Form 0405-611 - 2006 Alaska Corporation Net Income Tax Return Instructions Page 8
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10FORM 0405-611 - 2006 ALASKA CORPORATION NET INCOME TAX RETURN
INSTRUCTIONS
Line 2(d): Remove the income or loss of companies included
Lines 1(c) and 1(d): Alaska does not allow credits for backup
in line 1 that are not included in the unitary business of the
withholding, credit for employer social security and medicare
taxpayer(s). You must attach a schedule, by company.
taxes paid on certain employee tips, and the trans-Alaska
pipeline liability fund credit. See 15 AAC 20.145(e).
Line 2(e): Remove the income or loss of companies included in
line 1 that are part of the taxpayer’s unitary business but whose
Line 1(e): If line 1(a) includes credits from an electing large
U. S. factors are less than 20%. You must attach a schedule,
partnership (Part 1 of Federal Form 3800), taxpayers must
by-company.
remove credits that Alaska does not adopt.
Line 2(f): Enter the adjustment for intercompany transactions
SCHEDULE G - ALASKA EDUCATION CREDIT
that are necessary to reflect the combined income of the
Subject to the limitations below, a taxpayer is allowed a credit
water’s edge group.
The incomes of the companies
for cash contributions accepted for direct instruction, research,
represented in lines 1 through 2(e) may or may not include
and educational support purposes including library and
adjustments to, or the elimination of, intercompany profits as
museum acquisitions. Contributions accepted for endowment
required under the combined method of reporting.
An
purposes are also eligible for the credit. The contribution must
intercompany transaction of a federal consolidated group may
be given to a regionally accredited, non-profit, two or four-year
not be an intercompany transaction of the water’s edge group.
Alaska college or university.
This may include the reversal of a consolidating elimination or
adjustment from the consolidated federal return, the initiation of
The Education Credit is limited to 50% of the first $100,000 of
an elimination, or adjustment for inter-group transactions that
contributions and 100% of the next $100,000 of contributions.
are not reflected in the income reported on lines 1 or 2(a)-(e), or
a combination of the two.
The total contributions qualifying for the credit (line 1 of
Schedule G) cannot be claimed as a charitable contribution
Alaska regulations provide that intercompany transactions
deduction.
Contributions claimed as a credit on this return
between any two members of the combined group, if those two
cannot be claimed as a credit for other Alaska taxes.
members join in a consolidated federal return, must be
accounted for in the combined report in the same manner as
SCHEDULE H - COMPUTATION OF ALASKA
the transaction is accounted for in the consolidated federal
return. Refer to Alaska regulation 15 AAC 20.300(m).
INCOME (Form 0405-611 only)
Line 1: Enter the income or (loss) from line 28 of the federal
The most common adjustment is for intercompany profits
income tax return of the taxpayer. This should agree to the
residing in beginning and ending inventory. Reverse end-of-
federal return required to be attached to the Alaska return.
year intercompany profit eliminations between corporations
Taxpayers included in a consolidated federal return should
within and outside of the water’s edge group to the extent they
enter line 28 of the federal consolidated return here on line 1.
are included in the measure of income reported on lines 1
through 2(e). Reverse beginning-of-year intercompany profits
If the taxpayer is not affiliated with another corporation, skip line
on transactions between corporations within the water’s edge
two and enter the amount from line 1 on line 3.
combined group to the extent they were not reversed in the
measure of income reported on lines 1 through 2(e).
Line 2: Taxpayers using the combined method of reporting
(water’s edge taxpayers) must complete line 2. Line two of
Line 6(b): Enter the dividends between members of the Water’s
Schedule H reports the income of the corporations that are
Edge Combined group that are included as income within Line
added to or removed from those included in line 1 to arrive at
3 above. Do not eliminate dividends between members of a
the net income before modifications of the water’s edge group.
federal consolidated group that were eliminated in the federal
Skip directly to line 3 if the taxpayer is not required to use the
consolidated return.
combined method of reporting.
Examples of returns based
upon combined reporting, including consolidated returns, are
Line 6(f): Enter any non-business income or loss claimed and
presented in Alaska’s GUIDE TO RETURNS BASED ON A
COMBINED REPORT.
attach detailed schedules by category of income.
Line 10: Enter non-business income or loss allocated to Alaska
Line 2(a): Enter the amount reported on line 28 of the federal
and attach detailed schedules by category of income.
tax return(s) of all domestic corporations that are members of
the taxpayer’s water’s edge group which are not included in line
Line 11(a): Enter the taxpayer’s Alaska capital gain net income
1. You must attach a schedule, by-company.
and Section 1231 gains and losses from Schedule J, line 20.
Line 2(b): Enter the income of unitary foreign corporations of
Line 11(b): Enter the taxpayer’s Alaska charitable contribution
the water’s edge group. Include any foreign corporation with
deduction from Schedule K, line 10.
20% or greater U.S. factors. You must attach a schedule, by
company.
Line 11(c):
Enter the taxpayer’s Alaska dividends-received
deduction from Schedule L, line 9.
Line 2(c): Include the federal extraterritorial income exclusion
from federal Form 8873. Enter the foreign sales corporation’s
profit including federally exempt foreign trade income and
SCHEDULE I APPORTIONMENT FACTOR
allowing for deductions attributable to exempt foreign trade
(Form 0405-611 only)
income. Also report DISC and foreign tax haven corporation
Schedule I must be completed by taxpayers with business
net income here.
activity both within and outside of Alaska. If all business activity
is within Alaska, skip lines 1-4 and enter 1.0 on line 5.
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