Instructions For Form 1120-Sf - (Rev. December 2001) (Page 4 of 4) in pdf

partnership after December 17, 1992, unless

Use Form 2220, Underpayment of

Line 1. Taxable interest. Enter total taxable

the partnership agreement as in effect prior to

Estimated Tax by Corporations, to see if the

interest received or accrued during the tax

December 18, 1992, requires the contribution,

fund owes a penalty and to figure the amount

year, including original issue discount. Do not

and

of the penalty. Generally, the fund does not

include any tax-exempt interest here. Report

•

A principal purpose of the change in the

have to file this form because the IRS can

tax-exempt interest as an item of information

partnership agreement or capital contribution is

figure the amount of any penalty and bill the

under Additional Information, on page 2, line

to circumvent the limitations on deductions.

fund for it.

If Form 2220 is attached, check the box on

Line 12. Other deductions. Enter the total of

Do not offset interest expense against

line 18 and enter the amount of any penalty on

other deductions not entered on lines 7 through

interest income.

that line.

11. List the type and amount of deduction on

Line 3. Capital gain net income. Every sale

an attached schedule. If the fund has only one

See Form 2220 for other information that

or exchange of a capital asset must be

item of other deduction, describe it in

may apply.

reported in detail on Schedule D (Form 1120),

parentheses on the dotted line next to the entry

Capital Gains and Losses, even if there is no

space for line 12.

gain or loss.

Paperwork Reduction Act Notice. We ask

Line 13. Net operating loss deduction

Line 5. Other income. Enter other taxable

for the information on this form to carry out the

(NOL). Enter the total NOL carryovers from

income not reported on lines 1 through 4. List

Internal Revenue laws of the United States.

prior tax years, but do not enter more than the

the type and amount of income on an attached

You are required to give us the information. We

fund’s taxable income. See Pub. 536, Net

schedule. If the fund has only one item of other

need it to ensure that you are complying with

Operating Losses, and Regulations section

income, describe it in parentheses on the

these laws and to allow us to figure and collect

1.468B-2(b)(4) for more details.

dotted line next to the entry space for line 5.

the right amount of tax.

You are not required to provide the

Deductions

Part II. Tax Computation

information requested on a form that is subject

Note. Do not deduct:

Line 15. Modified gross income. Modified

•

to the Paperwork Reduction Act unless the

Expenses allocable to tax-exempt income

gross income of a qualified settlement fund is

form displays a valid OMB control number.

(see section 265).

its gross income, as defined in section 61,

•

Books or records relating to a form or its

Payments of claims made by the fund.

computed with certain modifications. See

•

instructions must be retained as long as their

Expenses incurred by, or on behalf of,

Regulations section 1.468B-2(b) for more

contents may become material in the

claimants or transferors.

information.

administration of any Internal Revenue law.

Line 11. Items of loss, deduction, or credit

Generally, tax returns and return information

Line 16. Total tax. To determine the fund’s

from a partnership interest. For tax years

are confidential, as required by section 6103.

tax, multiply the amount on line 15 by the tax

ending before 2003, a fund that holds a

rate for the tax year that the return is being

The time needed to complete and file this

partnership interest it acquired before February

filed. Enter the result on line 16.

form will vary depending on individual

15, 1992, is allowed a deduction for its

circumstances. The estimated average time is:

distributive share of that partnership’s items of

For tax year...

The tax rate is...

loss, deduction, or credits, described in section

Recordkeeping . . . . . . . . .

18 hr., 39 min.

2001

39.1%

702(a) that would be deductible in determining

taxable income (in the case of a tax credit, the

2002 and 2003

38.6%

Learning about the law or the

income tax liability) of a corporation. The

form . . . . . . . . . . . . . . . . .

2 hr., 43 min.

deduction is allowed only to the extent of the

2004 and 2005

37.6%

fund’s distributive share of that partnership’s

2006 and later

35%

Preparing the form . . . . . . .

5 hr., 0 min.

items of income and gains described in section

702(a) for that tax year. If the fund has an

interest in more than one partnership, attach a

Copying, assembling, and

Line 17. Credits and payments. No credits or

schedule showing each partnership’s items of

sending the form to the IRS

32 min.

payments are allowed other than those on lines

loss, deduction, and credit, and that

17a through 17e.

If you have comments concerning the

partnership’s items of income or gain. Credits

Line 18. Estimated tax penalty. A fund that

accuracy of these time estimates or

against tax are treated as deductions by

does not make estimated tax payments when

suggestions for making this form simpler, we

dividing the amount of the credit by the fund’s

due may be subject to an underpayment

would be happy to hear from you. You can

tax rate. See the instructions for line 16 below

penalty for the period of underpayment.

write to the Tax Forms Committee, Western

for the fund’s tax rate for the year.

Generally, a fund is subject to the penalty if its

Area Distribution Center, Rancho Cordova, CA

Note. Limitations on changes in partnership

tax liability is $500 or more, and it did not

95743-0001.

agreement and capital contribution and

timely pay the smaller of:

•

Do not send the tax form to this address.

changes in a qualified settlement fund’s

Its current year tax liability or

•

distributive share of items of income, gain,

Instead, see Where To File on page 1.

Its prior year’s tax.

loss, deduction, or credit are disregarded if:

See section 6655 for details and exceptions,

•

They result from a change in the terms of the

including special rules for large funds.

partnership agreement after December 17,

1992, or from a capital contribution to the

-4-

Instructions For Form 1120-Sf - (Rev. December 2001) Page 4

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