Instructions For Form 1120-Ic-Disc - 2003 (Page 11 of 16) in pdf

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The dividends-received deduction on line

The reduction for the long-term capital

and athletic clubs, airline and hotel clubs,

6b, page 1,

gain applies to:

and clubs operated to provide meals under

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The deduction allowed under section 249,

Contributions of tangible personal

conditions favorable to business discussion.

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Any net operating loss (NOL) carryback to

property for use by an exempt organization

Entertainment facilities. The IC-DISC

the tax year under section 172, and

for a purpose or function unrelated to the

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cannot deduct an expense paid or incurred

Any capital loss carryback to the tax year

basis for its exemption and

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for a facility (such as a yacht or hunting

under section 1212(a)(1).

Contributions of any property to or for the

lodge) used for an activity usually

use of certain private foundations except for

Carryover. Charitable contributions over

considered entertainment, amusement, or

stock for which market quotations are

the 10% limitation may not be deducted for

recreation.

readily available (section 170(e)(5)).

the tax year but may be carried over to the

For special rules for contributions of

next 5 tax years.

Note: The IC-DISC may be able to deduct

inventory and other property to certain

otherwise nondeductible meals, travel, and

Substantiation requirements. Generally,

organizations, see section 170(e).

entertainment expenses if the amounts are

no deduction is allowed for any contribution

Line 2e. Freight

treated as compensation and reported on

of $250 or more unless the IC-DISC gets a

Form W-2 for an employee or on Form

written acknowledgment from the donee

Enter freight expense not deducted on line

1099-MISC for an independent contractor.

organization that shows the amount of cash

1h as export promotion expense.

contributed, describes any property

Deduction for clean-fuel vehicles and

Line 2g. Other Expenses

contributed, and, either gives a description

certain refueling property. Section 179A

and a good faith estimate of the value of any

Enter any other allowable deduction not

allows a deduction for part of the cost of

goods or services provided in return for the

claimed on line 1 or lines 2a through 2f.

qualified clean-fuel vehicle property and

contribution or states that no goods or

qualified clean-fuel vehicle refueling

Generally, a deduction may not be taken

services were provided in return for the

property placed in service during the tax

for any amount that is allocable to a class of

contribution. The acknowledgment must be

year. For details, see Pub. 535, Business

exempt income. See section 265(b) for

obtained by the due date (including

Expenses.

exceptions.

extensions) of the IC-DISC’s return, or, if

Note: Do not deduct fines or penalties paid

earlier, the date the return is filed. Do not

Lobbying expenses. Generally, lobbying

to a government for violating any law.

attach the acknowledgment to the tax return,

expenses are not deductible. These

Special rules apply to the following

but keep it with the IC-DISC’s records.

expenses include:

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expenses:

These rules apply in addition to the filing

Amounts paid or incurred in connection

requirements for Form 8283, Noncash

Travel, meals, and entertainment. Subject

with influencing Federal or state legislation

Charitable Contributions, described below.

to the limitations and restrictions discussed

(but not local legislation) or

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below, an IC-DISC can deduct ordinary and

For more information on substantiation

Amounts paid or incurred in connection

necessary travel, meals, and entertainment

and recordkeeping requirements, see the

with any communication with certain Federal

expenses paid or incurred in its trade or

regulations under section 170 and Pub. 526,

executive branch officials in an attempt to

business. Also, special rules apply to

Charitable Contributions.

influence the official actions or positions of

deductions for gifts, skybox rentals, luxury

the officials. See Regulations section

Contributions to organizations

water travel, convention expenses, and

1.162-29 for the definition of “influencing

conducting lobbying activities.

entertainment tickets. See section 274 and

legislation.”

Contributions made to an organization that

Pub. 463 for more details.

conducts lobbying activities are not

Travel. The IC-DISC cannot deduct

Dues and other similar amounts paid to

deductible if:

travel expenses of any individual

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certain tax-exempt organizations may not be

The lobbying activities relate to matters of

accompanying a corporate officer or

deductible. See section 162(e). If certain

direct financial interest to the donor’s trade

employee, including a spouse or dependent

in-house lobbying expenditures do not

or business and

of the officer or employee, unless:

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exceed $2,000, they are deductible. For

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The principal purpose of the contribution

That individual is an employee of the

information on contributions to charitable

was to avoid Federal income tax by

IC-DISC and

organizations that conduct lobbying

obtaining a deduction for activities that

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His or her travel is for a bona fide

activities, see the instructions for line 2d. For

would have been nondeductible under the

business purpose and would otherwise be

more information on lobbying expenses, see

lobbying expense rules if conducted directly

deductible by that individual.

section 162(e).

by the donor.

Meals and entertainment. Generally,

Contribution of property other than cash.

the IC-DISC can deduct only 50% of the

Schedule J

If a corporation (other than a closely held

amount otherwise allowable for meals and

corporation) contributes property other than

entertainment expenses paid or incurred in

Deemed and Actual

cash and claims over a $500 deduction for

its trade or business. In addition (subject to

Distributions and Deferred

the property, it must attach a schedule to the

exceptions under section 274(k)(2)):

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return describing the kind of property

DISC Income for the Tax Year

Meals must not be lavish or extravagant;

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contributed and the method used to

A bona fide business discussion must

determine its fair market value (FMV).

occur during, immediately before, or

Part I—Deemed Distributions

Closely held corporations must complete

immediately after the meal; and

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Under Section 995(b)(1)

Form 8283 and attach it to their returns. All

An employee of the IC-DISC must be

other corporations generally must complete

present at the meal.

Line 2. Recognized Gain on

and attach Form 8283 to their returns for

Membership dues. The IC-DISC may

contributions of property (other than money)

Section 995(b)(1)(B) Property

deduct amounts paid or incurred for

if the total claimed deduction for all property

Enter gain recognized during the tax year on

membership dues in civic or public service

contributed was more than $5,000.

the sale or exchange of property, other than

organizations, professional organizations,

property which in the hands of the IC-DISC

Reduced deduction for contributions

business leagues, trade associations,

was a qualified export asset, previously

of certain property. For a charitable

chambers of commerce, and boards of

transferred to the IC-DISC in a transaction in

contribution of property, the IC-DISC must

trade. However, no deduction is allowed if a

which the transferor realized gain but did not

reduce the contribution by the sum of:

principal purpose of the organization is to

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recognize the gain in whole or in part. See

The ordinary income and short-term

entertain, or provide entertainment facilities

section 995(b)(1)(B). Show the computation

capital gain that would have resulted if the

for, members or their guests. In addition,

of the gain on a separate schedule. Include

property were sold at its FMV and

IC-DISCs may not deduct membership dues

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no more of the IC-DISC’s gain than the

For certain contributions, the long-term

in any club organized for business,

amount of gain the transferor did not

capital gain that would have resulted if the

pleasure, recreation, or other social

recognize on the earlier transfer.

property were sold at its FMV.

purpose. This includes country clubs, golf

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Instructions for Form 1120-IC-DISC

Instructions For Form 1120-Ic-Disc - 2003 Page 11

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