Instructions For Form 1120-Pc - 2005 (Page 5 of 21) in pdf

corporation held the asset generating the

Rounding Off to Whole

Specific Instructions

credit for 45 days or less.

Dollars

Penalties. The corporation may have

The corporation can round off cents to

Period Covered

to pay a penalty if it is required to disclose

whole dollars on its return and schedules.

Generally, file the 2005 return for

a reportable transaction under section

If the corporation does round to whole

calendar year 2005. However, if an

6011 and fails to properly complete and

dollars, it must round all amounts. To

insurance company joins in the filing of a

file Form 8886. The penalty is $50,000

round, drop amounts under 50 cents and

consolidated return, it may adopt the tax

($200,000 if the reportable transaction is

increase amounts from 50 to 99 cents to

year of the common parent corporation

a listed transaction) for each failure to file

the next dollar. For example, $1.39

even if that year is not a calendar year.

Form 8886 with its corporate return or for

becomes $1 and $2.50 becomes $3.

For a fiscal or short tax year return, fill in

failure to provide a copy of Form 8886 to

If two or more amounts must be added

the tax year space at the top of the form.

the Office of Tax Shelter Analysis

to figure the amount to enter on a line,

(OTSA). Other penalties, such as an

include cents when adding the amounts

Name and Address

accuracy-related penalty under section

and round off only the total.

6662A, may also apply. See the

Print or type the corporation’s true name

Instructions for Form 8886 for details.

(as set forth in the charter or other legal

Recordkeeping

document creating it), address, and EIN

Keep the corporation’s records for as long

Reportable transactions by material

on the appropriate lines. Include the suite,

as they may be needed for the

advisors. Until further guidance is

room, or other unit number after the street

administration of any provision of the

issued, material advisors who provide

address. If the post office does not deliver

Internal Revenue Code. Usually, records

material aid, assistance, or advice with

mail to the street address and the

that support an item of income, deduction,

respect to any reportable transaction,

corporation has a P.O. box, show the box

or credit on the return must be kept for 3

must use Form 8264, Application for

number instead.

years from the date the return is due or

Registration of a Tax Shelter, to disclose

If the corporation receives its mail in

filed, whichever is later. Keep records that

reportable transactions in accordance

care of a third party (such as an

verify the corporation’s basis in property

with interim guidance provided in Notice

accountant or an attorney), enter on the

for as long as they are needed to figure

2004-80, 2004-50 I.R.B. 963; Notice

street address line “C/O” followed by the

the basis of the original or replacement

2005-17, 2005-8 I.R.B. 606; and Notice

third party’s name and street address or

property.

2005-22, 2005-12 I.R.B. 756.

P.O. box.

The corporation should keep copies of

Transfers to a corporation controlled

all filed returns. They help in preparing

Item A. Section 953

by the transferor. If a person receives

future and amended returns.

stock of a corporation in exchange for

Elections

property, and no gain or loss is

Other Forms and

Check the applicable box if the

recognized under section 351, the person

corporation is a foreign corporation and

Statements That May Be

(transferor) and the transferee must each

elects under:

attach to their tax returns the information

Required

1. Section 953(c)(3)(C) to treat its

required by Regulations section 1.351-3.

related person insurance income as

Reportable transaction disclosure

Dual consolidated losses. If a domestic

effectively connected with the conduct of

statement. Disclose information for each

corporation incurs a dual consolidated

a trade or business in the United States

reportable transaction in which the

loss (as defined in Regulations section

corporation participated. Form 8886,

1.1503-2(c)(5)), the corporation (or

2. Section 953(d) to be treated as a

Reportable Transaction Disclosure

consolidated group) may need to attach

domestic corporation.

Statement, must be filed for each tax year

an elective relief agreement and/or an

that the federal income tax liability of the

annual certification as provided in

Generally, a foreign corporation

corporation is affected by its participation

Temporary Regulations section

making either election must file its return

in the transaction. The corporation may

1.1503-2T(g)(2).

with the Internal Revenue Service Center,

have to pay a penalty if it is required to

Philadelphia, PA 19255. See Notice

file Form 8886 and does not do so. The

Election to reduce basis under section

87-50, 1987-2 C.B. 357, and Rev. Proc.

following are reportable transactions.

362(e)(2)(C). The transferor and

2003-47, 2003-28 I.R.B. 55, for the

1. Any listed transaction, which is a

transferee in certain section 351

procedural rules, election statement

transaction that is the same as or

transactions can make a joint election

formats, and filing addresses for making

substantially similar to tax avoidance

under section 362(e)(2)(C) to limit the

the respective elections under section

transactions identified by the IRS.

transferor’s basis in the stock received

953(c)(3)(C) or section 953(d).

2. Any transaction offered under

instead of the transferee’s basis in the

Note. Once either election is made, it will

conditions of confidentiality for which the

transferred property. The transferor and

apply to the tax year for which made and

corporation paid an advisor a fee of at

transferee may make the election by

all subsequent tax years unless revoked

least $250,000.

attaching the statement as provided in

with the consent of the IRS. Also, any

3. Certain transactions for which the

Notice 2005-70, 2005-41 I.R.B. 694, to

loss of a foreign corporation electing to be

corporation has contractual protection

their tax returns filed by the due date

treated as a domestic insurance company

against disallowance of the tax benefits.

(including extensions) for the tax year in

under section 953(d) will be treated as a

4. Certain transactions resulting in a

which the transaction occurred. Once

dual-consolidated loss and may not be

loss of at least $10 million in any single

made, the election is irrevocable. See

used to reduce the taxable income of any

year or $20 million in any combination of

section 362(e)(2)(C) and Notice 2005-70.

other member of the affiliated group for

years.

this tax year or any other tax year.

Other forms and statements. See Pub.

5. Certain transactions resulting in a

542 for a list of other forms and

book-tax difference of more than $10

Note. If a section 953(d) election is

statements a corporation may need to file

million on a gross basis.

made, include the additional tax required

in addition to the forms and statements

6. Certain transactions resulting in a

to be paid, on line 13, page 1. On the

discussed throughout these instructions.

tax credit of more than $250,000, if the

dotted line to the left of line 13, page 1,

-5-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2005 Page 5

Related Articles

Related forms

Related Categories