Instructions For Form 1120-W - 2009 (Page 3 of 4) in pdf

Large corporations. A large corporation is a corporation that

the corporation chooses, may be taken into account after

had, or whose predecessor had, taxable income of $1 million or

annualizing the taxable income for the annualization period.

more for any of the 3 tax years immediately preceding the 2009

For more information regarding extraordinary items, see

tax year, or if less, the number of years the corporation has

Regulations section 1.6655-2(f)(ii) and the examples in

been in existence. For this purpose, taxable income is modified

Regulations section 1.6655-2(f)(vii). Also see Regulations

to exclude net operating loss and capital loss carrybacks or

section 1.6655-3(d)(3).

carryovers. Members of a controlled group, as defined in

section 1563, must divide the $1 million amount among

Part I. Adjusted Seasonal

themselves according to rules similar to those in section 1561.

Installment Method

If Schedule A is not used, follow the instructions below to

figure the amounts to enter on line 27. If Schedule A is used,

Complete this part only if the corporation’s base period

follow the instructions below to figure the amounts to enter on

percentage for any 6 consecutive months of the tax year equals

line 35 of Schedule A.

or exceeds 70% (.70). Figure the base period percentage using

•

If line 24 is smaller than line 25a: Enter 25% of line 24 in

the 6-month period in which the corporation normally receives

columns (a) through (d) of line 27.

the largest part of its taxable income. The base period

•

If line 25a is smaller than line 27: Enter 25% of line 25a in

percentage for any period of 6 consecutive months is the

column (a) of line 27. In column (b), determine the amount to

average of the three percentages figured by dividing the taxable

enter as follows:

income for the corresponding 6-consecutive-month period in

each of the 3 preceding tax years by the taxable income for

1. Subtract line 25a from line 24,

each of their respective tax years.

2. Add the result to the amount on line 24, and

3. Multiply the result in 2 above by 25% and enter the result

Example. An amusement park with a calendar year as its

in column (b). Enter 25% of line 24 in columns (c) and (d).

tax year receives the largest part of its taxable income during

the 6-month period from May through October. To compute its

Part II. Alternative Tax for Corporations with

base period percentage for this 6-month period in 2009, the

Qualified Timber Gain

amusement park figures its taxable income for each

If taxable income expected for the tax year includes both a net

May – October period in 2006, 2007, and 2008. It then divides

capital gain and qualified timber gain, an alternative maximum

the taxable income for each May – October period by the total

15% capital gains tax may apply to the qualified timber gain.

taxable income for that particular tax year. The resulting

For this purpose, a qualified timber gain means the net gains

percentages are 69% (.69) for May – October 2006, 74% (.74)

described in section 631(a) and (b), determined by taking into

for May – October 2007, and 67% (.67) for May – October 2008.

account only trees held more than 15 years. Only qualified

Because the average of 69%, 74%, and 67% is 70%, the base

timber gains for the period that begins after May 22, 2008, and

period percentage for May through October 2009 is 70%.

before May 23, 2009, are eligible for the alternative tax.

Therefore, the amusement park qualifies for the adjusted

seasonal installment method.

Complete Part II to determine the alternative tax. Enter the

amount from line 37 on page 1, Part I, line 15.

Line 2

If the corporation is a regulated investment company (RIC),

If the corporation has certain extraordinary items, special rules

qualified timber gain is taxed at 15%. All other gain not

apply. Do not include on line 2 the de minimis extraordinary

designated under section 852(b)(3)(D) is taxed at 35%. See the

items that the corporation chooses to include on line 9b. See

Instructions for Form 1120-RIC.

Extraordinary items above.

Schedule A

Line 9b

If only the adjusted seasonal installment method (Part I) is

If the corporation has extraordinary items of $1,000,000 or

used, complete Parts I and III of Schedule A. If only the

more, a net operating loss deduction, or a section 481(a)

annualized income installment method (Part II) is used,

adjustment, special rules apply. Include these amounts on line

complete Parts II and III. If both methods are used, complete all

9b for the appropriate period. Also include on line 9b the de

three parts. Enter in each column on page 1, Part I, line 27, the

minimis items that the corporation chooses to exclude from line

amounts from the corresponding column of line 38. If Schedule

2. See Extraordinary items above.

A is used for any payment date, it must be used for all payment

Line 15. Alternative Minimum Tax

dates.

The corporation may owe AMT unless it will be a “small

Do not figure any required installment until after the end

corporation” exempt from the AMT under section 55(e) for its

of the month preceding the due date for that installment.

2009 tax year. To figure the AMT, use the 2008 Form 4626 and

CAUTION

its instructions as a guide. Figure alternative minimum taxable

income (AMTI) using income and deductions for the months

Extraordinary items. Generally, under the annualized income

shown in the column headings above line 1. Divide the AMTI by

installment method, extraordinary items must be taken into

the amounts on line 8 before subtracting the exemption amount.

account after annualizing the taxable income for the

Multiply that result by 20% and subtract any AMT foreign tax

annualization period. Similar rules apply in determining taxable

credit plus the amount on line 10 to arrive at the AMT. For

income under the adjusted seasonal installment method. An

columns (a) through (c), multiply the AMT by the amount shown

extraordinary item includes:

•

on line 13.

Any item identified in Regulations section

1.1502-76(b)(2)(ii)(C)(1), (2), (3), (4), (7) and (8);

Line 16. Other Taxes

•

A net operating loss carryover;

•

For the same taxes used to figure page 1, Part I, line 21, figure

A section 481(a) adjustment; and

•

the amounts for the months shown in the column headings

Net gain or loss from the disposition of 25% or more of the

above line 1.

fair market value of the corporation

s business assets during

the tax year.

Line 18. Credits

These extraordinary items must be accounted for in the

Enter the credits to which the corporation is entitled for the

appropriate annualization period. However, a net operating loss

months shown in the column headings above line 1.

deduction and a section 481(a) adjustment (unless the

corporation makes the alternative choice under Regulations

Part II. Annualized Income Installment

section 1.6655-2(f)(ii)(C)) are treated as extraordinary items

Method

occurring on the first day of the tax year in which the item is

taken into account in determining taxable income.

Line 20. Annualization Periods

De minimis rule. Extraordinary items identified above that

are less than $1,000,000 (other than a net operating loss

Enter in the space on line 20, columns (a) through (d),

carryover or a section 481(a) adjustment) may be annualized

respectively, the annualization periods that the corporation is

using the general rules of Regulations section 1.6655-2(f), or if

using, based on the options listed below. For example, if the

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Instructions For Form 1120-W - 2009 Page 3

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