Instructions For Form 1120-Pc - 2001 (Page 16 of 20) in pdf

Line 5. Enter dividends received on

foreign corporations under subpart F. This

Worksheet for Schedule C, line 23

preferred stock of a 20%-or-more-owned

amount should equal the total subpart F

(keep for your records)

public utility that is subject to income tax

income reported on Schedule I of Form

and is allowed the deduction provided in

5471.

1. Enter the amount from Schedule

section 247 for dividends paid.

A, line 37 or Schedule B, line 21,

Line 12, column (b). Include gross-up

Line 6. Enter the U.S.-source portion of

whichever applies, without: the

for taxes deemed paid under sections 902

dividends that:

NOL deduction (section 172);

•

and 960.

Are received from

dividend-received deduction

less-than-20%-owned foreign

(sections 243(a)(1), 244(a),

Line 13, column (b). Include the

corporations and

245(a) or (b), and 247); any

following:

•

Qualify for the 70% deduction under

adjustment under section 1059;

and any capital loss carryback to

section 245(a). To qualify for the 70%

1. Dividends (other than capital gain

the tax year under section

deduction, the corporation must own at

distributions reported on Schedule D

1212(a)(1) . . . . . . . . . . . . . . .

least 10% of the foreign corporation by

(Form 1120) and exempt-interest

2. Enter the sum of the amounts

vote and value.

dividends) that are received from RICs

from line 22, column (b), (without

Also include dividends received from a

and that are not subject to the 70%

regard to wholly owned foreign

less-than-20%-owned foreign sales

deduction.

subsidiary dividends) and line 9,

corporation (FSC) that:

•

column (b) . . . . . . . . . . . . . . .

Are attributable to income treated as

2. Dividends from tax-exempt

3. Subtract line 2 from line 1 . . . . .

effectively connected with the conduct of

organizations.

4. Multiply line 3 by 80% . . . . . . .

a trade or business within the United

5. Add lines 16, 19, 21, and 22

3. Dividends (other than capital gain

States (excluding foreign trade income)

(without regard to FSC

dividends) received from a real estate

and

dividends), column (b) and the

•

investment trust (REIT) that, for the tax

Qualify for the 70% deduction provided

portion of the deduction on line

year of the trust in which the dividends

in section 245(c)(1)(B).

17, column (b) that is attributable

are paid, qualifies under sections 856

to dividends received from 20%

Line 7. Enter the U.S.-source portion of

through 860.

-or-more-owned corporations . .

dividends that are received from

6. Enter the smaller of line 4 or line

20%-or-more-owned foreign corporations

4. Dividends not eligible for a

5. If line 5 is greater than line 4,

and that qualify for the 80% deduction

dividends-received deduction because of

stop here; enter the amount from

under section 245(a). Also include

the holding period of the stock or an

line 6 on line 23, column (b)

dividends received from a

obligation to make corresponding

(without regard to FSC

20%-or-more-owned FSC that:

payments with respect to similar stock.

•

dividends). Do not complete the

Are attributable to income treated as

rest of this worksheet . . . . . . . .

effectively connected with the conduct of

Two situations in which the

7. Enter the total amount of

a trade or business within the United

dividends-received deduction will not be

dividends received from

States (excluding foreign trade income)

allowed on any share of stock are:

20%-or-more-owned corporations

•

and

that are included on lines 2, 3, 5,

If the corporation held it less than 46

•

Qualify for the 80% deduction provided

7, and 8 (without regard to FSC

days during the 90-day period beginning

in section 245(c)(1)(B).

dividends), column (b) . . . . . . .

45 days before the stock became

8. Subtract line 7 from line 3 . . . . .

Line 8. Enter dividends received from

ex-dividend with respect to the dividend

9. Multiply line 8 by 70% . . . . . . .

wholly owned foreign subsidiaries that are

(see section 246(c)(1)(A)) or

•

10. Subtract line 5 from line 23,

eligible for the 100% deduction provided

To the extent the corporation is under

column (b) (without regard to FSC

in section 245(b).

an obligation to make related payments

dividends) . . . . . . . . . . . . . . .

for substantially similar or related

In general, the deduction under

11. Enter the smaller of line 9 or line

property.

section 245(b) applies to dividends paid

10 . . . . . . . . . . . . . . . . . . . .

out of the earnings and profits of a foreign

12. Dividends-received deduction

5. Any other taxable dividend income not

corporation for a tax year during which:

after limitation (section 246(b)).

•

properly reported above (including

All of its outstanding stock is owned

Add lines 6 and 11. Enter the

distributions under section 936(h)(4)).

(directly or indirectly) by the domestic

result here and on line 23, column

(b) (without regard to FSC

corporation receiving the dividends and

Line 17. Dividends received on

•

dividends) . . . . . . . . . . . . . . .

All of its gross income from all sources

debt-financed stock acquired after July

is effectively connected with the conduct

18, 1984, are not entitled to the full 70%

of a trade or business within the United

or 80% dividends-received deduction.

States.

Schedule E—Premiums

The 70% or 80% deduction is reduced by

Line 9. Enter only those dividends that

a percentage that is related to the amount

Earned

qualify under section 243(b) for the 100%

of debt incurred to acquire the stock. See

dividends-received deduction described in

section 246A. Also, see section 245(a)

Definitions

section 243(a)(3). Corporations taking this

before making this computation for an

deduction are subject to the provisions of

Undiscounted unearned premiums

additional limitation which applies to

section 1561.

means the unearned premiums shown in

dividends received from foreign

the annual statement filed for the year

corporations. Attach a schedule showing

The 100% deduction does not apply to

ending with or in the tax year.

how the amount on line 17 was figured.

affiliated group members that are joining

in the filing of a consolidated return.

Applicable interest rate means the

Line 23

annual rate determined under section

Line 10, column (b). Enter foreign

846(c)(2) for the calendar year the

dividends not reportable on lines 6, 7, and

Limitations on Dividends-Received

premiums are received.

8. Include on line 10 the corporation’s

Deduction

share of the ordinary earnings of a

Applicable statutory premium

qualified electing fund from Form 8621,

Generally, line 23, column (b), may not

recognition pattern means the statutory

line 1c. Exclude distributions of amounts

exceed the amount from the worksheet

premium recognition pattern in effect for

constructively taxed in the current year or

below. However, in a year in which an

the calendar year the premiums are

in prior years under subpart F (sections

NOL occurs, this limitation does not apply

received, and is based on the statutory

951 through 964).

even if the loss is created by the

premium recognition pattern which

Line 11, column (b). Include income

dividends-received deduction. See

applies to premiums received by the

constructively received from controlled

sections 172(d) and 246(b).

corporation in that calendar year. For

-16-

Instructions For Form 1120-Pc - 2001 Page 16

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