Form 0405-611 - 2006 Alaska Corporation Net Income Tax Return Instructions (Page 9 of 10) in pdf

FORM 0405-611 - 2006 ALASKA CORPORATION NET INCOME TAX RETURN

INSTRUCTIONS

Taxpayers using the combined method of reporting are required

and 11 and enter non-business capital gain or loss on lines 6

to include a schedule of the combined apportionment formula in

and 12 as appropriate. Enter the portion of non-business gain

columnar format disclosing for each corporation the total

or loss that is allocable to Alaska on lines 8 and 14 as

property, payroll, and sales and the amount of Alaska property,

appropriate.

Taxpayers using the combined method of

payroll, and sales.

reporting should report the gains and losses of the entire

combined group.

Divide the Alaska factor values in column A by the everywhere

factor values in column B and enter the result in column C for

Line 2. The taxpayer’s non-recaptured net Section 1231 losses

lines 1, 2, and 3. Add column C lines 1, 2, and 3 and enter the

are based upon the apportioned Section 1231 gains and losses

result on line 4.

Divide line 4 by the number of applicable

in prior years and may not correspond to the taxpayer’s federal

factors (usually 3) and enter the result on line 5. All factor

non-recaptured net Section 1231 losses.

calculations (lines 1 – 5) should be rounded to the sixth decimal

place. If both the numerator and denominator (columns A and

Line 9. The Alaska capital loss carryover is the taxpayer’s

B) of a factor are zero, disregard that factor and divide line 4 by

allocated and apportioned net capital losses from prior years.

the remaining number of factors and enter the result on line 5.

Do not enter the taxpayer’s federal capital loss carryover from

federal Schedule D.

Property Factor: See 15 AAC 19.141-202.

The property factor is a fraction, the numerator of which is the

Line 17. If line 10 is a gain and line 16 is a loss, offset the loss

value of real and tangible personal property owned or rented

from line 16 against the gain from line 10 and enter the result,

and used within Alaska during the tax year to produce business

but not less than zero.

income. The denominator is the value of all real and tangible

personal property owned or rented and used to generate

Line 18. If line 16 is a gain and line 10 is a loss, offset the loss

business income.

from line 10 against the gain from line 16 and enter the result,

but not less than zero. This is the taxpayer’s net capital gain.

Property used in the production of non-business income is not

Enter the taxpayer’s net capital gain on line 2A of Schedule D.

included in the factor. Construction in progress is not included

in the factor.

Line 20. Add lines 17, 18, and 19 and enter the result on

Schedule H, line 11(a).

Owned property is valued at its original cost averaged over the

tax year. In general, original cost is the unadjusted basis for

SCHEDULE K – ALASKA CHARITABLE

federal income tax purposes at the time of acquisition adjusted

CONTRIBUTION DEDUCTION

by subsequent additions, improvements, or partial dispositions.

The taxpayer’s Alaska charitable contribution deduction may

The average value of owned property is computed by averaging

differ from its federal charitable contribution deduction as a

the property values at the beginning and end of the tax year.

result of allocation and apportionment, the 10% taxable income

Rented property is valued at eight times the annual rents paid.

limitation,

Alaska

Education

Credit

contributions,

and

differences in carryover values.

Schedule K is used to

Payroll Factor: See 15 AAC 19.211-241.

measure

the

taxpayer’s

Alaska

charitable

contribution

The payroll factor is a fraction, the numerator of which is the

deduction limited by its Alaska taxable income. Enter on line 1

compensation paid within Alaska during the tax year to produce

the taxpayer’s current charitable contributions before any

business income. The denominator is the total compensation

federal deduction limitations and exclusive of any federal

paid during the tax year to produce business income.

excess contribution carryover.

Enter the taxpayer’s Alaska

excess contribution carryover from prior years on line 6. Take

The term “compensation” means wages, salaries, commissions

the allowable charitable contribution deduction from line 10 to

and any other form of remuneration paid directly to employees

Schedule H, line 11(b).

for personal services.

Payments made to an independent

contractor, or to any person not properly classified as an

SCHEDULE L – ALASKA DIVIDENDS-RECEIVED

employee, are excluded.

DEDUCTION

The Alaska dividends-received deduction is based upon the

Sales Factor: See 15 AAC 19.251-302.

allocated and apportioned dividends included in Alaska taxable

The sales factor is a fraction, the numerator of which is the

income and may be limited to Alaska taxable income.

gross receipts derived during the tax year from transactions and

Taxpayers with non-business dividend income or who use the

activities attributable to Alaska in the regular course of the

combined method of reporting must take extra care in

taxpayer’s trade or business.

The denominator is the total

determining their dividends-received deduction.

Alaska does

gross receipts derived during the tax year from transactions and

not allow the 85% deduction under Internal Revenue Code

activities in the regular course of the corporation’s trade or

Section 965.

business.

Lines 8 and 9. Enter the allocated and apportioned dividends

SCHEDULE J – ALASKA CAPITAL AND SECTION

from line 7, according to the appropriate deduction percentage

1231 GAINS AND LOSSES

in accordance with Internal Revenue Code Sections 243 – 247,

(Form 0405-611 only)

in column A of line 8 and multiply across. Enter the sum of line

Schedule J is used to calculate the taxpayer’s Alaska net

8a-d column C in line 9 and carry the deduction, subject to

capital gain, capital gain net income, and ordinary net Section

limitation based upon Alaska taxable income (Internal Revenue

1231 gain or loss. These gains and losses are measured after

Code Section 246), to Schedule H line 11(c).

allocation and apportionment.

Enter the taxpayer’s current

gains and losses, before any federal limitations, according to

SHORT FORM 0405-611SF

their character. Corporations that conduct business both within

and without Alaska enter total gains and losses on lines 1, 5,

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Form 0405-611 - 2006 Alaska Corporation Net Income Tax Return Instructions Page 9

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