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Larger deduction. A larger deduction

For contributions of property reacquired

Amortization of pollution control

is allowed for certain contributions of:

by the manufacturer of the property, the

facilities, organization expenses, etc. See

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Inventory and other property to certain

3-year period begins on the date that the

Form 4562.

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organizations for use in the care of the ill,

original construction of the property was

Insurance premiums.

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needy, or infants (see section 170(e)(3)

substantially completed. Also, the original

Legal and professional fees.

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and Regulations section 1.170A-4A);

use of the property may be by someone

Supplies used and consumed in the

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Scientific equipment used for research

other than the donor or the donee.

business.

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to institutions of higher learning or to

Utilities.

Line 20. Depreciation. Besides

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certain scientific research organizations

Ordinary losses from trade or business

depreciation, include on line 20 the part of

(other than by personal holding

activities of a partnership (from Schedule

the cost that the cooperative elected to

companies and service organizations)

K-1 (Form 1065 or 1065-B)). Do not offset

expense under section 179 for certain

(see section 170(e)(4)); and

ordinary losses against ordinary income.

tangible property placed in service during

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Computer technology and equipment

Instead, include the income on line 10.

tax year 2002 or carried over from 2001.

for educational purposes.

Show the partnership’s name, address,

See Form 4562, Depreciation and

and EIN on a separate statement

Contributions of computer

Amortization, and its instructions.

attached to this return. If the amount

technology and equipment for

Line 22. Depletion. See sections 613

entered is from more than one

educational purposes. A cooperative

and 613A for percentage depletion rates

partnership, identify the amount from

may take an increased deduction under

applicable to natural deposits. Also, see

each partnership.

section 170(e)(6) for qualified

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section 291(a)(2) for the limitation on the

Extraterritorial income exclusion (from

contributions of computer technology or

depletion deduction for iron ore and coal

Form 8873, line 55).

equipment for educational purposes.

(including lignite).

Computer technology or equipment

Do not deduct:

Attach Form T (Timber), Forest

means computer software, computer or

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Fines or penalties paid to a government

Activities Schedule, if a deduction for

peripheral equipment, and fiber optic

for violating any law.

depletion of timber is taken.

cable related to computer use. A

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Any amount that is allocable to a class

contribution is a qualified contribution if:

Foreign intangible drilling costs and

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of exempt income. See section 265(b) for

It is made to an eligible donee (see

foreign exploration and development

exceptions.

below);

costs must either be added to the

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Substantially all of the donee property’s

cooperative’s basis for cost depletion

Special rules apply to the following

use is:

purposes or be deducted ratably over a

expenses.

1. Related to the purpose or function

10-year period. See sections 263(i), 616,

of the donee,

Travel, meals, and entertainment.

and 617 for details.

2. For use within the United States,

Subject to limitations and restrictions

Line 24. Pension, profit-sharing, etc.,

and

discussed below, a cooperative can

plans. Enter the deduction for

3. For educational purposes.

deduct ordinary and necessary travel,

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contributions to qualified pension,

The contribution is made not later than

meals, and entertainment expenses paid

profit-sharing, or other funded deferred

3 years after the date the taxpayer

or incurred in its trade or business.

compensation plans. Employers who

acquired or substantially completed the

maintain such a plan generally must file

Also, special rules apply to deductions

construction of the property;

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one of the forms listed below, even if the

for gifts, skybox rentals, luxury water

The original use of the property is by

plan is not a qualified plan under the

travel, convention expenses, and

the donor or the donee;

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Internal Revenue Code. The filing

entertainment tickets. For details, see

The property is not transferred by the

requirement applies even if the

section 274 and Pub. 463, Travel,

donee for money, services, or other

cooperative does not claim a deduction

Entertainment, Gift, and Car Expenses.

property, except for shipping, transfer,

for the current tax year. There are

and installation costs;

Travel. The cooperative cannot

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penalties for failure to file these forms on

The property fits productively into the

deduct travel expenses of any individual

time and for overstating the pension plan

donee’s education plan; and

accompanying a cooperative officer or

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deduction. See sections 6652(e) and

The property meets standards, if any,

employee, including a spouse or

6662(f).

that may be prescribed by future

dependent of the officer or employee,

regulations, to assure it meets minimum

Form 5500, Annual Return/Report of

unless:

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functionality and suitability for educational

Employee Benefit Plan. File this form for

That individual is an employee of the

purposes.

a plan that is not a one-participant plan

cooperative and

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(see below).

His or her travel is for a bona fide

Eligible donee. The term “eligible

business purpose and would otherwise be

donee” means:

Form 5500-EZ, Annual Return of

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deductible by that individual.

An educational organization that

One-Participant (Owners and Their

normally maintains a regular faculty and

Spouses) Retirement Plan. File this form

Meals and entertainment. Generally,

curriculum and has a regularly enrolled

for a plan that only covers the owner (or

the cooperative can deduct only 50% of

body of pupils in attendance at the place

the owner and his or her spouse) but only

the amount otherwise allowable for meals

where its educational activities are

if the owner (or the owner and his or her

and entertainment expenses paid or

regularly conducted,

spouse) owns the entire business.

incurred in its trade or business. In

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A section 501(c)(3) entity organized

addition (subject to exceptions under

Line 25. Employee benefit programs.

primarily for purposes of supporting

section 274(k)(2)):

Enter the contributions to employee

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elementary and secondary education, or

Meals must not be lavish or

benefit programs not claimed elsewhere

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A public library (as described in section

extravagant;

on the return (e.g., insurance, health and

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170(e)(6)(B)(i)(III)).

A bona fide business discussion must

welfare programs, etc.) that are not an

Exceptions. The following exceptions

occur during, immediately before, or

incidental part of a pension, profit-sharing,

apply to the above rules for computer

immediately after the meal; and

etc., plan included on line 24.

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technology and equipment:

An employee must be present at the

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Line 26. Other deductions. Attach a

Contributions to private foundations

meal.

schedule, listing by type and amount, all

may qualify if the foundation contributes

See section 274(n)(3) for a special rule

allowable deductions that are not

the property to an eligible donee within 30

that applies to meal expenses for

deductible elsewhere on Form 990-C.

days after the contribution and notifies the

individuals subject to the hours of service

donor of the contribution. For details, see

Examples of amounts to include on

limits of the Department of

section 170(e)(6)(C).

line 26:

Transportation.

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Instructions For Form 990-C - Farmers' Cooperative Association Income Tax Return - Internal Revenue Service - 2002 Page 10

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