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No deduction is allowed under

7. Enter the total amount of

dividends received from

Schedule H

section 243 for a dividend from an

20%-or-more-owned

IC-DISC or former DISC (as defined in

corporations that are included

section 992(a)) to the extent the

Deductions and Adjustments

on lines 2, 3, 5, 7, and 8,

dividend:

column (a) . . . . . . . . . . . . . .

Under Section 1382

8. Subtract line 7 from line 3 . . . .

1. Is paid out of the cooperative’s

Cooperatives may, under section

9. Multiply line 8 by 70% . . . . . . .

accumulated IC-DISC income or

1388(j)(1), use losses from one or more

10. Subtract line 5 from line 9,

previously taxed income, or

allocation units to offset earnings of one

column (c) . . . . . . . . . . . . . .

2. Is a deemed distribution under

or more other allocation units, as

11. Enter the smaller of line 9 or line

section 995(b)(1).

10 . . . . . . . . . . . . . . . . . . . .

permitted by their bylaws, but only to

12. Dividends-received deduction

the extent that the earnings and losses

after limitation (section 246(b)).

are from business done with or for

Line 16. Column (a)

Add lines 6 and 11. Enter the

patrons. If a cooperative exercises this

result here and on line 9,

Include the following:

option, it must provide the information

column (c) . . . . . . . . . . . . . .

specified in section 1388(j)(3) by written

1. Dividends (other than capital gain

notice to its patrons.

distributions reported on Schedule D

Line 10. Columns (a) and (c)

(Form 1120) and exempt-interest

Special rules also apply if a

Enter dividends from FSCs that are

dividends) that are received from RICs

cooperative has acquired the assets of

attributable to foreign trade income and

and that are not subject to the 70%

another cooperative under a section

that are eligible for the 100% deduction

deduction.

381(a) transaction. See section 1388(j)

provided in section 245(c)(1)(A).

2. Dividends from tax-exempt

for more information. Cooperatives may

organizations.

Enter dividends that qualify under

net earnings and losses under section

section 243(b) for the 100%

3. Dividends (other than capital gain

1388(j) and still be eligible for

dividends-received deduction described

distributions) received from a REIT that,

tax-exempt treatment. See section

in section 243(a)(3). Cooperatives

for the tax year of the trust in which the

521(b)(6).

taking this deduction are subject to the

dividends are paid, qualifies under

provisions of section 1561. The 100%

sections 856 through 860.

If the cooperative sells qualifying

deduction does not apply to affiliated

foreign trade property, no deduction is

4. Dividends not eligible for a

group members that are joining in the

allowed for patronage dividends,

dividends-received deduction, which

filing of a consolidated return.

per-unit retain allocations, and

include the following.

nonpatronage distributions related to

Line 11. Columns (a) and (c)

a. Dividends received on any share

foreign trade income. For details, see

of stock held for less than 46 days

Enter qualifying dividends from Form

section 941(b)(2).

during the 91-day period beginning 45

8895, One-Time Dividends Received

days before the ex-dividend date. When

Any patronage dividends or per-unit

Deduction for Certain Cash Dividends

counting the number of days the

retain allocations that are allocated to

from Controlled Foreign Corporations.

cooperative held the stock, you cannot

qualifying foreign trade income of the

Line 12. Column (a)

count certain days during which the

cooperative may be treated as

cooperative’s risk of loss was

qualifying foreign trade income of the

Enter foreign dividends not reportable

diminished. See section 246(c)(4) and

patron. In order to qualify, the amount

on lines 3, 6, 7, 8, 10, or 11 of column

Regulations section 1.246-5 for more

must be designated by the cooperative

(a). Include on line 12 the cooperative’s

in a written notice mailed to its patrons

details.

share of the ordinary earnings of a

not later than the 15th day of the 9th

b. Dividends attributable to periods

qualified electing fund from line 1c of

month following the close of the tax

totaling more than 366 days that the

Form 8621, Return by a Shareholder of

year. For more details, see section

cooperative received on any share of

a Passive Foreign Investment

943(g).

Company or Qualified Electing Fund.

preferred stock held for less than 91

Exclude distributions of amounts

days during the 181-day period that

Lines 1 and 2 apply only to section

constructively taxed in the current year

began 90 days before the ex-dividend

521 cooperatives.

or in prior years under subpart F

date. When counting the number of

(sections 951 through 964).

days the cooperative held the stock,

Line 1. Dividends Paid on

you cannot count certain days during

Line 13. Column (a)

Capital Stock (Section 521

which the cooperative’s risk of loss was

Include income constructively received

diminished. See section 264(c)(4) and

Cooperatives Only)

from CFCs under subpart F. This

Regulations section 1.264-5 for more

Enter the amount actually or

amount should equal the total subpart F

details. Preferred dividends attributable

constructively paid as dividends during

income reported on Schedule I, Form

to periods totaling less than 367 days

the tax year on:

5471, Information Return of U.S.

are subject to the 46-day holding period

•

Common stock (whether voting or

Persons With Respect To Certain

above.

nonvoting),

Foreign Corporations.

c. Dividends on any share of stock

•

Preferred stock,

to the extent the cooperative is under

•

Line 14. Column (a)

Capital retain certificates,

an obligation (including a short sale) to

•

Include gross-up for taxes deemed paid

Revolving fund certificates,

make related payments with respect to

•

under sections 902 and 960.

Letters of advice, or

positions in substantially similar or

•

Instructions For Form 990-C - Farmers' Cooperative Association Income Tax Return - Internal Revenue Service - 2005 Page 15

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