Instructions For Form 1120-Ic-Disc - 2005 (Page 11 of 15) in pdf

organizations, professional organizations,

for rules on figuring earnings and profits for

Part I—Deemed Distributions

the purpose of the section 995(b)(1)

business leagues, trade associations,

Under Section 995(b)(1)

limitation.

chambers of commerce, and boards of

trade. However, no deduction is allowed if a

Line 2. Recognized Gain on

Line 17. Foreign Investment

principal purpose of the organization is to

Section 995(b)(1)(B) Property

Attributable to Producer Loans

entertain, or provide entertainment facilities

Enter gain recognized during the tax year on

for, members or their guests. In addition,

Line 17a. For shareholders other than C

the sale or exchange of property, other than

IC-DISCs may not deduct membership dues

corporations. To figure the amount for line

property which in the hands of the IC-DISC

in any club organized for business,

17a, attach a computation showing (1) the

was a qualified export asset, previously

pleasure, recreation, or other social

IC-DISC’s foreign investment in producer’s

transferred to the IC-DISC in a transaction in

purpose. This includes country clubs, golf

loans during the tax year; (2) accumulated

which the transferor realized gain but did not

and athletic clubs, airline and hotel clubs,

earnings and profits (including earnings and

recognize the gain in whole or in part. See

profits for the 2005 tax year) minus the

and clubs operated to provide meals under

section 995(b)(1)(B). Show the computation

amount on line 15, Part I; and (3)

conditions favorable to business discussion.

of the gain on a separate schedule. Include

accumulated IC-DISC income. Enter the

no more of the IC-DISC’s gain than the

Entertainment facilities. The IC-DISC

smallest of these amounts (but not less than

amount of gain the transferor did not

may not deduct an expense paid or incurred

zero) on line 17a.

recognize on the earlier transfer.

for a facility (such as a yacht or hunting

Line 17b. For C corporation

lodge) used for an activity usually

Line 3. Recognized Gain on

shareholders. To figure the amount for line

considered entertainment, amusement, or

Section 995(b)(1)(C) Property

17b, attach a computation showing (1) the

recreation.

IC-DISC’s foreign investment in producer’s

Enter gain recognized on the sale or

loans during the tax year; (2) accumulated

exchange of property described in section

Amounts treated as compensation.

earnings and profits (including earnings and

995(b)(1)(C). Show the computation of the

Generally, the IC-DISC may be able to

profits for the 2005 tax year) minus the

gain on a separate schedule. Do not include

deduct otherwise nondeductible

amount on line 16, Part I; and (3)

any gain included in the computation of line

entertainment, amusement, or recreation

accumulated IC-DISC income. Enter the

2. Include only the amount of the IC-DISC’s

expenses if the amounts are treated as

smallest of these amounts (but not less than

gain that the transferor did not recognize on

compensation to the recipient and reported

zero) on line 17b.

the earlier transfer and that would have

on Form W-2 for an employee or on Form

been treated as ordinary income if the

For purposes of lines 17a and 17b,

1099-MISC for an independent contractor.

property had been sold or exchanged rather

foreign investment in producer’s loans is the

than transferred to the IC-DISC. Do not

smallest of (1) the net increase in foreign

However, if the recipient is an officer,

include gain on the sale or exchange of

assets by members of the controlled group

director, or beneficial owner (directly or

IC-DISC stock-in-trade or other property that

(defined in section 993(a)(3)) to which the

indirectly) of more than 10% of any class of

either would be included in inventory if on

IC-DISC belongs; (2) the actual foreign

stock, the deductible expense is limited. See

hand at the end of the tax year or is held

investment by the group’s domestic

section 274(e)(2) and Notice 2005-45,

primarily for sale in the normal course of

members; or (3) the IC-DISC’s outstanding

2005-24 I.R.B. 1228.

business.

producer’s loans to members of the

controlled group.

Line 4. Income Attributable to

Deduction for clean-fuel vehicles and

Net increase in foreign assets and actual

certain refueling property. Section 179A

Military Property

foreign investment are defined in sections

allows a deduction for part of the cost of

Enter 50% of taxable income attributable to

995(d)(2) and (3).

qualified clean-fuel vehicle property and

military property (section 995(b)(1)(D)).

qualified clean-fuel vehicle refueling

Show the computation of this income. To

See Regulations section 1.995-5 for

property placed in service during the tax

figure taxable income attributable to military

additional information on computing foreign

year before January 1, 2006. For details,

property, use the gross income attributable

investment attributable to producer’s loans.

see Pub. 535, Business Expenses.

to military property for the year and the

Lines 20 and 21. The percentages on lines

deductions properly allocated to that

20 and 21 must add up to 100%.

Lobbying expenses. Generally, lobbying

income. See Regulations section 1.995-6.

expenses are not deductible. These

Line 22. Allocate the line 22 amount to

Line 9. Deemed Distributions to C

expenses include:

shareholders that are individuals,

•

Corporations

partnerships, S corporations, trusts, and

Amounts paid or incurred in connection

estates.

with influencing Federal or state legislation

Line 9 provides for the computation of the

(but not local legislation) or

one-seventeenth deemed distribution of

Part II—Section 995(b)(1)(E)

•

section 995(b)(1)(F)(i). Line 9 only applies to

Amounts paid or incurred in connection

Taxable Income

shareholders of the IC-DISC that are C

with any communication with certain Federal

corporations.

executive branch officials in an attempt to

Generally, any taxable income of the

influence the official actions or positions of

IC-DISC attributable to qualified export

Line 10. International Boycott

the officials. See Regulations section

receipts that exceed $10 million will be

Income

1.162-29 for the definition of “influencing

deemed distributed.

An IC-DISC is deemed to distribute any

legislation.”

Line 1. Export Receipts

income that resulted from cooperating with

an international boycott (section

Dues and other similar amounts paid to

If there were no commission sales, leases,

995(b)(1)(F)(ii)). See Form 5713 to figure

certain tax-exempt organizations may not be

rentals, or services for the tax year, enter on

this deemed distribution and for reporting

deductible. See section 162(e)(3). If certain

line 1, Part II, the total of lines 1c and 2k,

requirements for any IC-DISC with

in-house lobbying expenditures do not

column (e), Schedule B.

operations related to a boycotting country.

exceed $2,000, they are deductible.

If there were commission sales, leases,

Line 11. Illegal Bribes, etc.

rentals, or services for the tax year, the total

For more information on other deductions

qualified export receipts to be entered on

An IC-DISC is deemed to distribute the

that may apply to corporations, see Pub.

line 1, Part II, are figured as follows (section

amount of any illegal payments, such as

535.

993(f)):

bribes or kickbacks, that it pays, directly or

indirectly, to government officials,

Schedule J

1. Add lines 1c and 2k, column (b),

employees, or agents (section

Schedule B . . . . . . . . . . . . . . .

995(b)(1)(F)(iii)).

Deemed and Actual

2. Add lines 1c and 2k, column (d),

Line 14. Earnings and Profits

Schedule B . . . . . . . . . . . . . . .

Distributions and Deferred

Attach a computation showing the earnings

3. Add lines 1 and 2. Enter on line

DISC Income for the Tax Year

and profits for the tax year. See section 312

1, Part II, Schedule J . . . . . . . .

-11-

Instructions for Form 1120-IC-DISC

Instructions For Form 1120-Ic-Disc - 2005 Page 11

Related Articles

Related forms

Related Categories