Shareholder'S Instructions For Schedule K-1 (Form 1120s)

Codes O and P. Extraterritorial

1041, U.S. Income Tax Return for

explained on page 2) by these

income exclusion.

Estates and Trusts.

distributions. If these distributions

exceed the basis of your stock, the

1. Corporation did not claim the

Code A. This amount is your share

excess is treated as capital gain from

exclusion. If the corporation reports

of the corporation’s post-1986

the sale or exchange of property and

your pro rata share of foreign trading

depreciation adjustment. If you are an

is reported on Schedule D (Form

individual shareholder, report this

gross receipts (code O) and the

1040).

extraterritorial income exclusion

amount on line 17 of Form 6251.

(code P), the corporation was not

Code E. Repayment of loans from

Code B. This amount is your share

entitled to claim the exclusion

shareholders. If these payments are

of the corporation’s adjusted gain or

because it did not meet the foreign

made on a loan with a reduced basis,

loss. If you are an individual

economic process requirements. You

the repayments must be allocated in

shareholder, report this amount on

may still qualify for your pro rata

part to a return of your basis in the

line 16 of Form 6251.

share of this exclusion if the

loan and in part to the receipt of

Code C. This amount is your share

corporation’s foreign trading gross

income. See Regulations section

of the corporation’s depletion

receipts for the tax year were $5

1.1367-2 for information on reduction

adjustment. If you are an individual

million or less. To qualify for this

in basis of a loan and restoration in

shareholder, report this amount on

exclusion, your foreign trading gross

basis of a loan with a reduced basis.

line 9 of Form 6251.

receipts from all sources for the tax

See Rev. Rul. 64-162, 1964-1 (Part

Codes D and E. Oil, gas, &

year also must have been $5 million

1) C.B. 304 and Rev. Rul. 68-537,

geothermal properties — gross

or less. If you qualify for the

1968-2 C.B. 372, for details.

income and deductions. The

exclusion, report the exclusion

amounts reported on these lines

amount in accordance with the

Box 17. Other

include only the gross income (code

instructions beginning on page 6 for

Information

D) from, and deductions (code E)

box 1, 2, or 3, whichever applies. See

allocable to, oil, gas, and geothermal

Form 8873, Extraterritorial Income

Code A. Investment income.

properties included in box 1 of

Exclusion, for details.

Report this amount on line 4a of Form

Schedule K-1. The corporation will

2. Corporation claimed the

4952.

report separately any income from or

exclusion. If the corporation reports

deductions allocable to such

Code B. Investment expenses.

your pro rata share of foreign trading

Report this amount on line 5 of Form

properties that are included in boxes

gross receipts but not the amount of

2 through 12, and 17. Use the

4952.

the extraterritorial income exclusion,

amounts reported here and any other

the corporation met the foreign

Code C. Look back interest —

reported amounts to help you figure

economic process requirements and

completed long-term contracts.

the net amount to enter on line 25 of

claimed the exclusion when figuring

The corporation will report any

Form 6251.

your pro rata share of corporate

information you need to figure the

Code F. Other AMT items. Enter the

income. You also may need to know

interest due or to be refunded under

information on the statement attached

the amount of your pro rata share of

the look-back method of section

by the corporation, along with items

foreign trading gross receipts from

460(b)(2) on certain long-term

from other sources, on the applicable

this corporation to determine if you

contracts. Use Form 8697, Interest

lines of Form 6251 or Schedule I of

met the $5 million or less exception

Computation Under the Look-Back

Form 1041.

discussed above for purposes of

Method for Completed Long-Term

qualifying for an extraterritorial

Contracts, to report any such interest.

Box 16. Items Affecting

income exclusion from other sources.

Code D. Look back interest —

Shareholder Basis

income forecast method. The

Note. Upon request, the corporation

corporation will report any information

should furnish you a copy of the

Code A. Tax-exempt interest

you need to figure the interest due or

corporation’s Form 8873 if there is a

income. Report on your return, as an

to be refunded under the look-back

reduction for international boycott

item of information, your share of the

method of section 167(g)(2) for

operations, illegal bribes, kickbacks,

tax-exempt interest received or

certain property placed in service

etc.

accrued by the corporation during the

after September 13, 1995, and

Code Q. Other foreign

year. Individual shareholders include

depreciated under the income

transactions. On an attachment to

this amount on Form 1040, line 8b.

forecast method. Use Form 8866,

Schedule K-1, the corporation will

Generally, you must increase the

Interest Computation Under the

report any other information on

basis of your stock by this amount.

Look-Back Method for Property

foreign transactions that you may

Code B. Other tax-exempt income.

Depreciated Under the Income

need using code Q.

Generally, you must increase the

Forecast Method, to report any such

basis of your stock by the amount

interest.

Box 15. Alternative

shown, but do not include it in income

Code E. Dispositions of property

on your tax return.

Minimum Tax (AMT)

with section 179 deductions. The

Code C. Nondeductible expenses.

corporation will report your pro rata

Items

The nondeductible expenses paid or

share of gain or loss on the sale,

incurred by the corporation are not

Use the information reported in box

exchange, or other disposition of

deductible on your tax return.

15 (as well as adjustments and tax

property for which a section 179

Generally, you must decrease the

preference items from other sources)

expense deduction was passed

basis of your stock by this amount.

to prepare your Form 6251,

through to shareholders with code E.

Alternative Minimum Tax —

Code D. Property distributions.

If the corporation passed through a

Individuals, or Schedule I of Form

Reduce the basis of your stock (as

section 179 expense deduction for

-12-

Instructions for Schedule K-1 (Form 1120S)

Shareholder'S Instructions For Schedule K-1 (Form 1120s) - 2005 Page 12

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