Instructions For Form 1120-Pc - 2006 (Page 7 of 20) in pdf

payment of income tax to a foreign

the general rules for computing this

in a prior year if, within 3 years of the date

country or U.S. possession, see Form

amount. Also, see Rev. Proc. 2006-39,

the vehicle was placed in service, it

1118, Foreign Tax Credit – Corporations.

2006-40 I.R.B. 600, for the domestic

ceases to qualify for the credit. See

asset/liability percentages and domestic

Regulations section 1.30-1 for details on

Line 8b. Qualified electric vehicle

investment yields needed to compute this

how to figure the recapture.

(QEV) credit. Use Form 8834, Qualified

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amount.

Recapture of Indian employment credit.

Electric Vehicle Credit, if the corporation

Generally, if an employer terminates the

can claim a credit for a qualified electric

Any additional income required by

employment of a qualified employee less

vehicle placed in service in 2006.

section 842(b) must be included in

than 1 year after the date of initial

taxable income (for example, Schedule A,

Line 8c. General Business Credit.

employment, any Indian employment

line 13).

Enter on line 8c the corporation’s total

credit allowed for a prior tax year because

general business credit.

Reduction of section 881 tax.

of wages paid or incurred to that

Additional taxes resulting from the net

The corporation is required to file Form

employee must be recaptured. For

investment income adjustment may offset

3800, General Business Credit, to claim

details, see Form 8845 and section 45A.

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a corporation’s section 881 tax on

certain business credits. For a list of

Recapture of new markets credit (see

U.S.-source income. The tax reduction is

allowable credits, see Form 3800. Check

Form 8874).

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determined by multiplying the section 881

the “Form 3800” box and include the

Recapture of employer-provided

tax by the ratio of the amount of income

allowable credit from Part II, line 19 of

childcare facilities and services credit

adjustment to income subject to the

Form 3800, on line 8c of Form 1120-PC.

(see Form 8882).

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section 881 tax, computed without the

Also, see the applicable credit form and

Interest on deferred tax attributable to

exclusion for interest on state and local

its instructions.

certain nondealer installment obligations

bonds or income exempted from taxation

(section 453A(c)).

If the corporation is filing Form 6478,

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by treaty. See section 842(c)(2). Attach a

Interest due on deferred gain (section

Credit for Alcohol Used as Fuel; Form

statement showing how the reduction

1260(b)).

8835, Renewable Electricity, Refined

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under section 881 was figured. Enter the

Alternative tax on qualifying shipping

Coal, and Indian Coal Production Credit,

net tax imposed by section 881 on line

activities (see Form 8902).

with a credit from Section B; or Form

10.

8844, Empowerment Zone and Renewal

How to report. If the corporation

Line 11. Personal holding company

Community Employment Credit, check

checked the “Other” box, attach a

tax. A corporation (other than a

the applicable box, and include the

schedule showing the computation of

corporation described in section 542(c)) is

allowable credit on line 8c.

each item included in the total for line 12

taxed as a personal holding company

and identify the applicable Code section

Line 8d. Credit for prior year minimum

(PHC) under section 542 if:

and the type of tax or interest.

tax. To figure the minimum tax credit and

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At least 60% of it’s adjusted ordinary

any carryforward of that credit, use Form

Line 13. Total Tax

gross income for the tax year is PHC

8827, Credit for Prior Year Minimum

Include any deferred tax on the

income, and

Tax — Corporations. Also see Form 8827

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termination of a section 1294 election

At any time during the last half of the

if any of the corporation’s 2005

applicable to shareholders in a qualified

tax year more than 50% in value of its

nonconventional source fuel credit or

electing fund in the amount entered on

outstanding stock is directly or indirectly

qualified electric vehicle credit was

line 13. See Form 8621, Part V, and How

owned by five or fewer individuals.

disallowed solely because of the tentative

to report, below.

See Schedule PH (Form 1120), U.S.

minimum tax limitation. See section 53(d).

Subtract any deferred tax on the

Personal Holding Company (PHC) Tax,

Line 8e. Bond credits. Enter the amount

corporation’s share of undistributed

for definitions and details on how to figure

of any credit from Form 8860, Qualified

earnings of a qualified electing fund (see

the tax.

Zone Academy Bond Credit, or from Form

Form 8621, Part II).

8912, Credit for Clean Renewable Energy

Line 12. Other Taxes

How to report. Attach a schedule

and Gulf Tax Credit Bonds. Check the

Include any of the following taxes and

showing the computation of each item

applicable box(es) and include the

interest in the total on line 12. Check the

included in, or subtracted from, the total

amount of the credit in the total for line

appropriate box(es) for the form, if any,

for line 13. On the dotted line next to line

8e.

used to compute the total.

13, specify (a) the applicable Code

Line 10. Foreign corporations. A

section, (b) the type of tax, and (c) the

Recapture of investment credit. If the

foreign corporation carrying on an

amount of tax.

corporation disposed of investment credit

insurance business in the United States is

property or changed its use before the

Line 14b. Prior year(s) special

taxed as a domestic insurance company

end of its useful life or recovery period, it

estimated tax payments to be applied.

on its income effectively connected with

may owe a tax. See Form 4255,

The amount entered on line 14b must

the conduct of a trade or business in the

Recapture of Investment Credit.

agree with the amount(s) from Form

United States (see sections 864(c) and

8816, Part III, line 11. See Form 8816 and

Recapture of low-income housing

897 for definition).

section 847 for additional information.

credit. If the corporation disposed of

Generally, any other U.S.-source

Line 14c. Estimated tax payments.

property (or there was a reduction in the

income received by the foreign

Enter any estimated tax payments the

qualified basis of the property) for which it

corporation is taxed at 30% (or at a lower

corporation made for the tax year. Do not

took the low-income housing credit, it may

treaty rate) under section 881. If the

include any amount being applied on line

owe a tax. See Form 8611, Recapture of

corporation has this income, attach a

14d.

Low-Income Housing Credit.

schedule showing the kind and amount of

Line 14d. Special estimated tax

Other. Additional taxes and interest

income, the tax rate, and the amount of

payments. If the deduction under section

amounts can be included in the total

tax. Enter the tax on line 9. However, see

847 is claimed on Schedule A, line 27,

entered on line 12. Check the box for

Reduction of section 881 tax, below.

special estimated tax payments must be

“Other” if the corporation includes any

Note. Interest received from certain

made in an amount equal to the tax

additional taxes and interest such as the

portfolio debt investments that were

benefit of the deduction. These payments

items discussed below. See How to

issued after July 18, 1984, is not subject

must be made on or before the due date

report, on this page, for details on

to the tax. See section 881(c) for details.

(without regard to extensions) of this tax

reporting these amounts on an attached

See section 842 for more information.

return. See Form 8816 and section 847(2)

schedule.

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for additional information.

Minimum effectively connected net

Recapture of qualified electric vehicle

investment income. See section 842(b)

(QEV) credit. The corporation must

Tax benefit rule. Section 847(8)

and Notice 89-96, 1989-2 C.B. 417, for

recapture part of the QEV credit it claimed

requires that if a corporation carries back

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Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2006 Page 7

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