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acknowledgment from the donee

Examples of other deductions

Line 21. Depletion

organization that shows the amount of

include the following.

•

See sections 613 and 613A for

cash contributed, describes any

Amortization (see Form 4562).

percentage depletion rates applicable

•

property contributed, and either gives a

Certain business start-up and

to natural deposits. Also, see section

description and a good faith estimate of

organizational costs the cooperative

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

the value of any goods or services

elects to deduct. See Business start-up

depletion deduction for iron ore and

provided in return for the contribution or

and organizational costs under

coal (including lignite).

states that no goods or services were

Deductions.

•

provided in return for the contribution.

Reforestation costs. The cooperative

Attach Form T (Timber), Forest

The acknowledgment must be obtained

can elect to deduct up to $10,000 of

Activities Schedule, if a deduction for

by the due date (including extensions)

qualifying reforestation expenses for

depletion of timber is taken.

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

each qualified timber property. The

Foreign intangible drilling costs and

the date the return is filed. Do not

cooperative can elect to amortize over

foreign exploration and development

attach the acknowledgment to the tax

84 months any amount not deducted.

costs must either be added to the

return, but keep it with the

See Pub. 535.

•

cooperative’s basis for cost depletion

cooperative’s records. These rules

Insurance premiums.

•

purposes or be deducted ratably over a

apply in addition to the filing

Legal and professional fees.

•

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

requirements for Form 8283, Noncash

Supplies used and consumed in the

616, and 617 for details. See Pub. 535

Charitable Contributions.

business.

•

for more information on depletion.

Utilities.

•

Contributions of property other than

Ordinary losses from trade or

Line 23. Pension,

cash. If a cooperative contributes

business activities of a partnership

property other than cash and claims

Profit-sharing, etc., Plans

(from Schedule K-1 (Form 1065 or

over a $500 deduction for the property,

1065-B)). Do not offset ordinary losses

Enter the deduction for contributions to

it must attach a schedule to the return

against ordinary income. Instead,

qualified pension, profit-sharing, or

describing the kind of property

include the income on line 10. Show

other funded deferred compensation

contributed and the method used to

the partnership’s name, address, and

plans. Employers who maintain such a

determine its fair market value (FMV).

EIN on a separate statement attached

plan generally must file one of the

Complete and attach Form 8283 for

to this return. If the amount entered is

forms listed below, even if the plan is

contributions of property (other than

from more than one partnership,

not a qualified plan under the Internal

money) if the total claimed deduction

identify the amount from each

Revenue Code. The filing requirement

for all property contributed was more

partnership.

applies even if the cooperative does not

•

than $5,000. Special rules apply to the

Extraterritorial income exclusion

claim a deduction for the current tax

contribution of certain property. See the

(from Form 8873, line 54).

year. There are penalties for failure to

•

Instructions for Form 8283.

Deduction for clean-fuel vehicle and

file these forms timely and for

certain refueling property placed in

overstating the pension plan deduction.

Larger deduction. A larger

service before January 1, 2006. See

See sections 6652(e) and 6662(f).

deduction is allowed for certain

Pub. 535.

contributions of:

•

Form 5500, Annual Return/Report of

•

Any negative net section 481(a)

Inventory and other property to

Employee Benefit Plan. File this form

adjustment. See the instructions for line

certain organizations for use in the care

for a plan that is not a one-participant

10.

of the ill, needy, or infants (section

•

plan (see below).

Deduction for certain energy efficient

170(e)(3)) including contributions made

commercial property placed in service

Form 5500-EZ, Annual Return of

after August 27, 2005, and before

after December 31, 2005. See section

One-Participant (Owners and Their

January 1, 2006, of “apparently

179D.

Spouses) Retirement Plan. File this

wholesome food” (section 170(e)(3)(C))

•

Dividends paid in cash on stock held

form for a plan that only covers the

and qualified book contributions

by an employee stock ownership plan.

owner (or the owner and his or her

(section 170(e)(3)(D));

•

spouse) but only if the owner (or the

Scientific equipment used for

See section 404(k) for more details

owner and his or her spouse) owns the

research to institutions of higher

and the limitation on certain dividends.

entire business.

learning or to certain scientific research

Do not deduct:

•

organizations (other than by personal

Fines or penalties paid to a

Line 24. Employee Benefit

holding companies and service

government for violating any law.

•

Programs

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

Any amount allocable to a class of

•

Computer technology and equipment

exempt income. See section 265(b) for

Enter the contributions to employee

for educational purposes (section

exceptions.

benefit programs not claimed

170(e)(6).

elsewhere on the return (that is,

Special rules

insurance, health and welfare

For more information on charitable

programs, etc.) that are not an

Travel, meals, and entertainment.

contributions, including substantiation

Subject to limitations and restrictions

incidental part of a pension,

and recordkeeping requirements, see

profit-sharing, etc., plan included on line

discussed below, a cooperative can

section 170, the related regulations,

23.

deduct ordinary and necessary travel,

and Pub. 526, Charitable Contributions.

meals, and entertainment expenses

For special rules that apply to

Line 26. Other Deductions

paid or incurred in its trade or business.

corporations, see Pub. 542.

Attach a schedule, listing by type and

Special rules that apply to

amount, all allowable deductions that

Line 20a. Depreciation

deductions for gifts, skybox rentals,

are not deductible elsewhere.

luxury water travel, convention

Include on line 20a depreciation and

expenses, and entertainment tickets.

the cost of certain property that the

See Special rules, later, for limits on

See section 274 and Pub. 463.

cooperative elected to expense under

certain other deductions. Also, see Pub.

section 179. See Form 4562 and its

535 for details on other deductions that

Travel. The cooperative cannot

instructions.

may apply to cooperatives.

deduct travel expenses of any

-10-

Instructions For Form 990-C - Farmers' Cooperative Association Income Tax Return - Internal Revenue Service - 2005 Page 10

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