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section 162(e)(5)(B). For information on

deduction. Also complete item 20 on

See Form 1139 for details, including

contributions to charitable organizations

Schedule N.

other elections that may be available,

that conduct lobbying activities, see

which must be made no later than 6

•

A personal service corporation may not

section 170(f)(9). For more information on

months after the due date (excluding

carry back an NOL to or from any tax year

other deductions that may apply to

extensions) of the cooperative’s return.

to which an election under section 444 to

cooperatives, see Pub. 535.

Line 32b. Estimated Tax

have a tax year other than a required tax

Line 28. Taxable Income Before

year applies.

Payments

•

A corporate equity reduction interest

NOL Deduction and Special

Enter any estimated tax payments the

loss may not be carried back to a tax year

Deductions

cooperative made for the tax year.

preceding the year of the equity reduction

Beneficiaries of trusts. If the

At-risk rules. Special at-risk rules under

transaction (see section 172(b)(1)(E)).

•

cooperative is the beneficiary of a trust,

section 465 generally apply to closely

If an ownership change occurs, the

and the trust makes a section 643(g)

held cooperatives (see Passive activity

amount of the taxable income of a loss

election to credit its estimated tax

limitations on page 10) engaged in any

corporation that may be offset by the

payments to its beneficiaries, include the

activity as a trade or business or for the

pre-change NOL carryovers may be

cooperative’s share of the estimated tax

production of income. These cooperatives

limited (see section 382 and the related

payment in the total amount entered on

may have to adjust the amount on line 28.

regulations). A loss corporation must file

line 32b. Enter “T” and the amount of the

an information statement with its income

A taxpayer is generally considered

payment in the blank space below line 31.

tax return for each tax year that certain

“at-risk” for an amount equal to his or her

ownership shifts occur (see Temporary

Line 32f. Credit from Refiguring

investment in the entity. That investment

Regulations section 1.382-2T(a)(2)(ii) for

consists of money and other property

Tax for Years in which

details). See Regulations section

contributed to the entity and amounts

Nonqualified Per-unit Retain

1.382-6(b) for details on how to make the

borrowed on behalf of the entity.

Certificates or Nonqualified

closing-of-the-books election.

•

The at-risk rules do not apply to:

If a corporation acquires control of

Written Notices of Allocation

•

Holding real property placed in service

another corporation (or acquires its

(redeemed this year) were

by the cooperative before 1987;

assets in a reorganization), the amount of

issued

•

Equipment leasing under sections

pre-acquisition losses that may offset

If the cooperative would pay less total tax

465(c)(4), (5), and (6); and

recognized built-in gain may be limited

•

by claiming the deduction for the

Any qualifying business of a qualified

(see section 384).

redemption of nonqualified written notices

cooperative under section 465(c)(7).

For details on the NOL deduction, see

of allocation or nonqualified per-unit retain

The at-risk rules do apply to the

Pub. 542, Corporations, section 172, and

certificates in the issue year versus the

holding of mineral property.

Form 1139, Corporation Application for

current tax year, refigure the tax for the

Tentative Refund.

years the nonqualified written notices or

If the at-risk rules apply, complete

certificates were originally issued

Form 6198, At-Risk Limitations, then

Line 30. Taxable Income

(deducting them in the issue year), then

adjust the amount on line 28 for any

Certain cooperatives may need to file

enter the amount of the reduction in the

section 465(d) losses. These losses are

Form 8817. If so, taxable income reported

issue years’ taxes on this line. Attach a

limited to the amount for which the

on line 30 may not exceed the combined

schedule showing how the credit was

cooperative is at risk for each separate

taxable income shown on line 30, Form

figured. This credit is treated as a

activity at the close of the tax year. If the

payment, and any amount that is more

8817. Attach Form 8817 to Form 990-C.

cooperative is involved in one or more

than the tax on line 31 will be refunded.

activities, any of which incurs a loss for

Patronage source losses cannot

the year, report the losses for each

Line 32g. Credit for Federal Tax

be used to offset nonpatronage

activity separately. Attach Form 6198

on Fuels

income. See Form 8817.

CAUTION

showing the amount at risk and gross

Enter the credit from Form 4136, Credit

income and deductions for the activities

Minimum taxable income. The

with the losses.

for Federal Tax Paid on Fuels, if the

cooperative’s taxable income cannot be

cooperative qualifies to take this credit.

If the cooperative sells or otherwise

less than the largest of the following

Attach Form 4136 to Form 990-C.

disposes of an asset or its interest (either

amounts.

•

total or partial) in an activity to which the

Line 32h. Total Payments

The amount of nondeductible CFC

at-risk rules apply, determine the net

dividends under section 965. This amount

Add the amounts on lines 32d through

profit or loss from the activity by

is equal to the difference between

32g and enter the total on line 32h.

combining the gain or loss on the sale or

columns (a) and (c) of Form 990,

Backup withholding If the cooperative

disposition with the profit or loss from the

Schedule C, line 11.

•

had federal income tax withheld from any

activity. If the cooperative has a net loss,

The inversion gain of the cooperative

payments it received, because, for

the loss may be limited because of the

for the tax year, if the cooperative is an

example, it failed to give the payer its

at-risk rules.

expatriated entity or a partner in an

correct EIN, include the amount withheld

expatriated entity. For details, see section

Treat any loss from an activity not

in the total for line 32h. Enter the amount

7874.

allowed for the current tax year as a

withheld and the words “Backup

deduction allocable to the activity in the

Net operating loss. If line 30 (figured

withholding” in the blank space above line

next tax year.

without regard to the minimum taxable

32h.

income rule stated above) is zero or less,

Line 29a. Net Operating Loss

Line 33. Estimated Tax Penalty

the cooperative can have an NOL that

Deduction

can be carried back or forward as a

A cooperative that does not make

A cooperative can use the net operating

deduction to other tax years. Generally, a

estimated tax payments when due may

loss incurred in one tax year to reduce its

cooperative first carries an NOL back 2

be subject to an underpayment penalty

taxable income in another year. Enter the

tax years. However, the cooperative can

for the period of underpayment.

total NOL carryovers from other tax years

elect to waive the carryback period and

Generally, a cooperative is subject to the

on line 29a, but do not enter more than

instead carry the NOL forward to future

penalty if its tax liability is $500 or more

the cooperative’s taxable income (after

tax years. To make the election, see the

and it did not timely pay the smaller of:

•

special deductions). Attach a schedule

instructions for Schedule N, item 19, on

Its tax liability for 2004, or

•

showing the computation of the

page 20.

Its prior year’s tax.

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Instructions For Form 990-C - Farmers' Cooperative Association Income Tax Return - Internal Revenue Service - 2004 Page 13

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