Instructions For Form 1120-Fsc - 2006 (Page 12 of 13) in pdf

•

preference items listed on Form 4626,

The excess of additional pension liability

Tax Rate Schedule

Alternative Minimum Tax – Corporations.

over unrecognized prior service cost.

If taxable income (Schedule B, line 20) is:

The FSC must file Form 4626 if its taxable

If the total adjustment to be entered on

income (or loss) combined with these

Of the

line 27 is a negative amount, enter the

adjustments and tax preference items is

But not

amount

amount in parentheses.

more than the smaller of $40,000 or the

Over —

over —

Tax is:

over —

FSC’s allowable exemption amount (from

Schedule M-1

$50,000

15%

Form 4626). For this purpose, taxable

50,000

75,000

$ 7,500 + 25%

50,000

income does not include the NOL deduction.

75,000

100,000

13,750 + 34%

75,000

See Form 4626 for details.

Reconciliation of Income (Loss)

100,000

335,000

22,250 + 39%

100,000

See Form 4626 for definitions and details

per Books With Income per

335,000 10,000,000

113,900 + 34%

335,000

on how to figure the tax.

Return

10,000,000 15,000,000 3,400,000 + 35% 10,000,000

15,000,000 18,333,333 5,150,000 + 38% 15,000,000

Line 5

Line 5c. Travel and entertainment.

18,333,333

- - - - -

35%

Include on line 5c any of the following:

Foreign tax credit. Generally, a FSC may

•

Meal and entertainment expenses not

not claim a foreign tax credit. It may,

Qualified personal service corporations.

deductible under section 274(n).

however, claim a foreign tax credit for any

A qualified personal service corporation is

•

Expenses for the use of an entertainment

foreign taxes imposed on foreign source

taxed at a flat rate of 35% on its taxable

facility.

taxable nonforeign trade income (Schedule

income. A FSC is a qualified personal

•

The part of business gifts over $25.

F, Part II) that is treated as effectively

service corporation if it meets both of the

•

Expenses of an individual over $2,000,

connected with a U.S. trade or business.

following tests:

which are allocable to conventions on cruise

•

See Temporary Regulations section

Substantially all of the FSC’s activities

ships.

1.921-3T(d)(2) for more details.

involve the performance of services in the

•

Employee achievement awards over

fields of engineering, architecture, or

$400.

Schedule L

management consulting and

•

The cost of entertainment tickets over

•

At least 95% of the corporation’s stock, by

face value (also subject to 50% limit under

Balance Sheets per Books

value, is owned, directly or indirectly, by (1)

section 274(n)).

employees performing the services, (2)

The balance sheet should agree with the

•

The cost of skyboxes over the face value

retired employees who had performed the

FSC’s books and records. Include

of nonluxury box seat tickets.

services listed above, (3) any estate of the

certificates of deposit as cash on line 1,

•

The part of luxury water travel expenses

employee or retiree described above, or (4)

Schedule L.

not deductible under section 274(m).

any person who acquired the stock of the

•

Line 5. Tax-exempt securities. Include on

Expenses for travel as a form of

FSC as a result of the death of an employee

this line:

education.

•

or retiree (but only for the 2-year period

•

State and local government obligations,

Other nondeductible travel and

beginning on the date of the employee’s or

the interest on which is excludible from

entertainment expenses.

retiree’s death).

gross income under section 103(a) and

•

For more information, see Pub. 542.

Note. If the FSC meets these tests, check

Stock in a mutual fund or other regulated

the box on line 2.

investment company that distributed

Line 7a. Tax-exempt interest. Report any

exempt-interest dividends during the tax

tax-exempt interest received or accrued,

Line 3

year of the FSC.

including any exempt-interest dividends

Alternative minimum tax (AMT). Unless

Line 27. Adjustments to shareholders’

received as a shareholder in a mutual fund

the FSC is treated as a small corporation

equity. Some examples of adjustments to

or other regulated investment company.

exempt from the AMT, it may owe the AMT

report on this line include:

Also report this amount on line 2, Additional

•

if it has any of the adjustments and tax

Foreign currency translation adjustments.

Information, on page 2 of the form.

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the

United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to

figure and collect the right amount of tax. Section 6109 requires return preparers to provide their identifying numbers on the return.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form

displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may

become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as

required by section 6103.

The time needed to complete and file this form and related schedule will vary depending on individual circumstances. The estimated

average times are:

Learning about the

Preparing and sending the form

Form

Recordkeeping

law or the form

to the IRS

1120-FSC

94 hr., 13 min.

19 hr., 45 min.

38 hr., 56 min.

Sch. P (1120-FSC)

9 hr., 48 min.

1 hr., 29 min.

1 hr., 43 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and related schedule simpler,

we would be happy to hear from you. You may write to Internal Revenue Service, Tax Products Coordinating Committee,

SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6406, Washington, DC 20224. Do not send the tax form to this office. Instead, see

Where To File on page 4.

-12-

Instructions For Form 1120-Fsc - 2006 Page 12

Related Articles

Related forms

Related Categories