Instructions For Form 1120-Pc - 2005 (Page 9 of 21) in pdf

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Interest due on deferred gain (section

Line 14e. Overpaid estimated tax. If the

transactions in 2005 (40% for

1260(b)).

corporation overpaid estimated tax, it may

transactions in 2006), unless made under

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Alternative tax on qualifying shipping

be able to get a quick refund by filing

a binding contract with an unrelated

activities (see Form 8902).

Form 4466. The overpayment must be at

person in effect on September 17, 2003,

least 10% of the corporation’s expected

and at all times thereafter. Use Form

How to report. If the corporation

income tax liability and at least $500. File

8873, Extraterritorial Income Exclusion, to

checked the “Other” box, attach a

Form 4466 after the end of the

figure the exclusion. Include the exclusion

schedule showing the computation of

corporation’s tax year, and no later than

in the total for “Other deductions” on line

each item included in the total for line 12

the 15th day of the third month after the

31.

and identify the applicable Code section

end of the tax year. Form 4466 must be

Income from qualifying shipping

and the type of tax or interest.

filed before the corporation files its tax

activities. Gross income does not

return.

Line 13. Total Tax

include income from qualifying shipping

activities if the corporation makes an

Line 14h. Credit by reciprocal for tax

Include any deferred tax on the

paid by attorney-in-fact under section

election under section 1354 to be taxed

termination of a section 1294 election

835(d). Enter the amount of tax paid by

on its notional shipping income (as

applicable to shareholders in a qualified

an attorney-in-fact as a result of income

defined in section 1353) at the highest

electing fund in the amount entered on

received by the attorney-in-fact from the

corporate tax rate (35%). If the election is

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

reciprocal during the tax year. For more

made, the corporation generally may not

to report below.

claim any loss, deduction, or credit with

information, see section 835, the related

Subtract any deferred tax on the

respect to qualifying shipping activities. A

regulations, and the instructions for line 5

corporation’s share of undistributed

corporation making this election also may

on page 7.

earnings of a qualified electing fund (see

elect to defer gain on the disposition of a

Line 14i. Other credits and payments.

Form 8621, Part II).

qualifying vessel.

Enter the amount of any other credits the

How to report. Attach a schedule

corporation may take and/or payments

Use Form 8902, Alternative Tax on

showing the computation of each item

made. Write to the left of the entry space,

Qualifying Shipping Activities, to figure

included in, or subtracted from, the total

an explanation of the entry.

the tax. Include the alternative tax on line

for line 13. On the dotted line next to line

12, page 1 of the Form 1120-PC.

Backup withholding. If the corporation

13, specify (a) the applicable Code

Note. In computing the amounts for lines

had federal income tax withheld from any

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

2, 3, and 4, take all interest, dividends, or

payments it received because, for

amount of tax.

example, it failed to give the payer its

rents received during the year, add

Line 14b. Prior year(s) special

correct EIN, include the amount withheld

interest, dividends, or rents due and

estimated tax payments to be applied.

in the total for line 14i. Write the amount

accrued at the end of the tax year, and

The amount entered on line 14b must

withheld and the words “Backup

deduct interest, dividends, or rents due

agree with the amount(s) from Form

Withholding” on the dotted line to the left

and accrued at the end of the preceding

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

of the entry space for line 14i.

tax year. For rules regarding the accrual

section 847 for additional information.

of dividends, see Regulations section

Line 14j. Total payments. Add the

1.301-1(b).

Line 14c. Estimated tax payments.

amounts on lines 14f through 14i and

Enter any estimated tax payments the

enter the total on line 14j.

Line 3a, column (a). Gross interest.

corporation made for the tax year. Do not

Enter the gross amount of interest

Line 15. Estimated tax penalty. If Form

include any amount being applied on line

income, including all tax-exempt interest.

2220 is attached, check the box on line

14d.

15 and enter the amount of any penalty

Line 3b, column (a). Section 103(a)

Line 14d. Special estimated tax

on this line.

excludes interest on state or local bonds

payments. If the deduction under section

from gross income.

Line 18. Electronic deposit of tax

847 is claimed on Schedule A, line 27,

refund of $1 million or more. If the

This exclusion does not apply to any:

special estimated tax payments must be

corporation is due a refund of $1 million

1. Private activity bond which is not a

made in an amount equal to the tax

or more and wants it electronically

qualified bond as defined by section 141;

benefit of the deduction. These payments

deposited into its checking or savings

2. Arbitrage bond as defined by

must be made on or before the due date

account at any U.S. bank or other

section 148; or

(without regard to extensions) of this tax

financial institution instead of having a

3. Bonds not meeting the

return. See Form 8816 and section 847(2)

check sent to the corporation, complete

requirements of section 149 (regarding

for additional information.

Form 8302 and attach it to the

the registration of tax-exempt bonds).

corporation’s tax return.

Tax benefit rule. Section 847(8)

Lines 3a and 3b, column (b).

requires that if a corporation carries back

Amortization of premium. Enter on line

net operating losses or capital losses that

Schedule A—Taxable

3a, column (b), the total amortization of

arise in years after a year in which a

bond premium, including amortization on

section 847 deduction was claimed, then

Income

tax-exempt bonds. Enter on line 3b,

the corporation must recompute the tax

column (b), the amortization of bond

benefit attributable to the previously

Gross income. Under section 832, gross

premium on tax-exempt bonds only.

claimed section 847 deduction taking into

amounts of underwriting and investment

account the loss carrybacks. Tax benefits

income should be computed on the basis

Note. Insurance companies electing to

also include those derived from filing a

amortize discount for tax purposes must

of the underwriting and investment exhibit

consolidated return with another

reduce the amortization of premium by

of the NAIC annual statement to the

insurance company (without regard to

any amortization of discount.

extent not inconsistent with the Internal

section 1503(c)).

Revenue Code and its Regulations.

Line 4. Gross rents. Enter gross rents,

Therefore, if the recomputation

Extraterritorial income. Gross income

computed as indicated under the

changes the amount of the section 847

generally does not include extraterritorial

instructions for Gross income above.

tax benefit, then the taxpayer must

income that is qualifying foreign trade

Deduct expenses, such as repairs,

provide a computation schedule and

income. The extraterritorial income

interest, taxes, and depreciation, on the

attach it to Form 8816.

exclusion is reduced by 20% for

proper lines for deductions.

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Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2005 Page 9

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