Instructions For Form 1120-Fsc - 2006 (Page 10 of 13) in pdf

the deduction provided in section 247 for

ex-dividend date. When counting the

4. Enter the smaller of line 2 or 3. If

dividends paid.

number of days the FSC held the stock, you

line 3 is greater than line 2, stop

may not count certain days during which the

here; enter the amount from line 4

Line 5, Column (a)

FSC’s risk of loss was diminished. See

on line 8, column (c), and do not

Enter dividends received on preferred stock

section 246(c)(4) and Regulations section

complete lines 5-10 below . . . . .

of a 20%-or-more-owned public utility that is

1.246-5 for more details.

5. Enter the total amount of dividends

subject to income tax and is allowed the

b. Dividends attributable to periods

from 20%-or-more-owned

deduction provided in section 247 for

totaling more than 366 days that the

corporations that are included on

dividends paid.

corporation received on any share of

lines 2, 3, 5, and 7, column (a) . .

preferred stock held for less than 91 days

Line 6, Column (a)

6. Subtract line 5 from line 1 . . . . . .

during the 181-day period that began 90

Enter the U.S.-source portion of dividends

days before the ex-dividend date. When

7. Multiply line 6 by 70% . . . . . . . .

that:

counting the number of days the FSC held

•

8. Subtract line 3 above from line 8,

Are received from less-than-20%-owned

the stock, you may not count certain days

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

foreign corporations and

during which the FSC’s risk of loss was

•

Qualify for the 70% deduction under

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

9. Enter the smaller of line 7 or

section 245(a). To qualify for the 70%

Regulations section 1.246-5 for more

line 8 . . . . . . . . . . . . . . . . . . .

deduction, the FSC must own at least 10%

details. Preferred dividends attributable to

10. Dividends-received deduction

of the stock of the foreign corporation by

periods totaling less than 367 days are

after limitation (sec. 246(b)). Add

vote and value.

subject to the 46-day holding period rule

lines 4 and 9. Enter the result here

above.

and on line 8, column (c) . . . . . . 10.

Line 7, Column (a)

c. Dividends on any share of stock to

Enter the U.S.-source portion of dividends

the extent the FSC is under an obligation

Line 10, Column (a)

that are received from 20%-or-more-owned

(including a short sale) to make related

If the FSC claims the foreign tax credit,

foreign corporations and that qualify for the

payments with respect to positions in

enter the tax that is deemed paid under

80% deduction under section 245(a).

substantially similar or related property.

sections 902 and 960. See sections 78 and

5. Any other taxable dividend income

Line 8, Column (c)

906(b)(4).

not properly reported elsewhere on the

Limitation on dividends-received

worksheet.

Line 11, Column (a)

deduction. Generally, line 8, column (c),

If patronage dividends or per-unit retain

Include the following:

may not exceed the amount on line 10 of the

allocations are included on line 11, identify

worksheet below. However, in a year in

1. Dividends (other than capital gain

the total of these amounts in a schedule

which an NOL occurs, this limitation does

distributions reported on Schedule D (Form

attached to Form 1120-FSC.

not apply even if the loss is created by the

1120) and exempt-interest dividends) that

dividends-received deduction. See sections

are received from RICs and that are not

172(d) and 246(b).

subject to the 70% deduction.

Schedule G

2. Dividends from tax-exempt

1. Refigure line 18, Part II, Schedule

Deductions Allocated or

organizations.

B (page 3 of Form 1120-FSC)

3. Dividends (other than capital gain

Apportioned to Foreign Trade

without any adjustment under

distributions) received from a real estate

Income Other Than Foreign

section 1059 and without any

investment trust that, for the tax year of the

capital loss carryback to the tax

trust in which the dividends are paid,

Trade Income Reported on

year under section 1212(a)(1) . . .

qualifies under sections 856 through 860.

Schedule F

4. Dividends not eligible for a

2. Multiply line 1 by 80% . . . . . . . .

dividends-received deduction, which include

3. Add lines 2, 5, and 7, column (c),

Limitations on Deductions

the following:

and the part of the deduction on

a. Dividends received on any share of

Section 263A uniform capitalization

line 3, column (c), that is

stock held for less than 46 days during the

rules. The uniform capitalization rules of

attributable to dividends from

91-day period beginning 45 days before the

section 263A generally require FSCs to

20%-or-more-owned corporations

Dividends and Dividends-Received Deduction Worksheet

(a) Dividends

(See instructions that begin on page 9)

received

(b) %

deduction: (a) x (b)

1 Dividends from less-than-20%-owned domestic corporations that are subject to the

70% deduction (other than debt-financed stock) . . . . . . . . . . . . . . . . . . . . . . .

2 Dividends from 20%-or-more-owned domestic corporations that are subject to the

80% deduction (other than debt-financed stock) . . . . . . . . . . . . . . . . . . . . . . .

3 Dividends on debt-financed stock of domestic and foreign corporations (section

246A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

See Inst.

4 Dividends on certain preferred stock of less-than-20%-owned public utilities . . . . .

5 Dividends on certain preferred stock of 20%-or-more-owned public utilities . . . . . .

6 Dividends from less-than-20%-owned foreign corporations that are subject to the

70% deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 Dividends from 20%-or-more-owned foreign corporations that are subject to the

80% deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8 Total dividends-received deduction. Add lines 1 through 7. See instructions for

limitation. Enter here and on line 19b, Schedule B. . . . . . . . . . . . . . . . . . . . . .

9 Other dividends from foreign corporations not included on lines 3, 6, or 7 . . . . . . .

10 Foreign dividend gross up (section 78) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 Other dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 Total dividends. Add lines 1 through 11. Enter here and on line 9, Schedule F . . .

-10-

Instructions For Form 1120-Fsc - 2006 Page 10

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