Instructions For Form 1120-Pc - 2004 (Page 16 of 21) in pdf

regardless of the holding period

member of the affiliated group is made as

public utility that is subject to income tax

determined under section 1223.

if no consolidated return was filed. See

and is allowed the deduction provided in

section 832(g).

section 247 for dividends paid.

A special rule applies in determining

Line 6. Enter the U.S.-source portion of

the acquisition date of dividends received

Line 1. Enter dividends (except those

dividends that:

from affiliates. This rule provides that the

received on debt-financed stock acquired

•

Are received from

portion of any 100% dividend which is

after July 18, 1984 – see section 246A)

less-than-20%-owned foreign

related to prorated amounts be treated as

that:

•

corporations and

received with respect to stock acquired on

Are received from

•

Qualify for the 70% deduction under

the later of:

less-than-20%-owned domestic

section 245(a). To qualify for the 70%

corporations subject to income tax and

(a) the date the payor acquired the

•

deduction, the corporation must own at

Qualify for the 70% deduction under

stock or obligation to which the prorated

least 10% of the foreign corporation by

section 243(a)(1).

amounts are attributable or

vote and value.

Also, include on line 1:

(b) the first day on which the payor and

•

Also include dividends received from a

Taxable distributions from an IC-DISC

payee were members of the same

less-than-20%-owned foreign sales

or former DISC that are designated as

affiliated group as defined in section

corporation (FSC) that:

eligible for the 70% deduction and certain

243(b).

•

Are attributable to income treated as

dividends of Federal Home Loan Banks.

Also, if the taxpayer is a member of an

effectively connected with the conduct of

See section 246(a)(2).

•

affiliated group filing a consolidated

a trade or business within the United

Dividends (except those received on

return, its determination of dividends

States (excluding foreign trade income)

debt-financed stock acquired after July

received is made as if the group were not

and

18, 1984) from a regulated investment

•

filing a consolidated return.

Qualify for the 70% deduction under

company (RIC). The amount of dividends

section 245(c)(1)(B).

eligible for the dividends-received

Prorated amounts means tax-exempt

deduction under section 243 is limited by

Line 7. Enter the U.S.-source portion of

interest and dividends for which a

section 854(b). The corporation should

dividends that:

deduction is allowable under section 243,

•

receive a notice from the RIC specifying

244, or 245 (other than 100% dividends).

Are received from 20%-or-more-owned

the amount of dividends that qualify for

foreign corporations and

100% dividend means any dividend if

•

the deduction.

Qualify for the 80% deduction under

the percentage used for purposes of

section 245(a).

Report so-called dividends or earnings

determining the deduction allowable

Also include dividends received from

received from mutual savings banks, etc.,

under section 243, 244, or 245(b) is

a 20%-or-more-owned FSC that:

100%. A special rule applies to certain

as interest. Do not treat them as

•

Are attributable to income treated as

dividends received by a foreign

dividends.

effectively connected with the conduct of

corporation.

Line 2. Enter on line 2:

•

a trade or business within the United

Dividends (except those received on

Lines 1 through 25

States (excluding foreign trade income)

debt-financed stock acquired after July

For purposes of the 20% ownership test

and

18, 1984) that are received from

•

on lines 1 through 7, the percentage of

Qualify for the 80% deduction provided

20%-or-more-owned domestic

stock owned by the corporation is based

in section 245(c)(1)(B).

corporations subject to income tax and

on voting power and value of the stock.

Line 8. Enter dividends received from

that are subject to the 80% deduction

Preferred stock described in section

wholly owned foreign subsidiaries that are

under section 243(c) and

1504(a)(4) is not taken into account.

•

eligible for the 100% deduction under

Taxable distributions from an IC-DISC

Corporations filing a consolidated return

section 245(b).

or former DISC that are considered

should see Regulations sections

eligible for the 80% deduction.

In general, the deduction under

1.1502-13, 1.1502-26, and 1.1502-27

section 245(b) applies to dividends paid

Line 3. Enter dividends that are:

before completing Schedule C.

•

out of the earnings and profits of a foreign

Received on debt-financed stock

Corporations filing a consolidated

corporation for a tax year during which:

acquired after July 18, 1984, from

•

return must not report as dividends on

All of its outstanding stock is directly or

domestic and foreign corporations subject

Schedule C any amounts received from

indirectly owned by the domestic

to income tax that would otherwise be

corporations within the tax consolidation

corporation receiving the dividends and

subject to the dividends-received

•

group. Such dividends are eliminated in

All of its gross income from all sources

deduction under section 243(a)(1),

consolidation rather than offset by the

is effectively connected with the conduct

243(c), or 245(a). Generally,

dividends-received deduction.

of a trade or business within the United

debt-financed stock is stock that the

Lines 1 through 9, column (a). Enter in

States.

corporation acquired by incurring a debt

column (a) of the appropriate line those

(for example, it borrowed money to buy

Also, include on line 8 dividends from

dividends that are subject to the

the stock).

FSCs that are attributable to foreign trade

•

provisions of section 832(b)(5)(B).This will

Received from a RIC on debt-financed

income and that are eligible for the 100%

include:

stock. The amount of dividends eligible

deduction provided in section

1. All dividends (other than 100%

for the dividends-received deduction is

245(c)(1)(A).

dividends) received on stock acquired

limited by section 854(b). The corporation

Line 9. Enter only those dividends that

after August 7, 1986, and

should receive a notice from the RIC

qualify under section 243(b) for the 100%

2. 100% dividends received on stock

specifying the amount of dividends that

dividends-received deduction described in

acquired after August 7, 1986, to the

qualify for the deduction.

section 243(a)(3). Corporations taking this

extent that such dividends are attributable

deduction are subject to the provisions of

Line 4. Enter dividends received on

to prorated amounts (see definition

section 1561.

preferred stock of a less-than-20%-owned

above).

public utility that is subject to income tax

The 100% deduction does not apply to

and is allowed the deduction provided in

affiliated group members that are joining

In the case of an insurance company

section 247 for dividends paid.

in the filing of a consolidated return.

that files a consolidated return, the

determination with respect to any

Line 5. Enter dividends received on

Line 10. Enter qualifying dividends from

dividend paid by a member to another

preferred stock of a 20%-or-more-owned

Form 8895.

-16-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2004 Page 16

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