Instructions For Form 1120-Ic-Disc - 2004 (Page 5 of 15) in pdf

Item F —Initial Return, Final

receipts from selling, leasing, or renting the

please explain. See section 6686 for other

property on which the commissions arose.

details.

Return, Name Change, Address

See Regulations section 1.993-6 for more

Change, or Amended Return

Trust fund recovery penalty. This penalty

information.

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may apply if certain excise, income, social

If this is the IC-DISC’s initial or final

security, and Medicare taxes that must be

Section 994, Intercompany

return, check the applicable box in item F at

collected or withheld are not collected or

the top of the form.

Pricing Rules

withheld, or these taxes are not paid. These

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If the IC-DISC has changed its address

If a related person described in section 482

taxes are generally reported on Forms 720,

since it last filed a return, check the box for

sells export property to the IC-DISC, use the

941, or 945. The trust fund recovery penalty

“Address change.”

intercompany pricing rules to figure taxable

may be imposed on all persons who are

income for the IC-DISC and the seller.

determined by the IRS to have been

Note. If a change in address occurs after

These rules generally do not permit the

responsible for collecting, accounting for,

the return is filed, use Form 8822, Change

related person to price at a loss. Under

and paying over these taxes, and who acted

of Address, to notify the IRS of the new

intercompany pricing, the IC-DISC’s taxable

willfully in not doing so. The penalty is equal

address.

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income from the sale (regardless of the

to the unpaid trust fund tax. See the

If the IC-DISC changed its name since it

price actually charged) may not exceed the

instructions for Form 720 or Pub. 15

last filed a return, check the box for “Name

greatest of:

(Circular E), Employer’s Tax Guide, for

change.” Generally, an IC-DISC also must

details, including the definition of

1. 4% of qualified export receipts on the

have amended its articles of incorporation

responsible persons.

IC-DISC’s sale of the property plus 10% of

and filed the amendment with the state in

the IC-DISC’s export promotion expenses

which it was incorporated.

•

attributable to the receipts,

To correct an error on a Form

2. 50% of the IC-DISC’s and the seller’s

Specific Instructions

1120-IC-DISC already filed, file an amended

combined taxable income from qualified

Form 1120-IC-DISC and check the

export receipts on the property, derived from

“Amended return” box. If the amended

the IC-DISC’s sale of the property plus 10%

return changes the income or distributions of

Period Covered

of the IC-DISC’s export promotion expenses

income to shareholders, an amended

attributable to the receipts, or

File the 2004 return for calendar year 2004

Schedule K (Form 1120-IC-DISC) must be

3. Taxable income based on the sale

and fiscal years that begin in 2004 and end

filed with the amended Form 1120-IC-DISC

price actually charged, provided that under

in 2005. For a fiscal year return, fill in the tax

and given to each shareholder. Write

section 482 the price actually charged

year space at the top of the form.

“AMENDED” across the top of the corrected

clearly reflects the taxable income of the

Schedule K you give to each shareholder.

Note. The 2004 Form 1120-IC-DISC may

IC-DISC and the related person.

also be used if:

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Question G(1)

The corporation has a tax year of less

Schedule P (Form 1120-IC-DISC),

than 12 months that begins and ends in

For rules of stock attribution, see section

Intercompany Transfer Price or

2005 and

267(c). If the owner of the voting stock of the

Commission, explains the intercompany

•

The 2005 Form 1120-IC-DISC is not

IC-DISC was an alien individual or a foreign

pricing rules in more detail.

available at the time the corporation is

corporation, partnership, trust, or estate,

Section 994(c), Export

required to file its return.

check the “Yes” box in the “Foreign owner”

column and enter the name of the owner’s

Promotion Expenses

The corporation must show its 2005 tax

country, in parentheses, in the address

year on the 2004 Form 1120-IC-DISC and

These are expenses incurred to help

column. “Owner’s country” for individuals is

take into account any tax law changes that

distribute or sell export property for use or

their country of residence; for other foreign

are effective for tax years beginning after

distribution outside the United States. These

entities, it is the country in which organized

December 31, 2004.

expenses do not include income tax, but do

or otherwise created, or in which

include 50% of the cost of shipping the

Address

administered.

export property on U.S.-owned and

Include the suite, room, or other unit number

U.S.-operated aircraft or ships in those

Taxable Income

after the street address. If the Post Office

cases where U.S. law or regulations do not

does not deliver mail to the street address

require that the export property be shipped

An IC-DISC must figure its taxable income

and the corporation has a P.O. box, show

although it does not pay most taxes. An

on such aircraft or ships.

the box number instead.

IC-DISC is exempt from the corporate

Deficits in Earnings and Profits

income tax, alternative minimum tax, and

Item C — Employer Identification

accumulated earnings tax.

A deficit in earnings and profits is

Number (EIN)

chargeable in the following order:

An IC-DISC and its shareholders are not

Enter the corporation’s EIN. If the

1. First, to any earnings and profits other

entitled to the possessions corporation tax

corporation does not have an EIN, it must

than accumulated IC-DISC income or

credit (section 936). An IC-DISC cannot

apply for one. An EIN may be applied for:

previously taxed income.

•

claim the general business credit or the

Online — Click on the EIN link at

2. Second, to any accumulated IC-DISC

credit for fuel produced from a

The EIN is

income.

nonconventional source. In addition, these

issued immediately once the application

3. Third, to previously taxed income.

credits cannot be passed through to

information is validated.

•

shareholders of the corporation.

Do not apply any deficit in earnings and

By telephone at 1-800-829-4933 from

profits against accumulated IC-DISC income

7:00 a.m. to 10:00 p.m. in the corporation’s

Line 6a. Net Operating Loss

that, as a result of the corporation’s revoking

local time zone.

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Deduction

its election to be treated as an IC-DISC (or

By mailing or faxing Form SS-4,

other disqualification), is deemed distributed

Application for Employer Identification

The net operating loss deduction is the

to the shareholders. See section

Number.

amount of the net operating loss carryover

995(b)(2)(A).

and carryback that can be deducted in the

If the corporation has not received its

tax year. See section 172 for details.

EIN by the time the return is due, enter

Penalties

“Applied for” in the space for the EIN. For

Line 7. Taxable Income

The IC-DISC may have to pay the following

more details, see Pub. 583, Starting a

penalties unless it can show that it had

If the IC-DISC uses either the gross receipts

Business and Keeping Records.

reasonable cause for not providing

method or combined taxable income method

Item E — Total Assets

information or not filing a return:

to compute the IC-DISC’s taxable income

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$100 for each instance of not providing

attributable to any transactions involving

Enter the IC-DISC’s total assets (as

required information, up to $25,000 during

products or product lines, attach Schedule P

determined by the accounting method

the calendar year.

(Form 1120-IC-DISC). Show in detail the

regularly used in keeping the IC-DISC’s

•

$1,000 for not filing a return.

IC-DISC’s taxable income attributable to

books and records) at the end of the tax

each such transaction or group of

If the return is filed late and the failure to

year. If there are no assets at the end of the

transactions.

file timely is due to reasonable cause,

tax year, enter -0-.

-5-

Instructions for Form 1120-IC-DISC

Instructions For Form 1120-Ic-Disc - 2004 Page 5

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