Shareholder'S Instructions For Schedule K-1 (Form 1120s)

You may also need Form 4255 if you

worksheet for Schedule D (Form 1040), line

less. If you qualify for the exclusion, report the

disposed of more than one-third of your stock

35, qualified 5-year gain from portfolio income.

exclusion amount in accordance with the

in the corporation.

Take into account any qualified 5-year gain

instructions on page 4 for line 1, 2, or 3,

14. Preproductive period farm expenses.

from section 1231 property when completing

whichever applies. See Form 8873,

You may elect to deduct these expenses

line 2 of that worksheet, as if it were included in

Extraterritorial Income Exclusion, for more

currently or capitalize them under section

Part I of Form 4797 (but only if line 7, column

information.

•

263A. See Pub. 225, Farmer’s Tax Guide, and

(g), of your Form 4797 is greater than zero).

Corporation claimed the exclusion. If the

Regulations section 1.263A-4 for more

22. Any information you need to figure the

corporation reports your pro rata share of

information.

interest due or to be refunded under the

foreign trading gross receipts but not the

15. Any information you need to figure the

look-back method of section 167(g)(2) for

amount of the extraterritorial income exclusion,

recapture of the new markets credit (see Form

certain property placed in service after

the corporation met the foreign economic

8874).

September 13, 1995, and depreciated under

process requirements and claimed the

16. Any information you need to figure

the income forecast method. Use Form 8866,

exclusion when figuring your pro rata share of

recapture of the qualified electric vehicle credit.

Interest Computation Under the Look-Back

corporate income. You also may need to know

See Pub. 535 for details, including how to

Method for Property Depreciated Under the

the amount of your pro rata share of foreign

figure the recapture.

Income Forecast Method, to report any such

trading gross receipts from this corporation to

17. Any information you need to figure your

interest.

determine if you met the $5 million or less

recapture of the Indian employment credit.

23. Amortizable basis of reforestation

exception discussed above for purposes of

Generally, if the corporation terminated a

expenditures and the year paid or incurred. To

qualifying for an extraterritorial income

qualified employee less than 1 year after the

figure your allowable amortization, including

exclusion from other sources.

date of initial employment, any Indian

limits that may apply, see section 194 and Pub.

Note: Upon request, the corporation should

employment credit allowed for a prior tax year

535. Follow the Instructions for Form 8582 to

furnish you a copy of the corporation’s Form

by reason of wages paid or incurred to that

report amortization allocable to a passive

8873 if there is a reduction for international

employee must be recaptured. For details, see

activity. Report amortization from a trade or

boycott operations, illegal bribes, kickbacks,

section 45A(d).

business activity in which you materially

etc.

18. Nonqualified withdrawals by the

participated on a separate line in Part II,

26. Commercial revitalization deduction

corporation from a capital construction fund

column (i), of Schedule E (Form 1040).

from rental real estate activities. Follow the

(CCF). These withdrawals are taxed separately

24. Any information you need to figure the

instructions for Form 8582 to determine how

from your other gross income at the highest

interest due under section 1260(b). If the

much of this deduction can be reported on

marginal ordinary income or capital gain tax

corporation had gain from certain constructive

Schedule E, Part II, column (f).

rate. Attach a statement to your Federal

ownership transactions, your tax liability must

27. Any information you need to complete a

income tax return to show your computation of

be increased by the interest charge on any

disclosure statement for reportable

both the tax and interest for a nonqualified

deferral of gain recognition under section

transactions in which the corporation

withdrawal. Include the tax and interest on

1260(b). If you are an individual, report the

participates. If the corporation participates in a

Form 1040, line 60. To the left of line 60, write

interest on Form 1040, line 60. Write “1260(b)”

transaction that must be disclosed on Form

the amount of tax and interest and “CCF.”

and the amount of the interest on the dotted

8886, Reportable Transaction Disclosure

19. Unrecaptured section 1250 gain.

line to the left of line 60. See section 1260(b)

Statement, both the corporation and its

Generally, report this amount on line 5 of the

for details, including how to figure the interest.

shareholders may be required to file Form

Unrecaptured Section 1250 Gain Worksheet

25. Extraterritorial income exclusion:

8886 for the transaction. The determination of

•

in the Schedule D (Form 1040) instructions.

Corporation did not claim the exclusion. If

whether you are required to disclose a

However, for an amount passed through from

the corporation reports your pro rata share of

transaction of the corporation is based on the

an estate, trust, real estate investment trust, or

foreign trading gross receipts and the

category(s) under which the transaction

regulated investment company, report it on line

extraterritorial income exclusion, the

qualifies for disclosure. See the instructions for

11 of that worksheet. Report on line 10 of that

corporation was not entitled to claim the

Form 8886 for details.

worksheet any gain from the corporation’s sale

exclusion because it did not meet the foreign

28. Any information you need to figure

or exchange of a partnership interest that is

economic process requirements. You may still

recapture of the credit for employer-provided

attributable to unrecaptured section 1250 gain.

qualify for your pro rata share of this exclusion

child care facilities and services (Form 8882).

20. Your share of any collectibles gain or

if the corporation’s foreign trading gross

29. Any other information you may need to

loss. Include this amount on line 4 of the

receipts for the tax year were $5 million or less.

file with your individual tax return that is not

worksheet for Schedule D (Form 1040), line

To qualify for this exclusion, your foreign

shown elsewhere on Schedule K-1.

20.

trading gross receipts from all sources for the

21. Any information you need to figure

tax year also must have been $5 million or

qualified 5-year gain. Include on line 5 of the

-8-

Instructions for Schedule K-1 (Form 1120S)

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Shareholder'S Instructions For Schedule K-1 (Form 1120s) - 2003 Page 8

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