Instructions For Schedule O Internal Revenue Service (Form 1120)

Instructions for Schedule O

Department of the Treasury

Internal Revenue Service

(Form 1120)

(December 2006)

Consent Plan and Apportionment Schedule for a Controlled Group

Section references are to the Internal

50% of the total value of shares of all

Definitions and Special

Revenue Code unless otherwise noted.

classes of stock of each corporation,

Rules

taking into account the stock

General Instructions

ownership of each such person only

to the extent such stock ownership is

Types of Controlled Groups

identical with respect to each such

Purpose of Schedule

Parent-subsidiary group. A

corporation.

Use Schedule O to report the

parent-subsidiary group is one or

apportionment of taxable income,

more chains of corporations

For purposes of determining and

income tax, and certain tax benefits

connected through stock ownership

allocating the following, the definition

with a common parent corporation if:

between the members of a controlled

of brother-sister group does not

•

Stock possessing at least 80% of

group.

include (1) above.

•

the total combined voting power of all

Taxable income brackets,

•

Also, use Schedule O to indicate

classes of stock entitled to vote or at

Accumulated earnings credit,

•

that all members of the controlled

least 80% of the total value of shares

Alternative minimum tax exemption

group:

of all classes of stock of each of the

amount,

•

corporations, except the common

Are not adopting an apportionment

Phaseout of the alternative

parent corporation, is directly or

plan,

minimum tax exemption amount, or

•

indirectly owned by one or more of

The additional tax.

Already have an apportionment

the other corporations; and

plan in effect,

•

For purposes of determining

The common parent corporation

•

Are amending a previously adopted

whether a corporation is a member of

directly or indirectly owns stock

apportionment plan,

a brother-sister controlled group of

possessing at least 80% of the total

•

corporations, within the meaning of

Are adopting an apportionment

combined voting power of all classes

section 1563(a)(2), stock owned by a

plan, or

of stock entitled to vote or at least

•

person who is an individual, estate, or

Are terminating the existing

80% of the total value of shares of all

trust means:

apportionment plan.

classes of stock of at least one of the

•

Stock owned directly by such

other corporations, excluding, in

person, and

Who Must File

computing such voting power or

•

Stock owned with the application of

value, stock owned directly by such

A corporation must file Schedule O

section 1563(e).

other corporations.

with its income tax return, amended

Combined group. A combined

return, or claim for refund (if

For purposes of determining

group is three or more corporations

appropriate) for each tax year that the

whether a corporation is a member of

each of which is a member of a

corporation is a member of a

a parent-subsidiary controlled group

parent-subsidiary group or a

controlled group, even if no

of corporations, within the meaning of

brother-sister group, and one of

apportionment plan in effect.

section 1563(a)(1), stock owned by a

which is:

corporation means:

•

A common parent corporation

•

By filing this schedule, the

Stock owned directly by the

included in a group of corporations in

corporation consents to the adoption

corporation, and

a parent-subsidiary group, and also

•

or amendment of an apportion plan

Stock owned with the application of

•

Included in a group of corporations

by the controlled group and to the

section 1563(e)(1), (2), and (3).

in a brother-sister group.

allocation by the members of the

Brother-sister group. A

controlled group of certain tax

Life insurance companies. Two or

brother-sister group is two or more

more insurance companies subject to

benefits. The apportionment plan

corporations if the same five or fewer

tax under section 801 which are

(including an amended plan) remains

persons who are individuals, estates,

members of a parent-subsidiary,

in effect until it is terminated.

or trusts directly or indirectly own

brother-sister, or combined group of a

stock possessing:

See sections 1561 and 1563 and

controlled group of corporations, will

the related regulations for more

1. At least 80% of the total

be treated as a controlled group of

information.

combined voting power of all classes

corporations separate from any other

of stock entitled to vote or at least

corporations which are members of

Note. The common parent of a

80% of the total value of shares of all

the controlled group of corporations

consolidated group can file one

classes of the stock of each

as a parent-subsidiary, brother-sister,

Schedule O for all the members of

corporation, and

or combined group. However, this

the consolidated group, with that

2. More than 50% of the total

does not apply to any life insurance

Schedule O containing the required

combined voting power of all classes

company that is a member (whether

information for each member.

of stock entitled to vote or more than

eligible or ineligible) of a life-nonlife

Cat. No. 48211V

Instructions For Schedule O Internal Revenue Service (Form 1120) - 2006

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