Instructions For Form 1120-Pc - 2005 (Page 12 of 21) in pdf

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Contributions of property other than

The corporation must capitalize this

The domestic production activities

cash. If a corporation (other than a

interest. Also capitalize any interest on

deduction.

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closely held or personal service

debt allocable to an asset used to

Any net operating loss (NOL) carryback

corporation) contributes property other

produce the property. See section 263A(f)

to the tax year under section 172.

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and Regulations section 1.263A-8

Any capital loss carryback to the tax

than cash and claims over a $500

through 1.263A-15 for definitions and

year under section 1212(a)(1).

deduction for the property, it must attach

a schedule to the return describing the

more information.

Temporary suspension of 10%

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kind of property contributed and the

Interest paid or incurred on any portion

limitation. A corporation may elect to

method used to determine its fair market

of an underpayment of tax that is

deduct qualified cash contributions

value (FMV). Closely held corporations

attributable to an understatement arising

without regard to the general 10% limit if

and personal service corporations must

from an undisclosed listed transaction or

the contributions were made after August

complete Form 8283 and attach it to their

an undisclosed reportable avoidance

27, 2005, and before January 1, 2006, to

transaction (other than a listed

returns. All other corporations generally

a qualified charitable organization (other

must complete and attach Form 8283 to

transaction) entered into in tax years

than certain private foundations described

their returns for contributions of property

beginning after October 22, 2004.

in section 509(a)(3)), for Hurricane

(other than money) if the total claimed

Katrina, Rita, or Wilma relief efforts. The

Special rules apply to:

deduction for all property contributed was

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total amount claimed cannot be more

Interest on which no tax is imposed

more than $5,000. Special rules apply to

(see section 163(j)).

than taxable income as computed above

the contribution of certain property. See

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Foregone interest on certain

substituting “100%” for “10%.” Excess

the Instructions for Form 8283.

qualified contributions are carried over to

below-market-rate loans (see section

Larger deduction. A larger deduction

the next 5 years. Attach a statement

7872).

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is allowed for certain contributions of:

substantiating that the contributions are

Original issue discount on certain

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Inventory and other property to certain

for Hurricane Katrina, Rita, or Wilma relief

high-yield discount obligations. (See

organizations for use in the care of the ill,

efforts and indicating the amount of

section 163(e) to figure the disqualified

needy, or infants (section 170(e)(3)),

qualified contributions for which the

portion.)

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including contributions after August 27,

Interest which is allocable to

election is made. See Pub. 4492,

2005, and before January 1, 2006, of

unborrowed policy cash values of life

Information for Taxpayers Affected by

“apparently wholesome food” (section

Hurricanes Katrina, Rita, and Wilma.

insurance, endowment, or annuity

170(e)(3)(C)) and qualified book

contracts issued after June 8, 1997. See

Carryover. Charitable contributions

contributions (section 170(e)(3)(D)).

section 264(f). Attach a statement

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over the 10% limitation cannot be

Scientific equipment used for research

showing the computation of the

deducted for the tax year but can be

to institutions of higher learning or to

deduction.

carried over to the next 5 tax years.

certain scientific research organizations

Line 20b. Less tax-exempt interest

(other than by personal holding

Special rules apply if the corporation

expense. Enter interest paid or accrued

companies and service organizations

has an NOL carryover to the tax year. In

during the tax year on indebtedness

(section 170(e)(4)); and

figuring the charitable contributions

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incurred or continued to purchase or carry

Computer technology and equipment

deduction for the current tax year, the

obligations if the interest is wholly exempt

for educational purposes (section

10% limit is applied using taxable income

from income tax. For exceptions, see

170(e)(6)).

after taking into account any deduction for

section 265(b).

the NOL.

For more information on charitable

Line 21. Charitable contributions.

contributions, including substantiation and

To figure the amount of any remaining

Enter contributions or gifts actually paid

recordkeeping requirements, see section

NOL carryover to later years, taxable

within the tax year to or for the use of

170 and the related regulations and Pub.

income must be modified (see section

charitable and governmental

526, Charitable Contributions. For special

172(b)). To the extent that contributions

organizations described in section 170(c)

rules that apply to corporations, see Pub.

are used to reduce taxable income for this

and any unused contributions carried over

542.

purpose and increase an NOL carryover,

from prior years. Special rules and limits

a contributions carryover is not allowed.

Line 22. Depreciation. Include on line

apply to contributions to organizations

See section 170(d)(2)(B).

22 depreciation and the cost of certain

conducting lobbying activities. See

property that the corporation elected to

Substantiation requirements.

section 170(f)(9).

expense under section 179. See Form

Generally, no deduction is allowed for any

Corporations reporting taxable income

4562 and its instructions.

contribution of $250 or more unless the

on the accrual method can elect to treat

Line 23. Depletion. See sections 613

corporation gets a written

as paid during the tax year any

and 613A for percentage depletion rates

acknowledgment from the donee

contributions paid by the 15th day of the

applicable to natural deposits. Also, see

organization that shows the amount of

3rd month after the end of the tax year if

section 291 for the limitation on the

cash contributed, describes any property

the contributions were authorized by the

depletion deduction for iron ore and coal

contributed, and, either gives a

board of directors during the tax year.

(including lignite).

description and a good faith estimate of

Attach a declaration to the return stating

the value of any goods or services

Attach Form T (Timber), Forest

that the resolution authorizing the

provided in return for the contribution or

Activities Schedule, if a deduction for

contributions was adopted by the board of

states that no goods or services were

depletion of timber is taken.

directors during the tax year. The

provided in return for the contribution. The

declaration must include the date the

Foreign intangible drilling costs and

acknowledgment must be obtained by the

resolution was adopted.

foreign exploration and development

due date (including extensions) of the

costs must either be added to the

Limitation on deduction. The total

corporation’s return, or, if earlier, the date

corporation’s basis for cost depletion

amount claimed cannot be more than

the return is filed. Do not attach the

purposes or be deducted ratably over a

10% of taxable income (line 37, Schedule

acknowledgment to the tax return, but

10-year period. See sections 263(i), 616,

A) computed without regard to the

keep it with the corporation’s records.

and 617 for details.

following.

These rules apply in addition to the filing

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Any deduction for contributions.

requirements for Form 8283, Noncash

See Pub. 535 for more information on

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The deduction for dividends received.

Charitable Contributions.

depletion.

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Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2005 Page 12

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