Instructions For Form 1120-Pc - 2004 (Page 12 of 21) in pdf

debt allocable to an asset used to

deducted for the tax year but may be

And the vehicle’s

produce the property. See section 263A(f)

carried over to the next 5 tax years.

FMV on the first

and Regulations section 1.263A-8

The lease term

day of the lease

Special rules apply if the corporation

began:

exceeded:

through 1.263A-15 for definitions and

has an NOL carryover to the tax year. In

more information.

figuring the charitable contributions

•

Interest paid or incurred on any portion

After 12/31/03 and before 1/1/05 . . $17,500

deduction for the tax year, the 10% limit is

of an underpayment of tax that is

applied using taxable income after taking

After 12/31/02 and before 1/1/04 . . $18,000

attributable to an understatement arising

into account any deduction for the NOL.

from an undisclosed listed transaction or

After 12/31/98 but before 1/1/03 . . $15,500

To figure the amount of any remaining

an undisclosed reportable avoidance

NOL carryover to later years, taxable

If the lease term began before January 1, 1999,

transaction (other than a listed

income must be modified (see section

see Pub. 463, Travel, Entertainment, Gift, and Car

transaction) entered into in tax years

172(b)). To the extent that contributions

Expenses, to find out if the corporation has an

beginning after October 22, 2004.

are used to reduce taxable income for this

inclusion amount. The inclusion amount for lease

Special rules apply to:

terms beginning in 2005 will be published in the

purpose and increase an NOL carryover,

•

Interest on which no tax is imposed

Internal Revenue Bulletin in early 2005.

a contributions carryover is not allowed.

(see section 163(j)).

See section 170(d)(2)(B).

•

Foregone interest on certain

See Pub. 463 for instructions on

Substantiation requirements.

below-market-rate loans (see section

figuring the inclusion amount.

Generally, no deduction is allowed for any

7872).

contribution of $250 or more unless the

•

Line 19. Taxes and licenses. Enter

Original issue discount on certain

corporation obtains a written

taxes paid or accrued during the tax year,

high-yield discount obligations. (See

acknowledgment from the donee

but do not include the following.

section 163(e) to figure the disqualified

•

organization that shows the amount of

Federal income taxes.

portion.)

•

cash contributed, describes any property

•

Foreign or U.S. possession income

Interest which is allocable to

contributed, and, either gives a

taxes if a tax credit is claimed (however,

unborrowed policy cash values of life

description and a good faith estimate of

see the Instructions for Form 5735 for

insurance, endowment, or annuity

the value of any goods or services

special rules for possession income

contracts issued after June 8, 1997. See

provided in return for the contribution or

taxes).

section 264(f). Attach a statement

•

states that no goods or services were

Taxes not imposed on the corporation.

showing the computation of the

•

provided in return for the contribution. The

Taxes, including state or local sales

deduction.

acknowledgment must be obtained by the

taxes, that are paid or incurred in

Line 20b. Less tax-exempt interest

due date (including extensions) of the

connection with an acquisition or

expense. Enter interest paid or accrued

corporation’s return, or, if earlier, the date

disposition of property. (These taxes must

during the tax year on indebtedness

the return is filed. Do not attach the

be treated as a part of the cost of the

incurred or continued to purchase or carry

acknowledgment to the tax return, but

acquired property or, in the case of a

obligations if the interest is wholly exempt

keep it with the corporation’s records.

disposition, as a reduction in the amount

from income tax. For exceptions, see

These rules apply in addition to the filing

realized on the disposition.)

•

section 265(b).

requirements for Form 8283, Noncash

Taxes assessed against local benefits

Line 21. Charitable contributions.

Charitable Contributions, discussed

that increase the value of the property

Enter contributions or gifts actually paid

below.

assessed (such as for paving, etc.).

•

within the tax year to or for the use of

Taxes deducted elsewhere on the

For more information on charitable

charitable and governmental

return.

contributions, including substantiation and

organizations described in section 170(c)

recordkeeping requirements, see section

See section 164(d) for the

and any unused contributions carried over

170 and the related regulations and Pub.

apportionment of taxes on real property

from prior years.

526, Charitable Contributions.

between a seller and a purchaser.

Corporations reporting taxable income

Contributions of property other than

Line 20a. Interest.

on the accrual method can elect to treat

cash. If a corporation (other than a

Note. Do not offset interest income

as paid during the tax year any

closely held or personal service

against interest expense.

contributions paid by the 15th day of the

corporation) contributes property other

3rd month after the end of the tax year if

The corporation must make an interest

than cash and claims over a $500

the contributions were authorized by the

allocation if the proceeds of a loan were

deduction for the property, it must attach

board of directors during the tax year.

used for more than one purpose (for

a schedule to the return describing the

Attach a declaration to the return stating

example, to purchase a portfolio

kind of property contributed and the

that the resolution authorizing the

investment and to acquire an interest in a

method used to determine its fair market

contributions was adopted by the board of

passive activity). See Temporary

value (FMV). Closely held corporations

directors during the tax year. The

Regulations section 1.163-8T for the

and personal service corporations must

declaration must include the date the

interest allocation rules.

complete Form 8283 and attach it to their

resolution was adopted.

returns. All other corporations generally

Do not deduct the following interest:

•

must complete and attach Form 8283 to

Limitation on deduction. The total

Interest on indebtedness incurred or

their returns for contributions of property

amount claimed may not be more than

continued to purchase or carry obligations

10% of taxable income (line 37, Schedule

(other than money) if the total claimed

if the interest is wholly exempt from

A) computed without regard to the

deduction for all property contributed was

income tax. For exceptions, see section

following.

more than $5,000.

265(b).

•

Any deduction for contributions.

Interest and carrying charges on

If the corporation made a “qualified

•

The deduction for dividends received.

straddles. Generally, these amounts must

conservation contribution” under section

•

Any net operating loss (NOL) carryback

be capitalized. See section 263(g).

170(h), also include the FMV of the

•

to the tax year under section 172.

Interest on debt allocable to the

underlying property before and after the

•

Any capital loss carryback to the tax

production of designated property by a

donation, as well as the type of legal

year under section 1212(a)(1).

corporation for its own use or for sale.

interest contributed, and describe the

The corporation must capitalize this

Carryover. Charitable contributions

conservation purpose benefited by the

interest. Also capitalize any interest on

over the 10% limitation may not be

donation. If a contribution carryover is

-12-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2004 Page 12

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