Instructions For Form 1120-Fsc - 2007 (Page 12 of 13) in pdf

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retired employees who had performed the

Meal and entertainment expenses not

Schedule L

services listed above, (3) any estate of the

deductible under section 274(n).

•

employee or retiree described above, or (4)

Expenses for the use of an entertainment

Balance Sheets per Books

any person who acquired the stock of the

facility.

•

The balance sheet should agree with the

FSC as a result of the death of an employee

The part of business gifts over $25.

•

FSC’s books and records. Include

or retiree (but only for the 2-year period

Expenses of an individual over $2,000,

certificates of deposit as cash on line 1,

beginning on the date of the employee’s or

which are allocable to conventions on cruise

Schedule L.

retiree’s death).

ships.

•

Employee achievement awards over

Note. If the FSC meets these tests, check

Line 5. Tax-exempt securities. Include on

$400.

the box on line 2.

•

this line:

The cost of entertainment tickets over

•

State and local government obligations,

Line 3

face value (also subject to 50% limit under

the interest on which is excludible from

section 274(n)).

Alternative minimum tax (AMT). Unless

•

gross income under section 103(a) and

The cost of skyboxes over the face value

•

the FSC is treated as a small corporation

Stock in a mutual fund or other regulated

of nonluxury box seat tickets.

exempt from the AMT, it may owe the AMT

•

investment company that distributed

The part of luxury water travel expenses

if it has any of the adjustments and tax

exempt-interest dividends during the tax

not deductible under section 274(m).

preference items listed on Form 4626,

•

year of the FSC.

Expenses for travel as a form of

Alternative Minimum Tax – Corporations.

education.

The FSC must file Form 4626 if its taxable

•

Line 27. Adjustments to shareholders’

Other nondeductible travel and

income (or loss) combined with these

equity. Some examples of adjustments to

entertainment expenses.

adjustments and tax preference items is

report on this line include:

For more information, see Pub. 542.

•

more than the smaller of $40,000 or the

Foreign currency translation adjustments.

Line 7a. Tax-exempt interest. Report any

•

FSC’s allowable exemption amount (from

The excess of additional pension liability

tax-exempt interest received or accrued,

Form 4626). For this purpose, taxable

over unrecognized prior service cost.

including any exempt-interest dividends

income does not include the NOL deduction.

received as a shareholder in a mutual fund

See Form 4626 for definitions and details

If the total adjustment to be entered on

or other regulated investment company.

on how to figure the tax.

line 27 is a negative amount, enter the

Also report this amount on line 2, Additional

amount in parentheses.

Line 5

Information, on page 2 of the form.

Foreign tax credit. Generally, a FSC may

Schedule M-1

not claim a foreign tax credit. It may,

however, claim a foreign tax credit for any

Reconciliation of Income (Loss)

foreign taxes imposed on foreign source

per Books With Income per

taxable nonforeign trade income (Schedule

F, Part II) that is treated as effectively

Return

connected with a U.S. trade or business.

See Temporary Regulations section

Line 5c. Travel and entertainment.

1.921-3T(d)(2) for more details.

Include on line 5c any of the following:

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the

United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to

figure and collect the right amount of tax. Section 6109 requires return preparers to provide their identifying numbers on the return.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form

displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may

become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as

required by section 6103.

The time needed to complete and file this form and related schedule will vary depending on individual circumstances. The estimated

average times are:

Learning about the

Preparing and sending the form

Form

Recordkeeping

law or the form

to the IRS

1120-FSC

94 hr., 13 min.

19 hr., 45 min.

38 hr., 56 min.

Sch. P (1120-FSC)

9 hr., 48 min.

1 hr., 29 min.

1 hr., 43 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and related schedule simpler,

we would be happy to hear from you. You may write to Internal Revenue Service, Tax Products Coordinating Committee,

SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form to this office. Instead, see

Where To File on page 4.

-12-

Instructions For Form 1120-Fsc - 2007 Page 12

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