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Forgone interest on certain

acknowledgment to the tax return, but

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

$14,600

below-market-rate loans (see section

keep it with the cooperative’s records.

If the lease term began before January 1, 1994, see Pub.

7872).

These rules apply in addition to the filing

463, Travel, Entertainment, Gift, and Car Expenses, to

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find out if the cooperative has an inclusion amount. The

Original issue discount on certain high

requirements for Form 8283, Noncash

inclusion amount for lease terms beginning in 2004 will be

yield discount obligations (see section

Charitable Contributions, described later

published in the Internal Revenue Bulletin in early 2004.

163(e) to figure the disqualified portion).

under Contributions of property other

than cash.

Line 19. Charitable contributions.

See Pub. 463 for instructions on

Enter contributions or gifts paid in the tax

For more information on substantiation

figuring the inclusion amount.

year to or for the use of charitable and

and recordkeeping requirements, see the

governmental organizations described in

regulations under section 170 and Pub.

Line 17. Taxes and licenses. Enter

section 170(c), and any unused

526, Charitable Contributions.

taxes paid or accrued during the tax year,

contributions carried over from prior

except the following.

Contributions to organizations

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years.

Federal income taxes.

conducting lobbying activities.

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Foreign or U.S. possession income

Cooperatives reporting taxable income

Contributions made to an organization

taxes if a tax credit is claimed (however,

on the accrual method may elect to treat

that conducts lobbying activities are not

see the Instructions for Form 5735 for

any contributions paid by the 15th day of

deductible if:

special rules for possession income

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the 3rd month after the end of the tax

The lobbying activities relate to matters

taxes).

year as paid during the tax year if the

of direct financial interest to the donor’s

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Taxes not imposed on the cooperative.

contributions were authorized by the

trade or business and

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Taxes, including state or local sales

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board of directors during the tax year.

The principal purpose of the

taxes, that are paid or incurred in

Attach a declaration to the return stating

contribution was to avoid Federal income

connection with an acquisition or

that the resolution authorizing the

tax by obtaining a deduction for activities

disposition of property (these taxes are

contributions was adopted by the board of

that would have been nondeductible

treated as part of the cost of the acquired

directors during the current tax year. The

under the lobbying expense rules if

property, or in the case of a disposition,

declaration must include the date the

conducted directly by the donor.

as a reduction in the amount realized on

resolution was adopted.

Contributions of property other than

the disposition).

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Limitation on deduction. The total

cash. If a cooperative contributes

Taxes assessed against local benefits

amount claimed may not be more than

property other than cash and claims over

that increase the value of the property

10% of taxable income (line 30)

a $500 deduction for the property, it must

assessed (such as for paving, etc.).

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computed without regard to the following:

attach a schedule to the return describing

Taxes deducted elsewhere on the

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Any deduction for contributions;

the kind of property contributed and the

return, such as those reflected in cost of

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The special deductions on line 29b;

method used to determine its FMV.

goods sold.

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Any net operating loss (NOL) carryback

Generally, cooperatives must complete

See section 164(d) for the rule on

to the tax year under section 172;

and attach Form 8283 to their returns for

apportionment of taxes on real property

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Any capital loss carryback to the tax

all contributions of property (other than

between the seller and purchaser.

year under section 1212(a)(1); and

money) if the total claimed deduction for

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Line 18. Interest.

The deduction allowed under section

all property contributed was more than

249.

$5,000.

Note. The deduction for interest is limited

when the cooperative is a policyholder or

Carryover. Charitable contributions

If the cooperative made a “qualified

beneficiary with respect to a life

over the 10% limitation may not be

conservation contribution” under section

deducted for the current tax year but may

insurance, endowment, or annuity

170(h), also include the FMV of the

contract issued after June 8, 1997. For

be carried over to the next 5 tax years.

underlying property before and after the

details, see section 264(f). Attach a

(See section 170(d)(2) for further details.)

donation, as well as the type of legal

statement showing the computation of the

interest contributed, and describe the

Special rules apply if the cooperative

deduction.

conservation purpose benefited by the

has an NOL carryover to the tax year. In

Do not deduct the following:

donation.

figuring the charitable contributions

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Interest on indebtedness used to

deduction for the tax year, the 10% limit is

If a contribution carryover was

purchase or carry exempt interest

applied using the taxable income after

included, show the amount and how it

obligations. For exceptions, see section

taking into account any deduction for the

was determined.

265(b).

NOL.

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For cash basis taxpayers, prepaid

Reduced deduction for

To figure the amount of any remaining

interest allocable to years following the

contributions of certain property. For a

NOL carryover to later years, taxable

current tax year (e.g., a cash basis

charitable contribution of property, the

income must be modified (see sections

calendar year taxpayer who in 2003

cooperative must reduce the contribution

172(b) and (d)). To the extent that

prepaid interest allocable to any period

by the sum of:

contributions are used to reduce taxable

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after 2003 can deduct only the amount

The ordinary income and short-term

income for this purpose and increase an

allocable to 2003).

capital gain that would have resulted if the

NOL carryover, a contributions carryover

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Interest and carrying charges on

property were sold at its FMV and

is not allowed. See section 170(d)(2)(B).

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straddles. Generally, these amounts must

For certain contributions, the long-term

be capitalized. See section 263(g).

Substantiation requirements.

capital gain that would have resulted if the

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Interest on debt allocable to the

Generally, no deduction is allowed for any

property were sold at its FMV.

production of designated property by a

contribution of $250 or more unless the

The reduction for the long-term capital

cooperative for its own use or for sale.

cooperative gets a written

gain applies to:

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This interest must be capitalized. A

acknowledgment from the donee

Contributions of tangible personal

cooperative must also capitalize any

organization that shows the amount of

property for use by an exempt

interest on debt allocable to an asset

cash contributed, describes any property

organization for a purpose or function

used to produce the above property. See

contributed and gives an estimate of the

unrelated to the basis for its exemption

section 263A(f) and Regulations sections

value of any goods or services provided

and

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1.263A-8 through 1.263A-15 for

in return for the contribution. The

Contributions of any property to or for

definitions and more information.

acknowledgment must be obtained by the

the use of certain private foundations,

Special rules apply to:

due date (including extensions) of the

except for stock, for which market

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Interest on which no tax is imposed

cooperative’s return, or, if earlier, the date

quotations are readily available (section

(see section 163(j)).

the return is filed. Do not attach the

170(e)(5)).

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Instructions For Form 990-C - Farmers' Cooperative Association Income Tax Return - Internal Revenue Service - 2003 Page 9

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