Shareholder'S Instructions For Schedule K-1 (Form 1120s) - 2005 Page 14
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14keeping requirements of Regulations
For a shareholder that is an estate
7. Inversion gain. The corporation
section 301.6112-1. See Form 8264;
or trust, report this income to the
will provide a statement showing the
Notice 2004-80, 2004-50 I.R.B. 963;
beneficiaries, as an item of
amounts of each type of income or
and Notice 2005-22, 2005-12 I.R.B.
information, on Schedule K-1 (Form
gain that is included in inversion gain.
756; for details.
1041). Do not report it elsewhere on
The corporation has included
2. Any information you need to
Form 1041.
inversion gain in income elsewhere
complete a disclosure statement for
4. The amount included in gross
on Schedule K-1. Inversion gain is
reportable transactions in which the
income with respect to qualified zone
also reported under code N because
corporation participates. If the
academy bonds. Income with respect
your taxable income and alternative
corporation participates in a
to qualified zone academy bonds
minimum taxable income cannot be
transaction that must be disclosed on
cannot be used to increase your
less than the inversion gain. Also,
Form 8886, Reportable Transaction
stock basis. Because this amount is
your inversion gain (a) is not taken
Disclosure Statement, both you and
already included in income elsewhere
into account in figuring the amount of
the corporation may be required to
on Schedule K-1, you must reduce
net operating loss (NOL) for the tax
file Form 8886 for the transaction.
your stock basis by this amount.
year or the amount of NOL that can
The determination of whether you are
5. The amount included in gross
be carried over to each tax year, (b)
required to disclose a transaction of
income with respect to clean
may limit the amount of your credits,
the corporation is based on the
renewable energy bonds. Income
and (c) is treated as income from
category(s) under which the
with respect to clean renewable
sources within the U.S. for the foreign
transaction qualifies for disclosure
energy bonds cannot be used to
tax credit. See section 7874 for
and is determined by the corporation.
increase your stock basis. Because
details.
You may have to pay a penalty if you
this amount is already included in
8. Any other information you may
are required to file Form 8886 and do
income elsewhere on Schedule K-1,
need to file with your return not
not do so. See the instructions for
you must reduce your stock basis by
shown elsewhere on Schedule K-1.
Form 8886 for details.
this amount.
The corporation should give you a
3. Gross farming and fishing
6. Any information you need to
description and the amount of your
income. If you are an individual
use part or all of the clean renewable
share for each of these items.
shareholder, enter this income, as an
energy bond credit to reduce any
item of information, on Schedule E
2006 underpayment of estimated tax
(Form 1040), Part V, line 42. Do not
penalty.
report this income elsewhere on Form
1040.
-14-
Instructions for Schedule K-1 (Form 1120S)
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