Instructions For Form 1120-Ic-Disc - 2003 (Page 9 of 16) in pdf

•

Line 3, Column (a)

All of its gross income from all sources is

obligation to make corresponding payments

effectively connected with the conduct of a

with respect to similar stock.

Enter dividends that are:

•

trade or business within the United States.

Two situations in which the

Received on debt-financed stock acquired

dividends-received deduction will not be

after July 18, 1984, from domestic and

Line 9, Column (c)

allowed on any share of stock are:

foreign corporations subject to income tax

•

If the IC-DISC held it less than 46 days

and that would otherwise be subject to the

Generally, line 9, column (c), may not

during the 90-day period beginning 45 days

dividends-received deduction under section

exceed the amount from the worksheet

before the stock became ex-dividend with

243(a)(1), 243(c), or 245(a). Generally,

below. However, in a year in which an NOL

respect to the dividend (see section 246

debt-financed stock is stock that the

occurs, this limitation does not apply even if

(c)(1)(A)) or

corporation acquired by incurring a debt

the loss is created by the dividends-received

•

To the extent the IC-DISC is under an

(e.g., it borrowed money to buy the stock).

deduction. See sections 172(d) and 246(b).

•

obligation to make related payments for

Received from a RIC on debt-financed

substantially similar or related property.

stock. The amount of dividends eligible for

Line 9, Column (c) Worksheet

5. Any other taxable dividend income

the dividends-received deduction is limited

not properly reported above (including

by section 854(b). The corporation should

1. Refigure line 5, page 1, Form

distributions under section 936(h)(4)).

receive a notice from the RIC specifying the

1120-IC-DISC, without any

amount of dividends that qualify for the

adjustment under section 1059

Line 15, Column (a)

deduction.

and without any capital loss

Qualified dividends are dividends that

Line 3, Columns (b) and (c)

carryback to the tax year under

qualify as qualified export receipts. They

section 1212(a)(1) . . . . . . . . .

Dividends received on debt-financed stock

include all dividends (or amounts) includible

2. Multiply line 1 by 80% (.80) . . .

acquired after July 18, 1984, are not entitled

in gross income (under section 951) that are

3. Add lines 2, 5, 7, and 8, column

to the full 70% or 80% dividends-received

attributable to stock of related foreign export

(c), and the part of the

deduction. The 70% or 80% deduction is

corporations. See item 6 under Qualified

deduction on line 3, column (c),

reduced by a percentage that is related to

export receipts and A related foreign

that is attributable to dividends

the amount of debt incurred to acquire the

export corporation on page 5 for more

received from

stock. See section 246A. Also see section

details.

20%-or-more-owned

245(a) before making this computation for

corporations . . . . . . . . . . . . .

an additional limitation that applies to

Schedule E

4. Enter the smaller of line 2 or

dividends received from foreign

line 3. If line 3 is larger than line

corporations. Attach a schedule to Form

Deductions

2, do not complete the rest of

1120-IC-DISC showing how the amount on

this worksheet. Instead, enter

line 3, column (c), was figured.

Limitations on Deductions

the amount from line 4 in the

Line 4, Column (a)

margin next to line 9 of

Section 263A uniform capitalization

Schedule C and on line 6b,

Enter dividends received on the preferred

rules. The uniform capitalization rules of

page 1, Form 1120-IC-DISC . .

stock of a less-than-20%-owned public utility

section 263A require corporations to

5. Enter the total amount of

that is subject to income tax and is allowed

capitalize, or include in inventory, certain

dividends received from

the deduction provided in section 247 for

costs incurred in connection with:

20%-or-more-owned

•

dividends paid.

Personal property (tangible and certain

corporations that are included

intangible property) acquired for resale.

Line 5, Column (a)

on lines 2, 3, 5, 7, and 8 of

•

The production of real property and

column (a) . . . . . . . . . . . . . .

Enter dividends received on preferred stock

tangible personal property produced by a

6. Subtract line 5 from line 1 . . . .

of a 20%-or-more-owned public utility that is

corporation for use in its trade or business

7. Multiply line 6 by 70% (.70) . . .

subject to income tax and is allowed the

or in an activity engaged in for profit.

8. Subtract line 3 above from

deduction under section 247 for dividends

Tangible personal property produced

column (c) of line 9 . . . . . . . .

paid.

by a corporation includes a film, sound

9. Enter the smaller of line 7 or

Line 6, Column (a)

recording, videotape, book, or similar

line 8 . . . . . . . . . . . . . . . . .

property.

10. Dividends-received

Enter the U.S.-source portion of dividends

deduction after limitation.

IC-DISCs subject to the section 263A

that:

•

Add lines 4 and 9. (If this is less

Are received from less-than-20%-owned

uniform capitalization rules are required to

than line 9 of Schedule C, enter

foreign corporations and

capitalize:

•

the smaller amount on line 6b,

Qualify for the 70% deduction under

1. Direct costs and

page 1, Form 1120-IC-DISC,

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

2. An allocable part of most indirect

and in the margin next to line 9

deduction, the corporation must own at least

costs (including taxes) that (a) benefit the

of Schedule C.) . . . . . . . . . .

10% of the stock of the foreign corporation

assets produced or acquired for resale or

by vote and value.

(b) are incurred by reason of the

performance of production or resale

Line 13, Column (a)

Line 7, Column (a)

activities.

Include the following:

Enter the U.S.-source portion of dividends

that are received from 20%-or-more-owned

1. Dividends (other than capital gain

For inventory, some of the indirect

distributions reported on Schedule D (Form

foreign corporations and that qualify for the

expenses that must be capitalized are:

•

1120) and exempt-interest dividends) that

80% deduction under section 245(a).

Administration expenses.

•

are received from RICs and that are not

Taxes.

Line 8, Column (a)

•

subject to the 70% deduction.

Depreciation.

•

Enter dividends received from wholly owned

2. Dividends from tax-exempt

Insurance.

•

foreign subsidiaries that are eligible for the

Compensation paid to officers attributable

organizations.

100% deduction under section 245(b).

to services.

3. Dividends (other than capital gain

•

Rework labor.

distributions) received from a real estate

In general, the deduction under section

•

Contributions to pension, stock bonus,

investment trust that, for the tax year of the

245(b) applies to dividends paid out of the

and certain profit-sharing, annuity, or

trust in which the dividends are paid,

earnings and profits of a foreign corporation

deferred compensation plans.

qualifies under sections 856 through 860.

for a tax year during which:

•

All of its outstanding stock is owned

4. Dividends not eligible for a

Regulations section 1.263A-1(e)(3)

(directly or indirectly) by the domestic

dividends-received deduction because of

specifies other indirect costs that relate to

corporation receiving the dividends and

the holding period of the stock or an

production or resale activities that must be

-9-

Instructions for Form 1120-IC-DISC

Instructions For Form 1120-Ic-Disc - 2003 Page 9

Related Articles

Related forms

Related Categories