Instructions For Form 1120-Sf - U.s. Income Tax Return For Settlement Funds

Line 3. Capital gain net income. Every

fund owes a penalty and to figure the

Specific Instructions

sale or exchange of a capital asset must be

amount of the penalty. Generally, the fund

reported in detail on Schedule D (Form

does not have to file this form because the

1120), Capital Gains and Losses, even if

IRS can figure the amount of any penalty

Period Covered

there is no gain or loss.

and bill the fund for it. See Form 2220 for

other information that may apply.

Line 5. Other income. Enter any other

A designated or qualified settlement fund’s

tax year is the calendar year.

taxable income not reported on lines 1

If Form 2220 is attached, check the box

through 4. List the type and amount of

on line 17 and enter the amount of any

Address

income on an attached schedule. If the fund

penalty on that line.

has only one item of other income, describe

Include the suite, room, or other unit number

Paperwork Reduction Act Notice. We

it in parentheses on the dotted line next to

after the street address. If the Post Office

ask for the information on this form to carry

the entry space for line 5.

does not deliver mail to the street address

out the Internal Revenue laws of the United

and the fund or the administrator has a P.O.

Deductions

States. You are required to give us the

box, show the box number instead.

information. We need it to ensure that you

Do not deduct:

•

are complying with these laws and to allow

Employer Identification

Expenses allocable to tax-exempt income

us to figure and collect the right amount of

(see section 265);

Number (EIN)

•

tax.

Payments of claims made by the fund;

and

You are not required to provide the

Enter the fund’s EIN. If the fund does not

•

Expenses incurred by, or on behalf of,

information requested on a form that is

have an EIN, it must apply for one. An EIN

subject to the Paperwork Reduction Act

claimants or transferors.

may be applied for online, by telephone, by

unless the form displays a valid OMB control

Line 11. Other deductions. Enter the total

fax, or by mail, depending on how soon the

number. Books or records relating to a form

of other deductions not entered on lines 7

fund needs to use the EIN. Use Form SS-4,

or its instructions must be retained as long

through 10. List the type and amount of

Application for Employer Identification

as their contents may become material in

deduction on an attached schedule. If the

Number.

the administration of any Internal Revenue

fund has only one item of other deduction,

If the fund has not received its EIN by the

law. Generally, tax returns and return

describe it in parentheses on the dotted line

time the return is due, write “Applied for” in

information are confidential, as required by

next to the entry space for line 11.

the space for the EIN. For more details, see

section 6103.

Line 12. Net operating loss deduction

the Instructions for Form SS-4.

The time needed to complete and file this

(NOL). Enter the total NOL carryovers from

form will vary depending on individual

Final Return, Name

prior tax years, but do not enter more than

circumstances. The estimated average time

the fund’s taxable income. See Regulations

Change, Address Change,

is:

section 1.468B-2(b)(4) for details.

or Amended Return

Part II. Tax Computation

Recordkeeping . . . . . . . . .

18 hr., 24 min.

Indicate a final return, name change,

Line 14. Modified gross income. Modified

Learning about the law or the

address change, or amended return by

gross income of a designated or qualified

form . . . . . . . . . . . . . . . . .

2 hr., 49 min.

checking the appropriate box. If a change in

settlement fund is its gross income, as

address occurs after the return is filed, use

defined in section 61, computed with certain

Preparing the form . . . . . . .

5 hr., 6 min.

Form 8822, Change of Address, to notify the

modifications. See Regulations section

IRS of the new address.

1.468B-2(b) for more information.

Copying, assembling, and

Part I. Income and

Line 16. Credits and payments.

sending the form to the IRS

32 min.

Generally, no credits or payments are

Deductions

If you have comments concerning the

allowed other than those on lines 16a

accuracy of these time estimates or

through 16e.

suggestions for making this form simpler, we

Income

Line 17. Estimated tax penalty. A fund

would be happy to hear from you. You can

that does not make estimated tax payments

Note. Amounts transferred to the fund by

write to the Internal Revenue Service, Tax

when due may be subject to an

or on behalf of a transferor are generally

Products Coordinating Committee,

underpayment penalty for the period of

excluded from income.

SE:W:CAR:MP:T:M:S, 1111 Constitution

underpayment. Generally, a fund is subject

Line 1. Taxable interest. Enter total

Ave., NW, IR-6526, Washington, DC 20224.

to the penalty if its tax liability is $500 or

taxable interest received or accrued during

Do not send the tax form to this address.

more and it did not timely pay the smaller of:

the tax year, including original issue

•

Instead, see Where To File, earlier.

Its current year tax liability or

discount. Do not include any tax-exempt

•

Its prior year’s tax.

interest. Do not offset interest expense

See section 6655 for details and exceptions,

against interest income.

including special rules for large funds.

Note. Report tax-exempt interest on line 2

Use Form 2220, Underpayment of

of Additional Information (on page 2 of Form

Estimated Tax by Corporations, to see if the

1120-SF).

-4-

Instructions For Form 1120-Sf - U.s. Income Tax Return For Settlement Funds - 2011 Page 4

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