Instructions For Form 1120-Pc - 2001 (Page 11 of 20) in pdf

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401(k) cash or deferred arrangement, or

Welfare-to-work credit from Form 8861.

disposition, as a reduction in the amount

amounts contributed under a salary

See the instructions for these forms for

realized on the disposition.)

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reduction SEP agreement or a SIMPLE

more information. Do not include salaries

Taxes assessed against local benefits

IRA plan.

and wages deductible elsewhere on the

that increase the value of the property

return, such as elective contributions to a

assessed (such as for paving, etc.)

Include only the deductible part of

section 401(k) cash or deferred

See section 164(d) for the

each officers’ compensation on line 15.

arrangement, or amounts contributed

apportionment of taxes on real estate

(See Disallowance of deduction for

under a salary reduction SEP agreement

between a seller and a purchaser.

employee compensation in excess of

or a SIMPLE IRA plan.

Line 20a. Interest.

$1 million below.) Attach a schedule for

all officers using the following columns:

If the corporation provided taxable

Note. The deduction for interest is limited

fringe benefits to its employees,

when the corporation is a policyholder or

1. Name of officer;

such as the personal use of a car,

beneficiary with respect to a life

2. Social security number;

CAUTION

do not deduct as wages the amount

insurance, endowment, or annuity

3. Percentage of time devoted to

allocated for depreciation and other

contract issued after June 8, 1997. For

business;

expenses that are claimed elsewhere on

details, see section 264(f). Attach a

4. Amount of compensation.

its return.

statement showing the computation of the

If a consolidated return is filed, each

deduction.

member of an affiliated group must

Line 18. Rents. If the corporation rented

The corporation must make an interest

furnish this information.

or leased a vehicle, enter the total annual

allocation if the proceeds of a loan were

Disallowance of deduction for

rent or lease expense paid or incurred

used for more than one purpose (e.g., to

employee compensation in excess of

during the year. Also complete Part V of

purchase a portfolio investment and to

$1 million. Publicly-held corporations

Form 4562, Depreciation and

acquire an interest in a passive activity).

may not deduct compensation to a

Amortization. If the corporation leased a

See Temporary Regulations section

“covered employee” to the extent that the

vehicle for a term of 30 days or more, the

1.163-8T for the interest allocation rules.

compensation exceeds $1 million.

deduction for the vehicle lease expense

Do not deduct the following interest:

Generally, a covered employee is:

may have to be reduced by an amount

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Interest on indebtedness incurred or

The chief executive officer of the

called the inclusion amount. The

continued to purchase or carry obligations

corporation (or an individual acting in that

corporation may have an inclusion

if the interest is wholly exempt from

capacity) as of the end of the tax year or

amount if:

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income tax. For exceptions, see section

An employee whose total

265(b).

compensation must be reported to

And the

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Interest and carrying charges on

shareholders under the Securities

vehicle’s FMV

straddles. Generally, these amounts must

Exchange Act of 1934 because the

on the first day

be capitalized. See section 263(g).

employee is among the four highest

of the lease

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Interest on debt allocable to the

compensated officers for that tax year

The lease term began:

exceeded:

production of designated property by a

(other than the chief executive officer).

After 12/31/98 . . . . . . . . . . . . . . .

$15,500

corporation for its own use or for sale.

For this purpose, compensation does

The corporation must capitalize this

After 12/31/96 but before 1/1/99 . . .

$15,800

not include the following:

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After 12/31/94 but before 1/1/97 . . .

$15,500

interest. Also capitalize any interest on

Income from certain employee trusts,

After 12/31/93 but before 1/1/95 . . .

$14,600

debt allocable to an asset used to

annuity plans, or pensions and

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produce the property. See section 263A(f)

Any benefit paid to an employee that is

If the lease term began before January

and Regulations section 1.263A-8

excluded from the employee’s income.

1, 1994 or, the corporation leased an

through 1.263A-15 for definitions and

The deduction limit does not apply to:

electric vehicle, see Pub. 463, Travel,

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more information.

Commissions based on individual

Entertainment, Gift and Car Expenses, to

Special rules apply to:

performance,

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find out if the corporation has an inclusion

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Interest on which no tax is imposed

Qualified performance-based

amount.

(see section 163(j)).

compensation, and

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See Pub. 463 for instructions on

Foregone interest on certain

Income payable under a written,

figuring the inclusion amount.

below-market-rate loans (see section

binding contract in effect on February 17,

Line 19. Taxes and licenses. Enter

7872).

1993.

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taxes paid or accrued during the tax year,

Original issue discount on certain

The $1 million limit is reduced by

high-yield discount obligations (See

but do not include the following:

amounts disallowed as excess parachute

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Federal income taxes.

section 163(e) to figure the disqualified

payments under section 280G.

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Foreign or U.S. possession income

portion.)

For details, see section 162(m) and

taxes if a credit is claimed (however, see

Line 20b. Less tax-exempt interest

Regulations section 1.162-27.

the Instructions for Form 5735 for special

expense. Enter interest paid or accrued

Line 16. Salaries and wages. Enter the

rules for possession income taxes).

during the tax year on indebtedness

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amount of salaries and wages paid for the

Taxes not imposed on the corporation.

incurred or continued to purchase or carry

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tax year, reduced by:

Taxes, including state or local sales

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obligations if the interest is wholly exempt

Work opportunity credit from Form

taxes, that are paid or incurred in

from income tax. For exceptions, see

5884,

connection with an acquisition or

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section 265(b).

Empowerment zone employment credit

disposition of property. (These taxes must

from Form 8844,

be treated as a part of the cost of the

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Indian employment credit from Form

acquired property or, in the case of a

8845, and

-11-

Instructions For Form 1120-Pc - 2001 Page 11

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