable credit form allocations are included on line 20, identify files its income tax return electronically, it and its instructions. the total of these amounts in a statement should not include the annual statements attached to Form 1120. Line 5d. To figure the minimum tax credit and schedules required to be filed with and any carryforward of that credit, Line 21, Column (c) Form 1120-L. However, such statements complete and attach Form 8827, Credit for Section 247 (as affected by P.L.113-295, must be available at all times for Prior Year Minimum Tax—Corporations. inspection by the IRS and retained for so Div. A, section 221(a)(41)(A), Dec. 19, Line 5e. Enter the allowable credits from 2014, 128 Stat. 4043) allows public long as such statements may be material in the administration of any Internal Form 8912, Credit to Holders of Tax Credit utilities a deduction of 40% of the smaller Bonds, line 12. of (a) dividends paid on their preferred Revenue law. stock during the tax year, or (b) taxable Deferred tax under section 1291. If the Line 8 income computed without regard to this corporation was a shareholder in a PFIC deduction. In a year in which an NOL and received an excess distribution or A corporation is taxed as a personal occurs, compute the deduction without disposed of its investment in the PFIC holding company under section 542 if: regard to section 247(a)(1)(B). during the year, it must include the • At least 60% of its adjusted ordinary increase in taxes due under section gross income for the tax year is personal Line 22, Column (c) 1291(c)(2) (from Form 8621) in the total holding company income, and Enter the section 250 deduction claimed for line 2. On the dotted line next to line 2, • At any time during the last half of the tax for FDII and GILTI. This should equal the enter “Section 1291” and the amount. year more than 50% in value of its sum of the amounts on Form 8993, Part Do not include on line 2 any interest outstanding stock is directly or indirectly IV, lines 8 and 9. due under section 1291(c)(3). Instead, owned by five or fewer individuals. include the amount of interest owed on Schedule J, Part I, line 9f. See Schedule PH (Form 1120) for Schedule J. definitions and details on how to figure the For more information on reporting the tax. Tax Computation and deferred tax and interest, see the Payment Instructions for Form 8621. Line 9 Part I—Tax Computation Additional tax under section 197(f). A corporation that elects to recognize gain Include any of the following taxes and Line 1 and pay tax on the sale of a section 197 interest. If the corporation is a member of a intangible under the related person Line 9a. Recapture of investment cred- controlled group, check the box on line 1. exception to the anti-churning rules should it. If the corporation disposed of Complete and attach Schedule O (Form include any additional tax due in the total investment credit property or changed its 1120), Consent Plan and Apportionment for line 2. On the dotted line next to line 2, use before the end of its useful life or Schedule for a Controlled Group. enter “Section 197” and the amount. See recovery period, or is required to Component members of a controlled section 197(f)(9)(B)(ii). recapture a qualifying therapeutic group must use Schedule O to report the discovery project grant, enter the increase apportionment of certain tax benefits Line 3 in tax from Form 4255, Recapture of between the members of the group. See Investment Credit. See the Instructions for If the corporation had gross receipts of at Schedule O and the Instructions for Form 4255. Schedule O for more information. least $500 million in any one of the 3 tax years preceding the current tax year, Line 9b. Recapture of low-income complete and attach Form 8991. Enter on housing credit. If the corporation line 3 the base erosion minimum tax disposed of property (or there was a

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reduction in the qualified basis of the • Interest due under section 1291(c)(3). Part III—Payments, Refundable property) for which it took the low-income See Form 8621 and the Instructions for Credits, and Section 965 Net housing credit, and the corporation did not Form 8621. follow the procedures that would have Tax Liability prevented recapture of the credit, it may Line 11 owe a tax. See Form 8611, Recapture of Line 14 Low-Income Housing Credit. Include any deferred tax on the termination of a section 1294 election Enter any estimated tax payments the Line 9c. Interest due under the applicable to shareholders in a qualified corporation made for the tax year. look-back method—completed electing fund in the amount entered on Beneficiaries of trusts. If the long-term contracts. If the corporation line 11. used the percentage-of-completion corporation is the beneficiary of a trust, method under section 460(b) for certain and the trust makes a section 643(g) Subtract the following amounts from election to credit its estimated tax long-term contracts, figure any interest the total for line 11. due or to be refunded using the look-back payments to its beneficiaries, include the • Deferred tax on the corporation's share corporation's share of the payment in the method described in section 460(b)(2). of undistributed earnings of a qualified Use Form 8697 to figure any interest due total for line 14. Enter “T” and the amount electing fund. See the Instructions for on the dotted line next to the entry space. or to be refunded. See the Instructions for Form 8621. Form 8697. Include any interest due on • Deferred LIFO recapture tax (section Special estimated tax payments for line 9c. 1363(d)). This tax is the part of the LIFO certain life insurance companies. The Line 9d. Interest due under the recapture tax that will be deferred and corporation may be required to make or look-back method—income forecast paid with Form 1120S in the future. To apply special estimated tax payments in method. If the corporation used the figure the deferred tax, first figure the total addition to regular estimated tax income forecast method to depreciate LIFO recapture tax. Follow the steps payments. See Form 8816 and its property, it must figure any interest due or below to figure the total LIFO recapture tax instructions. If applicable, on the dotted to be refunded using the look-back and the deferred amount. Also see line next to line 14, enter “Form 8816” and method described in section 167(g)(2). Line 10. Other Income, earlier. the amount. Attach a statement showing Use Form 8866 to figure any interest due the computation of estimated tax Step 1. Figure the tax on the or to be refunded. See the Instructions for payments. corporation's income including the LIFO Form 8866. Include any interest due on recapture amount. Complete Schedule J, line 9d. Line 15 Part I, lines 1 through 10. Line 9e. Alternative tax on qualifying If the corporation overpaid estimated tax, it shipping activities. Enter any alternative Step 2. Using a separate worksheet, may be able to get a quick refund by filing tax on qualifying shipping activities from complete Schedule J again, but do not Form 4466. The overpayment must be at Form 8902. include the LIFO recapture amount in the least 10% of the corporation's expected corporation's taxable income. income tax liability and at least $500. File Line 9f. Other. Include on line 9f Form 4466 after the end of the additional taxes and interest such as the Step 3. Compare the tax in Step 2 to corporation's tax year, and no later than following. Attach a statement showing the the tax in Step 1. The difference between the due date for filing the corporation’s tax computation of each item included in the the two is the LIFO recapture tax. return (not including extensions). Form total for line 9f and identify the applicable 4466 must be filed before the corporation Code section and the type of tax or Step 4. Multiply the amount figured in files its tax return. See the instructions for interest. Step 3 by 75% (0.75). The result is the Form 4466. • Recapture of Indian employment credit. deferred LIFO recapture tax. Generally, if an employer terminates the employment of a qualified employee less How to report. Attach a statement Line 18 than 1 year after the date of initial showing the computation of each item If the corporation had federal income tax employment, any Indian employment included in, or subtracted from, the total withheld from any payments it received credit allowed for a prior tax year because for line 11. On the dotted line next to because, for example, it failed to give the of wages paid or incurred to that employee line 11, specify (a) the applicable Code payer its correct EIN or was otherwise must be recaptured. For details, see Form section, (b) the type of tax, and (c) enter subjected to back-up withholding, include 8845 and section 45A. the amount of tax. For example, if the the amount withheld in the total for line 18. • Recapture of new markets credit (see corporation is deferring a $100 LIFO recapture tax, subtract this amount from Form 8874, New Markets Credit, and Line 20. Refundable Credits Form 8874-B, Notice of Recapture Event the total on line 11, then enter “Section for New Markets Credit). 1363-Deferred Tax-$100” on the dotted Line 20a. Credit from Form 2439. Enter • Recapture of employer-provided line next to line 11. any credit from Form 2439, Notice to childcare facilities and services credit (see Part II—Section 965 Payments Shareholder of Undistributed Long-Term Form 8882). Capital Gains, for the corporation's share • Tax and interest on a nonqualified of the tax paid by a regulated investment withdrawal from a capital construction Line 12 company (RIC) or a real estate investment fund (section 7518(g)). Complete and attach Form 965-B. Enter trust (REIT) on undistributed long-term • Interest on deferred tax attributable to the amount from Form 965-B, Part II, capital gains included in the corporation's (a) installment sales of certain timeshares column (k), line 2, on Schedule J, Part II, income. Attach Form 2439. and residential lots (section 453(l)(3)), and line 12. Also enter this amount on page 1, Line 20b. Credit for federal tax on (b) certain nondealer installment line 32. obligations (section 453A(c)). fuels. Enter the total income tax credit • Interest due on deferred gain (section claimed on Form 4136, Credit for Federal 1260(b)). Tax Paid on Fuels. Attach Form 4136.

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Line 20c. Refundable credits from Note. If the corporation is an “excluded Question 5a member” of a controlled group (see Form 8827. Enter on line 20c the List each foreign or domestic corporation amounts from Form 8827, line 8c. definition in the Instructions for Schedule O (Form 1120)), it is still not included on Form 851, Affiliations Line 20d. Other. Include on line 20d any considered a member of a controlled Schedule, in which the corporation, at the other refundable credit the corporation is group for this purpose. end of the tax year, owned directly 20% or claiming, including the following. Attach a more, or owned, directly or indirectly, 50% statement listing the type of credit and the Affiliated group. An affiliated group is or more of the total voting power of all amount of the credit. one or more chains of includible classes of stock entitled to vote. Indicate • Credit for tax withheld under Chapter 3 corporations (section 1504(a)) connected the name of the corporation, EIN (if any), or 4 of the Internal Revenue Code that is through stock ownership with a common country of incorporation, and the shown on Form 1042-S, Form 8805, or parent corporation. The common parent percentage interest owned, directly or Form 8288-A. Attach the applicable form. must be an includible corporation and the indirectly, in the total voting power. List the • Credit for tax on ozone-depleting following requirements must be met. parent corporation of an affiliated group of chemicals. See section 4682(g)(2). 1. The common parent must own corporations filing a consolidated tax • Credit under section 960(c) (section directly stock that represents at least 80% return rather than the subsidiary members 960(b) for pre-2018 taxable years of of the total voting power and at least 80% except for subsidiary members in which foreign corporations). If an increase in the of the total value of the stock of at least an interest is owned, directly or indirectly, limitation under section 960(c) (section one of the other includible corporations. independent of the interest owned, directly or indirectly, in the parent corporation. List 960(b) (pre-2018)) exceeds the total tax 2. Stock that represents at least 80% a corporation owned through a on Schedule J, Part I, line 11, for the tax of the total voting power and at least 80% disregarded entity rather than the year, the amount of the excess is deemed of the total value of the stock of each of disregarded entity. an overpayment of tax for the tax year. the other corporations (except for the See section 960(c) (section 960(b) common parent) must be owned directly (pre-2018)) for more information regarding by one or more of the other includible Question 5b the circumstances under which such an corporations. List each foreign or domestic partnership excess arises. For this purpose, the term “stock” in which the corporation, at the end of the tax year, owned directly an interest of 20% Line 22 generally does not include any stock that (a) is nonvoting, (b) is nonconvertible, or more, or owned, directly or indirectly, an Complete and attach Form 965-B. Enter (c) is limited and preferred as to dividends interest of 50% or more in the profit, loss, the amount from Form 965-B, Part I, and does not participate significantly in or capital of the partnership. List each trust column (d), line 2. corporate growth, and (d) has redemption in which the corporation, at the end of the and liquidation rights that do not exceed tax year, owned directly an interest of 20% the issue price of the stock (except for a or more, or owned, directly or indirectly, an Schedule K. reasonable redemption or liquidation interest of 50% or more in the trust Other Information premium). See section 1504(a)(4). beneficial interest. Indicate the name, EIN (if any), country of organization, and the Complete all items that apply to the Question 4. Constructive maximum percentage interest owned, corporation. Ownership of the Corporation directly or indirectly, in the profit, loss, or capital of the partnership at the end of the Question 2 For purposes of question 4, the partnership tax year, or, for a trust, the See the list of Principal Business Activity constructive ownership rules of section percentage interest owned in the trust Codes later in the instructions. Using the 267(c) (excluding section 267(c)(3)) apply beneficial interest. List a partnership or list of codes and activities, determine from to ownership of interests in corporate trust owned through a disregarded entity which activity the corporation derives the stock and ownership of interests in the rather than the disregarded entity. highest percentage of its total receipts. profit, loss, or capital of a partnership. If Enter on lines 2a, 2b, and 2c the principal the corporation checked “Yes” to question Maximum percentage owned in part- business activity code number, the 4a or 4b, complete and attach Schedule G nership profit, loss, or capital. For the corporation's business activity, and a (Form 1120), Information on Certain purposes of question 5b, the term description of the principal product or Persons Owning the Corporation's Voting “maximum percentage owned” means the service of the corporation. Stock. highest percentage of interest in a partnership's profit, loss, or capital as of Question 3 Question 5. Constructive the end of the partnership's tax year, as Check the “Yes” box for question 3 if: Ownership of Other Entities determined under the partnership • The corporation is a subsidiary in an For purposes of determining the agreement, when taking into account the affiliated group (defined below), but is not corporation's constructive ownership of constructive ownership rules earlier. If the filing a consolidated return for the tax year other entities, the constructive ownership partnership agreement does not express with that group, or rules of section 267(c) (excluding section the partner's share of profit, loss, and • The corporation is a subsidiary in a 267(c)(3)) apply to ownership of interests capital as fixed percentages, use a parent–subsidiary controlled group. For a in partnerships and trusts as well as reasonable method in arriving at the definition of a parent–subsidiary controlled corporate stock. Generally, if an entity (a percentage items for the purposes of group, see the Instructions for Schedule O corporation, partnership, or trust) is completing question 5b. Such method (Form 1120). owned, directly or indirectly, by or for must be consistent with the partnership agreement. The method used to compute Any corporation that meets either of the another entity (corporation, partnership, a percentage share of profit, loss, and requirements above should check the estate, or trust), the owned entity is capital must be applied consistently from “Yes” box. This applies even if the considered to be owned proportionately year to year. Maintain records to support corporation is a subsidiary member of one by or for the owners (shareholders, the determination of the share of profits, group and the parent corporation of partners, or beneficiaries) of the owning losses, and share of capital. another. entity.

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Example. Corporation A owns, section 892. to 2018. Do not reduce the amount by any directly, a 50% interest in the profit, loss, However, the term "foreign person" NOL deduction reported on line 29a. or capital of Partnership B. Corporation A does not include any foreign person who Question 14 also owns, directly, a 15% interest in the consents to the filing of a joint U.S. income profit, loss, or capital of Partnership C and tax return. A corporation that files Form 1120 must owns, directly, 15% of the voting stock of file Schedule UTP (Form 1120), Uncertain Corporation D. Partnership B owns, Owner's country. For individuals, the Tax Position Statement, with its 2018 directly, a 70% interest in the profit, loss, term “owner's country” means the country income tax return if: or capital of Partnership C and owns, of residence. For all others, it is the • For 2018, the corporation's total assets directly, 70% of the voting stock of country where incorporated, organized, equal or exceed $10 million; Corporation D. Corporation A owns, created, or administered. • The corporation or a related party indirectly, through Partnership B, a 35% Requirement to file Form 5472. If the issued audited financial statements interest (50% of 70%) in the profit, loss, or corporation checked “Yes,” it may have to reporting all or a portion of the capital of Partnership C and owns, file Form 5472, Information Return of a corporation's operations for all or a portion indirectly, 35% of the voting stock of 25% Foreign-Owned U.S. Corporation or of the corporation's tax year; and Corporation D. Corporation A owns, a Foreign Corporation Engaged in a U.S. • The corporation has one or more tax directly or indirectly, a 50% interest in the Trade or Business. Generally, a 25% positions that must be reported on profit, loss, or capital of Partnership C foreign-owned corporation that had a Schedule UTP. (15% directly and 35% indirectly), and reportable transaction with a foreign or owns, directly or indirectly, 50% of the Attach Schedule UTP to the domestic related party during the tax year corporation's income tax return. Do not file voting stock of Corporation D (15% must file Form 5472. See the Instructions directly and 35% indirectly). it separately. A taxpayer that files a for Form 5472, for filing instructions and protective Form 1120 also must file Corporation A reports in its answer to penalties for failure to file. Schedule UTP if it satisfies the question 5a that it owns, directly or requirements set forth above. indirectly, 50% of the voting stock of Item 9 Corporation D. Corporation A reports in its Show any tax-exempt interest received or For details, see the Instructions for answer to question 5b that it owns, accrued. Include any exempt-interest Schedule UTP. directly, an interest of 50% in the profit, dividends received as a shareholder in a loss, or capital of Partnership B and owns, mutual fund or other RIC. Also, if required, Questions 15a and 15b directly or indirectly, 50% of the profit, include the same amount on If the corporation made any payment in loss, or capital of Partnership C. Schedule M-1, line 7 (or Schedule M-3, 2018 that would require the corporation to Part II, line 13, if applicable). file any Form(s) 1099, check the “Yes” box Question 7 for question 15a and answer question Check the “Yes” box if one foreign person Item 11 15b. Otherwise, check the “No” box for owned at least 25% of the total voting If the corporation has an NOL attributable question 15a and skip question 15b. See power of all classes of stock of the to farming losses, it generally can elect to Am I Required to File a Form 1099 or corporation entitled to vote or at least 25% waive the entire carryback period for the Other Information Return? on IRS.gov. of the total value of all classes of stock of NOL and instead carry the NOL forward to the corporation. future tax years. To do so, check the box Question 19 on line 11 and file the tax return by its due If the corporation made any payments in The constructive ownership rules of date, including extensions. Do not attach 2018 that would require the corporation to section 318 apply in determining if a the statement described in Temporary file any Forms 1042 and 1042-S, check corporation is foreign owned. See section Regulations section 301.9100-12T. Once the “Yes” box. See the Instructions for 6038A(c)(5) and the related regulations. made, the election is irrevocable. Form 1042 and Instructions for Form 1042-S for information regarding who is If the corporation timely filed its return Enter on line 7a the percentage owned required to file Forms 1042 and 1042-S for the loss year without making the by the foreign person specified in question and what types of payments are subject to election, it can make the election on an 7. On line 7b, enter the name of the reporting on Forms 1042 and 1042-S. owner’s country. amended return filed within 6 months of the due date of the loss year return Question 21 Note. If there is more than one (excluding extensions). Attach the election Section 267A disallows a deduction for 25%-or-more foreign owner, complete to the amended return and write "Filed certain interest and royalty payments or question 7 for the foreign person with the pursuant to section 301.9100-2" on the accruals. In general, section 267A applies highest percentage of ownership. election statement. See the Instructions when: for Form 1139. Foreign person. The term “foreign 1. The interest or royalty is paid or person” means: Corporations filing a consolidated accrued to a related party; • An individual who is not a citizen or return that elect to waive the entire 2. Under its tax laws, the related party resident of the United States; carryback period for the group also must either: • An individual who is a citizen or resident attach the statement required by of a U.S. possession who is not otherwise Regulations section 1.1502-21(b)(3) or the a. Does not include the full amount in a citizen or resident of the United States; election will not be valid. income, or • Any partnership, association, company, b. Is allowed a deduction with respect or corporation that is not created or Item 12 to the amount; and organized in the United States; Enter the amount of the NOL carryover to 3. The amount is paid or accrued • Any foreign estate or trust within the the tax year from prior years, even if some pursuant to a hybrid transaction or by, or meaning of section 7701(a)(31); or of the loss is used to offset income on this to, a hybrid entity. • A foreign government (or one of its return. The amount to enter is the total of agencies or instrumentalities) to the extent all NOLs generated in prior years but not When section 267A applies, the deduction that it is engaged in the conduct of a used to offset income (either as a is generally disallowed to the extent the commercial activity as described in carryback or carryover) to a tax year prior related party does not include the amount

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in income or is allowed a deduction with • An electing real property trade or Line 1 respect to the amount. However, the business, Include certificates of deposit as cash on deduction is not disallowed to the extent An electing farming business, or • this line. the amount is included in the gross • Certain utility businesses. income of a U.S. shareholder under Small business taxpayer. A small Line 5 section 951(a). business taxpayer is not subject to the Include on this line: For definitions of terms, see section business interest expense limitation and is • State and local government obligations, 267A. not required to file Form 8990. A small the interest on which is excludable from business taxpayer is a taxpayer that (a) is gross income under section 103(a), and Question 22 not a tax shelter (as defined in section • Stock in a mutual fund or other RIC that If the corporation had gross receipts of at 448(d)(3)) and (b) meets the gross distributed exempt-interest dividends least $500 million in any one of the 3 receipts test of section 448(c), discussed during the tax year of the corporation. preceding tax years, complete and attach next. Line 26 Form 8991. For this purpose, the Gross receipts test. A taxpayer meets corporation's gross receipts include the Some examples of adjustments to report the gross receipts test if the taxpayer has gross receipts of all persons aggregated on this line include: average annual gross receipts of $25 with the corporation as specified in section • Unrealized gains and losses on million or less for the 3 prior tax years. A 59A(e)(3). See the Instructions for Form securities held “available for sale.” taxpayer's average annual gross receipts 8991 to determine if the corporation is • Foreign currency translation for the 3 prior tax years is determined by subject to the base erosion minimum tax. adjustments. adding the gross receipts for the 3 prior • The excess of additional pension Question 23 tax years and dividing the total by 3. Gross liability over unrecognized prior service receipts include the aggregate gross For tax years beginning after 2017, the cost. receipts from all persons treated as a limitation on business interest expense • Guarantees of employee stock (ESOP) single employer, such as a controlled applies to every taxpayer with a trade or debt. group of corporations, commonly business, unless the taxpayer meets • Compensation related to employee controlled partnerships, or proprietorships, certain specified exceptions. A taxpayer stock award plans. and affiliated service groups. See section may elect out of the limitation for certain 448(c) and the Instructions for Form 8990 If the total adjustment to be entered on businesses otherwise subject to the for additional information. line 26 is a negative amount, enter the business interest expense limitation. amount in parentheses. Certain real property trades or Question 25 businesses and farming businesses If the corporation is operating a Qualified qualify to make an election not to limit Opportunity Fund (QOF), the corporation Schedule M-1. business interest expense. This is an must annually attach Form 8996, Reconciliation of Income irrevocable election. If you make this self-certifying as a QOF. In addition, the election, you are required to use the corporation must complete question 25. (Loss) per Books With alternative depreciation system to For more information, see the Instructions Income per Return depreciate any property with a recovery for Form 8996. In completing Schedule M-1, the following period of 10 years or more. Also, you are apply. not entitled to the special depreciation • Corporations with total receipts (page 1, allowance for that property. For a taxpayer Schedule L. line 1a plus lines 4 through 10) and total with more than one qualifying business, Balance Sheets per Books assets at the end of the tax year less than the election is made with respect to each The balance sheets should agree with the $250,000 are not required to complete business. corporation's books and records. Schedules L, M-1, and M-2 if the “Yes” box on Schedule K, question 13, is Check “Yes” if the corporation has an Corporations with total receipts checked. election in effect to exclude a real property (page 1, line 1a plus lines 4 through 10) • Corporations with total assets trade or business or a farming business and total assets at the end of the tax year non-consolidated (or consolidated for all from section 163(j). For more information, less than $250,000 are not required to corporations included within the see section 163(j) and the Instructions for complete Schedules L, M-1, and M-2 if the consolidated tax group) of $10 million or Form 8990. “Yes” box on Schedule K, question 13, is more on the last day of the tax year must Question 24 checked. file Schedule M-3 (Form 1120) instead of Schedule M-1. Generally, a taxpayer with a trade or Corporations with total assets A corporation filing Form 1120 that is business must file Form 8990 to claim a non-consolidated (or consolidated for all • not required to file Schedule M-3 may deduction for business interest. In corporations included within the voluntarily file Schedule M-3 instead of addition, Form 8990 must be filed by any consolidated tax group) of $10 million or Schedule M-1. See the Instructions for taxpayer that owns an interest in a more on the last day of the tax year must Schedule M-3 (Form 1120) for more partnership with current year, or prior year file Schedule M-3 (Form 1120) instead of information. carryover, excess business interest Schedule M-1. However, see the Corporations that (a) are required to file expense allocated from the partnership. instructions for Schedule M-1 below. See • the separate Instructions for Schedule M-3 Schedule M-3 (Form 1120) and have less Exclusions from filing. A taxpayer is not (Form 1120) for provisions that also affect than $50 million total assets at the end of required to file Form 8990 if the taxpayer Schedule L. the tax year, or (b) are not required to file is a small business taxpayer and does not Schedule M-3 (Form 1120) and voluntarily have excess business interest expense If filing a consolidated return, report file Schedule M-3 (Form 1120), must from a partnership. A taxpayer also is not total consolidated assets, liabilities, and either (i) complete Schedule M-3 (Form required to file Form 8990 if the taxpayer shareholder's equity for all corporations 1120) entirely or (ii) complete only has business interest expense from joining in the return. See Consolidated Schedule M-3 (Form 1120) through Part I, these excepted trades or businesses: Return, earlier. and complete Form 1120, Schedule M-1,

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instead of completing Parts II and III of • Entertainment-related meal expenses. • The part of luxury water travel expenses Schedule M-3 (Form 1120). If the • Non-entertainment meal expenses not not deductible under section 274(m). corporation chooses to complete deductible under section 274(n). • Expenses for travel as a form of Schedule M-1 instead of completing Parts • Expenses for the use of an education. II and III of Schedule M-3, the amount on entertainment facility. • Other nondeductible travel and Schedule M-1, line 1, must equal the • The part of business gifts over $25. entertainment expenses. amount on Schedule M-3, Part I, line 11. • Expenses of an individual over $2,000, See the Instructions for Schedule M-3 which are allocable to conventions on For more information, see Pub. 535. (Form 1120) for more information. cruise ships. Line 7 • Employee achievement awards of Line 5c nontangible or tangible property over $400 Report any tax-exempt interest received Include any of the following applicable ($1,600 if part of a qualified plan). or accrued, including any exempt-interest expenses. • The cost of skyboxes. dividends received as a shareholder in a • Entertainment expenses not deductible • Nondeductible club dues. mutual fund or other RIC. Also report this under section 274(a). same amount on Schedule K, item 9.

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Paperwork Reduction Act Notice. We ask for the information on these forms to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

Estimates of Taxpayer Burden. The following tables show burden estimates based on current statutory requirements as of December 2017, for taxpayers filing 2017 Forms 1065, 1065-B, 1066, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120S, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-REIT, 1120-RIC, 1120-POL, and related attachments. Time spent and out-of-pocket costs are presented separately. Time burden is broken out by taxpayer activity, with reporting representing the largest component. Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples include tax return preparation and submission fees, postage and photocopying costs, and tax preparation software costs. While these estimates do not include burden associated with post-filing activities, IRS operational data indicate that electronically prepared and filed returns have fewer arithmetic errors, implying lower post-filing burden.

Reported time and cost burdens are national averages and do not necessarily reflect a “typical” case. Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer type. For instance, the estimated average time burden for all taxpayers filing Forms 1065, 1066, or 1120 and related forms is 275 hours, with an average cost of $4,700 per return. This average includes all associated forms and schedules, across all preparation methods and taxpayer activities.

The average burden for taxpayers filing Forms 1065, 1065-B, or 1066, and related attachments is about 388 hours and $13,000; the average burden for taxpayers filing Form 1120 and associated forms is about 610 hours and $26,233; and the average for Forms 1120-REIT, 1120-RIC, 1120S, and all related attachments is 363 hours and $12,467. Within each of these estimates there is significant variation in taxpayer activity. Tax preparation fees and other out-of-pocket costs vary extensively depending on the tax situation of the taxpayer, the type of software or professional preparer used, and the geographic location. Third-party burden hours are not included in these estimates.

Table 1 – Taxpayer Burden for Entities Taxed As Partnerships

Forms 1065, 1065-B, 1066 and all attachments Primary Form Filed or Type of Taxpayer Number of Returns (millions) Average Time per Taxpayer (hours) Average Cost per Taxpayer All Partnerships 4.2 290 $5,800 Small 4.0 270 $4,400 Large* 0.2 610 $29,000 *A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and pass-through corporations. A small business is any business that does not meet the definition of a large business.

Table 2 – Taxpayer Burden for Entities Taxed As Taxable Corporations

Forms 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL and all attachments Primary Form Filed or Type of Taxpayer Number of Returns (millions) Average Time per Taxpayer (hours) Average Cost per Taxpayer All Taxable Corporations 2.0 340 $7,900 Small 1.9 380 $4,000 Large* 0.1 1,250 $69,100 *A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and pass-through corporations. A small business is any business that does not meet the definition of a large business.

Table 3 – Taxpayer Burden for Entities Taxed As Pass-Through Corporations

Forms 1120-REIT, 1120-RIC, 1120S and all attachments Primary Form Filed or Type of Taxpayer Number of Returns (millions) Average Time per Taxpayer (hours) Average Cost per Taxpayer All Pass-Through Corporations 5.0 245 $3,500 Small 4.9 240 $3,100 Large* 0.1 610 $30,800 *A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and pass-through corporations. A small business is any business that does not meet the definition of a large business.

Comments. If you have comments concerning the accuracy of these time estimates or suggestions for making these forms simpler, we would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form to this address. Instead, see Where To File, earlier, near the beginning of the instructions.

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Principal Business Activity Codes largest percentage of its “total receipts.” Total receipts is 2a, 2b, and 2c. On line 2a, enter the six-digit code defined as the sum of gross receipts or sales (page 1, selected from the list below. On line 2b, enter the This list of principal business activities and their line 1a) plus all other income (page 1, lines 4 through company's business activity. On line 2c, enter a brief associated codes is designed to classify an enterprise 10). If the company purchases raw materials and description of the principal product or service of the by the type of activity in which it is engaged to facilitate supplies them to a subcontractor to produce the finished company. the administration of the Internal Revenue Code. These product, but retains title to the product, the company is principal business activity codes are based on the North considered a manufacturer and must use one of the American Industry Classification System. manufacturing codes (311110–339900). Using the list of activities and codes below, Once the principal business activity is determined, determine from which activity the company derives the entries must be made on Form 1120, Schedule K, lines Agriculture, Forestry, Fishing, 238300 Building Finishing Contractors 325900 Other Chemical Product & 336990 Other Transportation Equipment (including drywall, insulation, Preparation Mfg Mfg and Hunting painting, wallcovering, flooring, Plastics and Rubber Products Furniture and Related Product Crop Production tile, & finish carpentry) Manufacturing Manufacturing 111100 Oilseed & Grain Farming 238900 Other Specialty Trade 326100 Plastics Product Mfg 337000 Furniture & Related Product Contractors (including site Manufacturing 111210 Vegetable & Melon Farming preparation) 326200 Rubber Product Mfg (including potatoes & yams) Nonmetallic Mineral Product Miscellaneous Manufacturing 111300 Fruit & Tree Nut Farming Manufacturing Manufacturing 339110 Medical Equipment & Supplies 111400 Greenhouse, Nursery, & Food Manufacturing 327100 Clay Product & Refractory Mfg Mfg Floriculture Production 311110 Animal Food Mfg 327210 Glass & Glass Product Mfg 339900 Other Miscellaneous Manufacturing 111900 Other Crop Farming (including 311200 Grain & Oilseed Milling 327300 Cement & Concrete Product Mfg tobacco, cotton, sugarcane, hay, Wholesale Trade peanut, sugar beet, & all other 311300 Sugar & Confectionery Product 327400 Lime & Gypsum Product Mfg crop farming) Mfg 327900 Other Nonmetallic Mineral Merchant Wholesalers, Durable Goods Animal Production 311400 Fruit & Vegetable Preserving & Product Mfg 423100 Motor Vehicle & Motor Vehicle Specialty Food Mfg 112111 Beef Cattle Ranching & Farming Primary Metal Manufacturing Parts & Supplies 311500 Dairy Product Mfg 112112 Cattle Feedlots 331110 Iron & Steel Mills & Ferroalloy 423200 Furniture & Home Furnishings 311610 Animal Slaughtering and Mfg 112120 Dairy Cattle & Milk Production 423300 Lumber & Other Construction Processing 331200 Steel Product Mfg from Materials 112210 Hog & Pig Farming 311710 Seafood Product Preparation & Purchased Steel 423400 Professional & Commercial 112300 Poultry & Egg Production Packaging 331310 Alumina & Aluminum Production Equipment & Supplies 112400 Sheep & Goat Farming 311800 Bakeries, Tortilla & Dry Pasta & Processing 423500 Metal & Mineral (except 112510 Aquaculture (including shellfish & Mfg 331400 Nonferrous Metal (except Petroleum) finfish farms & hatcheries) 311900 Other Food Mfg (including Aluminum) Production & 423600 Household Appliances and 112900 Other Animal Production coffee, tea, flavorings & Processing Electrical & Electronic Goods seasonings) Forestry and Logging 331500 Foundries 423700 Hardware, Plumbing, & Heating Beverage and Tobacco Product Fabricated Metal Product Equipment & Supplies 113110 Timber Tract Operations Manufacturing Manufacturing 423800 Machinery, Equipment, & 113210 Forest Nurseries & Gathering of 312110 Soft Drink & Ice Mfg Forest Products 332110 Forging & Stamping Supplies 312120 Breweries 113310 Logging 332210 Cutlery & Handtool Mfg 423910 Sporting & Recreational Goods & 312130 Wineries Supplies Fishing, Hunting, and Trapping 332300 Architectural & Structural Metals 312140 Distilleries Mfg 423920 Toy & Hobby Goods & Supplies 114110 Fishing 312200 Tobacco Manufacturing 332400 Boiler, Tank, & Shipping 423930 Recyclable Materials 114210 Hunting & Trapping Textile Mills and Textile Product Mills Container Mfg 423940 Jewelry, Watch, Precious Stone, Support Activities for Agriculture and 332510 Hardware Mfg & Precious Metals Forestry 313000 Textile Mills 314000 Textile Product Mills 332610 Spring & Wire Product Mfg 423990 Other Miscellaneous Durable 115110 Support Activities for Crop Goods Production (including cotton Apparel Manufacturing 332700 Machine Shops; Turned Product; & Screw, Nut, & Bolt Mfg Merchant Wholesalers, Nondurable ginning, soil preparation, 315100 Apparel Knitting Mills planting, & cultivating) 332810 Coating, Engraving, Heat Goods 315210 Cut & Sew Apparel Contractors 115210 Support Activities for Animal Treating, & Allied Activities 424100 Paper & Paper Products Production 315220 Men's & Boys' Cut & Sew 332900 Other Fabricated Metal Product 424210 Drugs & Druggists' Sundries Apparel Mfg 115310 Support Activities for Forestry Mfg 424300 Apparel, Piece Goods, & Notions 315240 Women's, Girls' and Infants' Cut Machinery Manufacturing Mining & Sew Apparel Mfg 424400 Grocery & Related Products 333100 Agriculture, Construction, & 424500 Farm Product Raw Materials 211120 Crude Petroleum Extraction 315280 Other Cut & Sew Apparel Mfg Mining Machinery Mfg 424600 Chemical & Allied Products 211130 Natural Gas Extraction 315990 Apparel Accessories & Other 333200 Industrial Machinery Mfg Apparel Mfg 424700 Petroleum & Petroleum Products 212110 Coal Mining 333310 Commercial & Service Industry Leather and Allied Product Machinery Mfg 424800 Beer, Wine, & Distilled Alcoholic 212200 Metal Ore Mining Manufacturing Beverages 212310 Stone Mining & Quarrying 333410 Ventilation, Heating, 316110 Leather & Hide Tanning & Air-Conditioning, & Commercial 424910 Farm Supplies 212320 Sand, Gravel, Clay, & Ceramic & Finishing Refrigeration Equipment Mfg 424920 Book, Periodical, & Newspapers Refractory Minerals Mining & 316210 Footwear Mfg (including rubber Quarrying 333510 Metalworking Machinery Mfg 424930 Flower, Nursery Stock, & Florists' & plastics) Supplies 212390 Other Nonmetallic Mineral 333610 Engine, Turbine & Power 316990 Other Leather & Allied Product Transmission Equipment Mfg 424940 Tobacco & Tobacco Products Mining & Quarrying Mfg 333900 Other General Purpose 424950 Paint, Varnish, & Supplies 213110 Support Activities for Mining Wood Product Manufacturing Machinery Mfg 424990 Other Miscellaneous Nondurable Utilities 321110 Sawmills & Wood Preservation Computer and Electronic Product Goods 221100 Electric Power Generation, 321210 Veneer, Plywood, & Engineered Manufacturing Wholesale Electronic Markets and Transmission & Distribution Wood Product Mfg 334110 Computer & Peripheral Agents and Brokers 221210 Natural Gas Distribution 321900 Other Wood Product Mfg Equipment Mfg 425110 Business to Business Electronic 221300 Water, Sewage & Other Systems Paper Manufacturing 334200 Communications Equipment Mfg Markets 221500 Combination Gas & Electric 322100 Pulp, Paper, & Paperboard Mills 334310 Audio & Video Equipment Mfg 425120 Wholesale Trade Agents & Brokers Construction 322200 Converted Paper Product Mfg 334410 Semiconductor & Other Printing and Related Support Activities Electronic Component Mfg Retail Trade Construction of Buildings 323100 Printing & Related Support 334500 Navigational, Measuring, Motor Vehicle and Parts Dealers 236110 Residential Building Construction Activities Electromedical, & Control Instruments Mfg 441110 New Car Dealers 236200 Nonresidential Building Petroleum and Coal Products Construction Manufacturing 334610 Manufacturing & Reproducing 441120 Used Car Dealers Magnetic & Optical Media Heavy and Civil Engineering 324110 Petroleum Refineries (including 441210 Recreational Vehicle Dealers Construction integrated) Electrical Equipment, Appliance, and 441222 Boat Dealers Component Manufacturing 237100 Utility System Construction 324120 Asphalt Paving, Roofing, & 441228 Motorcycle, ATV, and All Other 237210 Land Subdivision Saturated Materials Mfg 335100 Electric Lighting Equipment Mfg Motor Vehicle Dealers 237310 Highway, Street, & Bridge 324190 Other Petroleum & Coal 335200 Major Household Appliance Mfg 441300 Automotive Parts, Accessories, Construction Products Mfg 335310 Electrical Equipment Mfg & Tire Stores 237990 Other Heavy & Civil Engineering Chemical Manufacturing 335900 Other Electrical Equipment & Furniture and Home Furnishings Stores Construction 325100 Basic Chemical Mfg Component Mfg 442110 Furniture Stores Specialty Trade Contractors 325200 Resin, Synthetic Rubber, & Transportation Equipment 442210 Floor Covering Stores 238100 Foundation, Structure, & Building Artificial & Synthetic Fibers & Manufacturing 442291 Window Treatment Stores Filaments Mfg Exterior Contractors (including 336100 Motor Vehicle Mfg 442299 All Other Home Furnishings framing carpentry, masonry, 325300 Pesticide, Fertilizer, & Other 336210 Motor Vehicle Body & Trailer Mfg Stores glass, roofing, & siding) Agricultural Chemical Mfg 336300 Motor Vehicle Parts Mfg Electronics and Appliance Stores 238210 Electrical Contractors 325410 Pharmaceutical & Medicine Mfg 336410 Aerospace Product & Parts Mfg 443141 Household Appliance Stores 238220 Plumbing, Heating, & 325500 Paint, Coating, & Adhesive Mfg Air-Conditioning Contractors 336510 Railroad Rolling Stock Mfg 443142 Electronics Stores (including 325600 Soap, Cleaning Compound, & 336610 Ship & Boat Building Audio, Video, Computer, and 238290 Other Building Equipment Toilet Preparation Mfg Camera Stores) Contractors

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Principal Business Activity Codes (Continued)

Building Material and Garden 484120 General Freight Trucking, Activities Related to Credit Accounting, Tax Preparation, Equipment and Supplies Dealers Long-distance Intermediation Bookkeeping, and Payroll Services 444110 Home Centers 484200 Specialized Freight Trucking 522300 Activities Related to Credit 541211 Offices of Certified Public 444120 Paint & Wallpaper Stores Transit and Ground Passenger Intermediation (including loan Accountants Transportation brokers, check clearing, & 541213 Tax Preparation Services 444130 Hardware Stores money transmitting) 485110 Urban Transit Systems 541214 Payroll Services 444190 Other Building Material Dealers Securities, Commodity Contracts, and 444200 Lawn & Garden Equipment & 485210 Interurban & Rural Bus Other Financial Investments and 541219 Other Accounting Services Supplies Stores Transportation Related Activities Architectural, Engineering, and Related Food and Beverage Stores 485310 Taxi and Ridesharing Services 523110 Investment Banking & Securities Services 445110 Supermarkets and Other 485320 Limousine Service Dealing 541310 Architectural Services Grocery (except Convenience) 485410 School & Employee Bus 523120 Securities Brokerage 541320 Landscape Architecture Services Stores Transportation 523130 Commodity Contracts Dealing 541330 Engineering Services 445120 Convenience Stores 485510 Charter Bus Industry 523140 Commodity Contracts Brokerage 541340 Drafting Services 445210 Meat Markets 485990 Other Transit & Ground 523210 Securities & Commodity 541350 Building Inspection Services Passenger Transportation 445220 Fish & Seafood Markets Exchanges 541360 Geophysical Surveying & 445230 Fruit & Vegetable Markets Pipeline Transportation 523900 Other Financial Investment Mapping Services 445291 Baked Goods Stores 486000 Pipeline Transportation Activities (including portfolio 541370 Surveying & Mapping (except Scenic & Sightseeing Transportation management & investment Geophysical) Services 445292 Confectionery & Nut Stores advice) 445299 All Other Specialty Food Stores 487000 Scenic & Sightseeing 541380 Testing Laboratories Transportation Insurance Carriers and Related 445310 Beer, Wine, & Liquor Stores Activities Specialized Design Services Support Activities for Transportation Health and Personal Care Stores 524140 Direct Life, Health, & Medical 541400 Specialized Design Services 488100 Support Activities for Air (including interior, industrial, 446110 Pharmacies & Drug Stores Insurance & Reinsurance Transportation Carriers graphic, & fashion design) 446120 Cosmetics, Beauty Supplies, & 488210 Support Activities for Rail Computer Systems Design and Related Perfume Stores 524150 Direct Insurance & Reinsurance Transportation (except Life, Health, & Medical) Services 446130 Optical Goods Stores 488300 Support Activities for Water Carriers 541511 Custom Computer Programming 446190 Other Health & Personal Care Transportation 524210 Insurance Agencies & Services Stores 488410 Motor Vehicle Towing Brokerages 541512 Computer Systems Design Gasoline Stations 488490 Other Support Activities for Road 524290 Other Insurance Related Services 447100 Gasoline Stations (including Transportation Activities (including third-party 541513 Computer Facilities Management convenience stores with gas) 488510 Freight Transportation administration of insurance and Services Clothing and Clothing Accessories Arrangement pension funds) 541519 Other Computer Related Stores 488990 Other Support Activities for Funds, Trusts, and Other Financial Services 448110 Men's Clothing Stores Transportation Vehicles Other Professional, Scientific, and 448120 Women's Clothing Stores Couriers and Messengers 525100 Insurance & Employee Benefit Technical Services Funds 448130 Children's & Infants' Clothing 492110 Couriers 541600 Management, Scientific, & Stores 525910 Open-End Investment Funds Technical Consulting Services 492210 Local Messengers & Local (Form 1120-RIC) 448140 Family Clothing Stores Delivery 541700 Scientific Research & 525920 Trusts, Estates, & Agency Development Services 448150 Clothing Accessories Stores Warehousing and Storage Accounts 541800 Advertising & Related Services 448190 Other Clothing Stores 493100 Warehousing & Storage (except 525990 Other Financial Vehicles lessors of miniwarehouses & 541910 Marketing Research & Public 448210 Shoe Stores (including mortgage REITs & Opinion Polling self-storage units) closed-end investment funds) 448310 Jewelry Stores 541920 Photographic Services Information “Offices of Bank Holding 448320 Luggage & Leather Goods 541930 Translation & Interpretation Stores Companies” and “Offices of Publishing Industries (except Internet) Other Holding Companies” are Services Sporting Goods, Hobby, Book, and 511110 Newspaper Publishers located under Management of 541940 Veterinary Services Music Stores 511120 Periodical Publishers Companies (Holding 541990 All Other Professional, Scientific, 451110 Sporting Goods Stores Companies), later. 511130 Book Publishers & Technical Services 451120 Hobby, Toy, & Game Stores 511140 Directory & Mailing List Real Estate and Rental and Management of Companies 451130 Sewing, Needlework, & Piece Publishers Goods Stores Leasing (Holding Companies) 511190 Other Publishers 451140 Musical Instrument & Supplies Real Estate 511210 Software Publishers 551111 Offices of Bank Holding Stores 531110 Lessors of Residential Buildings Companies 451211 Book Stores Motion Picture and Sound Recording & Dwellings (including equity Industries REITs) 551112 Offices of Other Holding 451212 News Dealers & Newsstands Companies 512100 Motion Picture & Video Industries 531120 Lessors of Nonresidential General Merchandise Stores (except video rental) Buildings (except Administrative and Support and 452200 Department Stores 512200 Sound Recording Industries Miniwarehouses) (including Waste Management and equity REITs) 452300 General Merchandise Stores, Broadcasting (except Internet) incl. Warehouse Clubs and 531130 Lessors of Miniwarehouses & Remediation Services 515100 Radio & Television Broadcasting Supercenters Self-Storage Units (including Administrative and Support Services Miscellaneous Store Retailers 515210 Cable & Other Subscription equity REITs) Programming 561110 Office Administrative Services 453110 Florists 531190 Lessors of Other Real Estate 561210 Facilities Support Services Telecommunications Property (including equity REITs) 453210 Office Supplies & Stationery 561300 Employment Services Stores 517000 Telecommunications (including 531210 Offices of Real Estate Agents & paging, cellular, satellite, cable & Brokers 561410 Document Preparation Services 453220 Gift, Novelty, & Souvenir Stores other program distribution, 531310 Real Estate Property Managers 561420 Telephone Call Centers 453310 Used Merchandise Stores resellers, other 531320 Offices of Real Estate Appraisers 561430 Business Service Centers 453910 Pet & Pet Supplies Stores telecommunications, & Internet (including private mail centers & service providers) 531390 Other Activities Related to Real copy shops) 453920 Art Dealers Estate Data Processing Services 561440 Collection Agencies 453930 Manufactured (Mobile) Home Rental and Leasing Services Dealers 518210 Data Processing, Hosting, & 561450 Credit Bureaus Related Services 532100 Automotive Equipment Rental & 453990 All Other Miscellaneous Store Leasing 561490 Other Business Support Services Retailers (including tobacco, Other Information Services (including repossession services, candle, & trophy shops) 519100 Other Information Services 532210 Consumer Electronics & court reporting, & stenotype Appliances Rental Nonstore Retailers (including news syndicates, services) libraries, Internet publishing & 532281 Formal Wear & Costume Rental 454110 Electronic Shopping & broadcasting) 561500 Travel Arrangement & Mail-Order Houses 532282 Video Tape & Disc Rental Reservation Services 454210 Vending Machine Operators Finance and Insurance 532283 Home Health Equipment Rental 561600 Investigation & Security Services 454310 Fuel Dealers (including Heating Depository Credit Intermediation 532284 Recreational Goods Rental 561710 Exterminating & Pest Control Oil and Liquefied Petroleum) 522110 Commercial Banking 532289 All Other Consumer Goods Services Rental 454390 Other Direct Selling 522120 Savings Institutions 561720 Janitorial Services Establishments (including 532310 General Rental Centers 522130 Credit Unions 561730 Landscaping Services door-to-door retailing, frozen 532400 Commercial & Industrial 522190 Other Depository Credit 561740 Carpet & Upholstery Cleaning food plan providers, party plan Machinery & Equipment Rental & Services merchandisers, & coffee-break Intermediation Leasing service providers) Nondepository Credit Intermediation 561790 Other Services to Buildings & Lessors of Nonfinancial Intangible Dwellings 522210 Credit Card Issuing Transportation and Assets (except copyrighted works) 561900 Other Support Services Warehousing 522220 Sales Financing 533110 Lessors of Nonfinancial (including packaging & labeling 522291 Consumer Lending Intangible Assets (except services, & convention & trade Air, Rail, and Water Transportation 522292 Real Estate Credit (including copyrighted works) show organizers) 481000 Air Transportation mortgage bankers & originators) Professional, Scientific, and Waste Management and Remediation 482110 Rail Transportation Services 522293 International Trade Financing Technical Services 483000 Water Transportation 522294 Secondary Market Financing 562000 Waste Management & Legal Services Remediation Services Truck Transportation 522298 All Other Nondepository Credit 484110 General Freight Trucking, Local Intermediation 541110 Offices of Lawyers 541190 Other Legal Services

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Principal Business Activity Codes (Continued)

Other Ambulatory Health Care Services courses, skiing facilities, Automotive & Electronic) Repair Educational Services marinas, fitness centers, & & Maintenance 621900 Other Ambulatory Health Care bowling centers) 611000 Educational Services (including Services (including ambulance 811410 Home & Garden Equipment & schools, colleges, & universities) services & blood & organ banks) Accommodation and Food Appliance Repair & Maintenance Health Care and Social Hospitals Services 811420 Reupholstery & Furniture Repair 622000 Hospitals 811430 Footwear & Leather Goods Assistance Accommodation Repair Nursing and Residential Care Facilities Offices of Physicians and Dentists 721110 Hotels (except Casino Hotels) & 811490 Other Personal & Household 621111 Offices of Physicians (except 623000 Nursing & Residential Care Motels Goods Repair & Maintenance Facilities mental health specialists) 721120 Casino Hotels Personal and Laundry Services Social Assistance 621112 Offices of Physicians, Mental 721191 Bed & Breakfast Inns 812111 Barber Shops Health Specialists 624100 Individual & Family Services 721199 All Other Traveler 812112 Beauty Salons 621210 Offices of Dentists 624200 Community Food & Housing, & Accommodation 812113 Nail Salons Offices of Other Health Practitioners Emergency & Other Relief 721210 RV (Recreational Vehicle) Parks Services 812190 Other Personal Care Services 621310 Offices of Chiropractors & Recreational Camps 624310 Vocational Rehabilitation (including diet & weight reducing 621320 Offices of Optometrists 721310 Rooming & Boarding Houses, centers) Services Dormitories, & Workers’ Camps 621330 Offices of Mental Health 624410 Child Day Care Services 812210 Funeral Homes & Funeral Practitioners (except Physicians) Food Services and Drinking Places Services 621340 Offices of Physical, Occupational Arts, Entertainment, and 722300 Special Food Services (including 812220 Cemeteries & Crematories food service contractors & & Speech Therapists, & Recreation 812310 Coin-Operated Laundries & Audiologists caterers) Performing Arts, Spectator Sports, and Drycleaners 621391 Offices of Podiatrists 722410 Drinking Places (Alcoholic Related Industries Beverages) 812320 Drycleaning & Laundry Services 621399 Offices of All Other (except Coin-Operated) 711100 Performing Arts Companies 722511 Full-Service Restaurants Miscellaneous Health 812330 Linen & Uniform Supply Practitioners 711210 Spectator Sports (including 722513 Limited-Service Restaurants sports clubs & racetracks) 812910 Pet Care (except Veterinary) Outpatient Care Centers 722514 Cafeterias and Buffets 711300 Promoters of Performing Arts, Services 621410 Family Planning Centers Sports, & Similar Events 722515 Snack and Non-alcoholic 812920 Photofinishing Beverage Bars 621420 Outpatient Mental Health & 711410 Agents & Managers for Artists, 812930 Parking Lots & Garages Substance Abuse Centers Athletes, Entertainers, & Other Other Services 812990 All Other Personal Services 621491 HMO Medical Centers Public Figures Repair and Maintenance Religious, Grantmaking, Civic, 621492 Kidney Dialysis Centers 711510 Independent Artists, Writers, & Professional, and Similar Organizations Performers 811110 Automotive Mechanical & 621493 Freestanding Ambulatory Electrical Repair & Maintenance 813000 Religious, Grantmaking, Civic, Surgical & Emergency Centers Museums, Historical Sites, and Similar Professional, & Similar Institutions 811120 Automotive Body, Paint, Interior, 621498 All Other Outpatient Care & Glass Repair Organizations (including Centers 712100 Museums, Historical Sites, & condominium and homeowners Similar Institutions 811190 Other Automotive Repair & associations) Medical and Diagnostic Laboratories Maintenance (including oil 621510 Medical & Diagnostic Amusement, Gambling, and Recreation change & lubrication shops & car Laboratories Industries washes) Home Health Care Services 713100 Amusement Parks & Arcades 811210 Electronic & Precision 621610 Home Health Care Services 713200 Gambling Industries Equipment Repair & 713900 Other Amusement & Recreation Maintenance Industries (including golf 811310 Commercial & Industrial Machinery & Equipment (except

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Index

Limited liability companies 2 Refundable credits 20 A E Lobbying expenses, Related party transactions 11 Accounting methods 6 Electronic deposit requirement 5 nondeductibility 15 Rents (expense) 12 Accounting period (Tax Year) 6 Electronic filing 3 Rents (income) 10 Address change 9 Employee benefit programs 14 Repairs and maintenance 12 Advance payments 9 Employer identification number M Affiliated group 21 (EIN) 9 Merchant Marine capital Amended return 6 Entities electing to be taxed as construction fund: S Amortization 11 corporations 2 Deduction for contributions 16 Salaries and wages 12 Assembling the return 5 Estimated tax: Tax on nonqualified Schedule: At-risk rules 15 Penalty 5, 16 withdrawal 20 C 17 Estimated tax payments 5 Minimum tax: J 19 Extension of time to file 3 Prior year, credit for 19 K 21 B Mutual savings banks conducting L 23 Backup withholding 20 life insurance business 19 M-1 23 Bad debts 12 F M-3 8, 23 Balance sheets 23 Farming, corporations engaged O 19 Base erosion minimum tax 19, 23 in 2 N Section 263A costs 10 Beneficiaries of trusts 20 Final return 9 Name change 9 Section 965 payments 20 Business start-up expenses 11 Financial asset securitization Net operating loss 15, 22 Shareholders' equity Nonaccrual experience method 9 adjustments 23 investment trust (FASIT) 2 Signature 3 Foreign person (defined) 22 Small business taxpayer 6, 23 C Foreign tax credit 19 Specific Instructions 7 Capital construction Forms and publications, how to O fund (See Merchant Marine get 2 Other deductions 14 capital construction fund) Future Developments 1 Other income 10 Closely held corporations 11 Other taxes 19 T Overpaid estimated tax 20 Taxes and licenses 12 Compensation of officers 12 Tax-exempt securities 23 Consolidated return 8, 22 G Tax issues, unresolved 2 Contributions, charitable 13 General business credit 19 Total assets 9 Contributions to reduce public General Instructions 2 P Travel, meals, and debt 2 Gross receipts 9 Partnership income (loss) 15 entertainment 15 Controlled group 19 Passive activity limitations 11 Cost of goods sold 10 Payments and refundable Credits against tax 19 I credits 20 Installment sales 9 Penalties 5, 16 U Interest due: Pension, profit-sharing, etc. Uniform capitalization rules 10 D Late payment of tax 5, 6 plans 14 Deductions 10 Look-back method 20 Personal holding company 8 Depletion 14 Interest expense 12 Personal holding company tax 19 W Depository methods of tax Interest income: Personal service corporation 8 What's New 1 payment 5 Taxable 10 Preparer, tax return 3, 4 When to file 3 Depreciation 14 Tax-exempt 22, 24 Private delivery services 3 Where to file 4 Direct deposit of refund 2, 16 Who must file 2 Disclosure statement 6 Who must sign 3 Dividend income 10 L R Worksheets: Dividends-received LIFO recapture: Recapture taxes 19 Schedule C 18 deduction 17–19 Tax on 20 Reconciliation of income 24 Dues, membership and other 15 Limitations on deductions 10, 13 Recordkeeping 6

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