Instructions For Form 1120-Ic-Disc - 2004 (Page 12 of 15) in pdf

The amount on line 3, Part V, is allocated

Selling industrial chemicals accounts for

Part III—Deemed Distributions

to each shareholder on line 10, Part III, of

$2 million (20% of the $10 million total) and

Under Section 995(b)(2)

Schedule K (Form 1120-IC-DISC).

is the IC-DISC’s second largest product or

If the corporation is a former DISC or a

service. The IC-DISC should enter “281”

Shareholders of an IC-DISC must file

former IC-DISC that revoked IC-DISC status

(the product code for industrial inorganic

Form 8404 if the IC-DISC reports deferred

or lost IC-DISC status for failure to satisfy

and organic chemicals) and “20%” in line 1b.

DISC income on line 10, Part III of Schedule

one or more of the conditions specified in

section 992(a)(1) for 2004, each

Line 2. Definitions

shareholder is deemed to have received a

Schedule K

Export gross receipts are receipts from

distribution taxable as a dividend on the last

any of the following:

day of the 2004 tax year. The deemed

•

Providing engineering or architectural

Shareholder’s Statement of

distribution equals the shareholder’s

services for construction projects located

prorated share of the DISC’s or IC-DISC’s

IC-DISC Distributions

outside the United States.

income accumulated during the years just

•

Attach a separate Copy A, Schedule K

Selling for direct use, consumption, or

before DISC or IC-DISC status ended. The

(Form 1120-IC-DISC), to Form

disposition outside the United States,

shareholder will be deemed to receive the

1120-IC-DISC for each shareholder who

property (such as inventory) produced in the

distribution in equal parts on the last day of

received an actual or deemed distribution

United States.

each of the 10 tax years of the corporation

•

during the tax year or to whom the

Renting this property to unrelated persons

following the year of the termination or

corporation reported deferred DISC income

for use outside the United States.

disqualification of the IC-DISC (but in no

•

for the tax year.

Providing services involved in such a sale

case over more than twice the number of

or rental.

years the corporation was a DISC or

•

Schedule L

Providing export management services.

IC-DISC).

For commission sales, export gross

Balance Sheets per Books

Part IV—Actual Distributions

receipts include the total receipts on which

The balance sheet should agree with the

the IC-DISC earned the commission.

IC-DISC’s books and records. Include

Line 1. Distributions To Meet

For purposes of line 2, Schedule N only,

certificates of deposits as cash on line 1.

Qualification Requirements under

no reduction is to be made for receipts

Section 992(c)

Line 12. Accumulated Pre-1985

attributable to military property. Therefore,

DISC Income

If the corporation is required to pay interest

an IC-DISC’s export gross receipts for

under section 992(c)(2)(B) on the amount of

purposes of line 2 includes the total of the

If the corporation was a qualified DISC as of

a distribution to meet the qualification

amounts from page 2, Schedule B, columns

December 31, 1984, the accumulated

requirements of section 992(c), report this

(b) and (d) of lines 1c, 2a, 2b, 2c, and 2d.

pre-1985 DISC income will generally be

interest on line 2c, Schedule E. Also include

treated as previously taxed income (exempt

Related persons are:

the amount on line 1, Part IV of Schedule J

•

from tax) when distributed to DISC

An individual, partnership, estate, or trust

and show the computation of the interest on

shareholders after December 31, 1984.

that controls the IC-DISC.

an attached schedule.

•

Exception: The exemption does not apply

A corporation that controls the IC-DISC or

to distributions of accumulated pre-1985

is controlled by it.

Line 4a. Previously Taxed Income

•

DISC income of an IC-DISC or former DISC

A corporation controlled by the same

Report on line 4a all actual distributions of

that was made taxable under section

person or persons who control the IC-DISC.

previously taxed income. Also, include any

995(b)(2) because of a prior revocation of

distributions of pre-1985 accumulated DISC

Control means direct or indirect ownership

the DISC election or disqualification of the

income that are nontaxable (see the

of more than 50% of the total voting power

DISC. For more details on these

instructions for Schedule L, line 12, below).

of all classes of stock entitled to vote. See

distributions, see Temporary Regulations

Enter on the dotted line to the left of the line

section 993(a)(3).

section 1.921-1T(a)(7).

4a amount, the dollar amount of the

U.S. person is:

Line 13. Accumulated IC-DISC

distribution that is nontaxable pre-1985

•

A citizen or resident of the United States,

DISC income and identify it as such. Do not

Income

which includes the Commonwealth of Puerto

include distributions of pre-1985 DISC

Accumulated IC-DISC income (for periods

Rico and possessions of the United States.

income that are made under section

•

after 1984) is accounted for on line 13 of

A domestic corporation or partnership.

995(b)(2) because of prior year revocations

•

Schedule L. The balance of this account is

An estate or trust (other than a foreign

or disqualifications.

used in figuring deferred DISC income in

estate or trust as defined in section

Part V of Schedule J.

7701(a)(31)).

Part V—Deferred DISC Income

Schedule N

Under Section 995(f)(3)

Export Gross Receipts for 2004

In general, deferred DISC income is:

Column (a). All IC-DISCs should complete

Export Gross Receipts

1. Accumulated IC-DISC income (for

column (a) in line 2. If two or more IC-DISCs

of the IC-DISC and Related U.S.

periods after 1984) of the IC-DISC as of the

are related persons, only the IC-DISC with

close of the computation year over

Persons

the largest export gross receipts should

2. The amount of

complete columns (b) and (c). If an IC-DISC

distributions-in-excess-of-income for the tax

acts as a commission agent for a related

Line 1. Product Code and

year of the IC-DISC following the

person, attribute the total amount of the

Percentage

computation year.

transaction to the IC-DISC.

Enter in line 1a the code number and

percentage of total export gross receipts

Complete column (a) to report the

For purposes of item 2 above,

(defined below), for the product or service

IC-DISC’s export gross receipts from all

distributions-in-excess-of-income means the

that accounts for the largest portion of the

sources (including the United States) for the

excess (if any) of:

•

IC-DISC’s export gross receipts. The

2004 tax year.

Actual distributions to shareholders out of

product codes are on page 15 of these

accumulated IC-DISC income over

Column (b). Export gross receipts of

instructions. On line 1b enter the same

•

The amount of IC-DISC income (as

related IC-DISCs. Complete column (b) to

information for the IC-DISC’s next largest

defined in section 996(f)(1)) for the tax year

report related IC-DISCs’ export gross

product or service.

following the computation year.

receipts from all sources (including the

Example: An IC-DISC has export gross

United States).

For purposes of items 1 and 2 above,

receipts of $10 million. Selling agricultural

see section 995(f) and Proposed

chemicals accounts for $4.5 million (45%) of

Column (c). Export gross receipts of all

Regulations section 1.995(f)-1 for a

that amount, which is the IC-DISC’s largest

other related U.S. persons. Complete

definition of computation year, examples,

product or service. The IC-DISC should

column (c) to report other related U.S.

and other details on figuring deferred DISC

enter “287” (the product code for agricultural

persons’ export gross receipts from all

income.

chemicals) and “45%” in line 1a.

sources except the United States.

-12-

Instructions for Form 1120-IC-DISC

Instructions For Form 1120-Ic-Disc - 2004 Page 12

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