Instructions For Schedule O Internal Revenue Service (Form 1120)

for each member of the group for

Members of a controlled group are

additional tax applies, each member

assessing any resulting deficiency.

entitled to one $50,000, one $25,000,

will pay that tax based on the part of

See the instructions for line 5, below.

and one $9,925,000 taxable income

the amount used in each taxable

bracket amount (in that order) on

income bracket to reduce that

Note. The corporation is required to

columns (c), (d), and (e). See Equal

member’s tax. See section 1561(a).

provide information regarding the

Apportionment Plan and Unequal

status of the group’s apportionment

Column (f). If the taxable income of

Apportionment Plan earlier.

plan. In connection with the

the controlled group exceeds

information provided, the corporation

Column (c). Enter taxable income

$100,000, enter each member’s

may be required to indicate whether

(Form 1120, page 1, line 30, or the

share of the smaller of: 5% of the

all of the component members of the

comparable line of the corporation’s

taxable income in excess of

controlled group are adopting,

income tax return) or the

$100,000, or $11,750.

amending, or terminating an

corporation’s share of the $50,000

Column (g). If the taxable income of

apportionment plan. If all the

taxable income bracket, whichever is

the controlled group exceeds $15

members of a controlled group

less.

million, enter each member’s share of

complete a written agreement setting

Column (d). Enter taxable income

the smaller of: 3% of the taxable

forth the terms of the adopted or

(Form 1120, page 1, line 30, or the

income in excess of $15 million, or

amended apportionment plan (or an

comparable line of the corporation’s

$100,000.

agreement to terminate the previously

income tax return) minus the

Part IV. Other

adopted plan), each member of the

corporation’s share of column (c) or

group may rely on this agreement as

the corporation’s share of the

Apportionments

a basis for its answers. The

$25,000 taxable income bracket,

agreement must be signed by an

whichever is less.

Column (b). The component

authorized person on behalf of each

members of a controlled group of

Column (e). Enter taxable income

component member of the controlled

corporations may allocate the

(Form 1120, page 1, line 30, or the

group. Each member must retain as

$250,000 accumulated earnings

comparable line of the corporation’s

part of its records either the original

credit unequally if they adopt an

income tax return) minus the

or a copy of such agreement. The

apportionment plan or have an

corporation’s share of columns (c)

agreement should contain the group’s

apportionment plan in effect.

and (d) or the corporation’s share of

apportionment methodology (e.g.,

the $9,925,000 taxable income

If any component member of the

percentages) for each tax benefit

bracket, whichever is less.

controlled group is a corporation

item.

described in section 535(c)(2)(B), the

Column (f). Enter taxable income

Line 5. Statute of limitations. An

amount to be apportioned among the

(Form 1120, page 1, line 30, or the

apportionment plan may not be

component members is $150,000

comparable line of the corporation’s

adopted for a particular tax year

(rather than $250,000). See section

income tax return) minus the

unless there is at least one year

1561(a).

corporation’s share of columns (c)

remaining in the statutory period

through (e).

Columns (c) and (d). In applying the

(including any extensions) for

$40,000 AMT exemption amount, the

Column (g). Enter the total of

assessing a deficiency against the

alternative minimum taxable income

columns (c) through (f) for each

corporation, the tax liability of which

of all component members shall be

component member. Each total in

would be increased by adopting such

taken into account. Any decrease in

Part II, column (g) for each member

plan.

the exemption amount shall be

must agree with Form 1120, page 1,

If there is less than one year

allocated to the component members

line 30, or the comparable line of

remaining in the statutory period, the

of the group in the same manner as

such member’s income tax return.

corporation must have entered into

the exemption amount was allocated

Part III. Income Tax

an agreement with the IRS extending

to the members. See sections

the statutory period for the limited

55(d)(3) and 1561(a).

Apportionment

purpose of assessing any deficiency

Column (f). Enter each member’s

against that corporation attributable to

Members of a controlled group are

share of any other tax benefits not

the adoption of the apportionment

treated as one group to figure the

included in columns (b) through (e).

plan. See Temporary Regulations

applicability of the additional 5% tax

section 1.1561-3T(c)(2).

and the additional 3% tax. If an

Part II. Taxable Income

Apportionment

Enter each member’s share of each

taxable income bracket as applicable.

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Instructions For Schedule O Internal Revenue Service (Form 1120) - 2006 Page 3

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