Instructions For Form 3307 - Sbt Loss Adjustment Worksheet For The Small Business Credit

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INSTRUCTIONS FOR LOSS ADJUSTMENT WORKSHEET
Purpose: To adjust your adjusted business income to
the total loss available for the current year on line 13
qualify for the small business credit or minimize the
does not equal or exceed the loss adjustment required
reduction percentage required.
on line 9, you may still calculate a lesser loss
adjustment to enable you to claim a reduced credit.
If your adjusted business income was less than zero
in any of the five years immediately preceding the tax
You may have to try the calculation more than once.
year for which you are claiming a credit, and you
Substitute the numbers, shown on the chart below, on
received a small business credit for that same year,
line 5 in order to maximize your claimed small
you may adjust for the loss before you figure your
business credit:
eligibility for the small business credit. A loss
Line 5
Eligible % of credit
adjustment will not help you if your gross receipts
$95,000
100% - no reduction
exceed $10 million or if a shareholder or officer of a
$99,999
80%
C-corporation has compensation alone that exceeds
$104,999
60%
$95,000.
$109,999
40%
Part 1: Current Year Amounts
$115,000
20%
Use this part to determine the amount of loss adjust-
The SBT loss adjustment worksheet is structured for
ment necessary to qualify for the small business credit.
corporations. To use it for a partnership or individual, make
If you are not eligible for the credit because your
these changes.
adjusted business income exceeds $475,000, complete
• Individuals. In Part 1, replace the disqualifier amount on line
lines 1 through 3.
2 with $115,000.
• Partnerships. Enter on line 6 any guaranteed payments made
If you are not eligible because you have a
to the partner creating a $115,000 disqualifier. On line 8,
shareholder whose allocated income exceeds $95,000
divide by the percentage of ownership from the C-8000KP,
for tax years beginning before January 1, 1998 or
col. D.
$115,000 for tax years beginning after December 31,
• Controlled Groups. A member of a controlled group may
1997, or a partner with distributive income that
use this form for the shareholder compensation disqualifier
exceeds $95,000 for tax years beginning before
(lines 4 through 9). But the business income disqualifier must
be calculated on a consolidated basis. Substitute consolidated
January 1, 1998 or $115,000 for tax years beginning
figures for lines 1- 3 and lines 10 - 15.
after December 31, 1997, complete lines 4 through 9
Note: Please see "new" instructions if you are attempting to
for the shareholder or partner creating the disqualifier.
minimize the reduction percentage required.
You may have to calculate both if you have more
than one disqualifier. Complete lines 4 through 9 for
each shareholder or partner who creates a disqualifier.
Part 2: Available Loss
The loss adjustment required is the amount needed to
Use this section to determine the loss available from
eliminate all disqualifiers.
the five preceding years.
New: Reduced small business credit. P.A. 284 of
Line 10. Enter 'Y' under each year that a small
1995 requires, for tax years beginning after December
business credit was received.
31, 1997, a reduction to the small business credit if an
Line 11. Enter the adjusted business income from
individual, a partner in a partnership or shareholder or
C-8000C, line 9 for each tax year that reported a loss.
officer of a corporation has allocated income after loss
Report the loss in brackets.
adjustment between $95,000 and $115,000.
Lines 12 - 15. Continue to fill out each year's column
Complete lines 4 through 9 for the shareholder or
only if you entered a Y on line 10 and the adjusted
partner creating the need to reduce the small business
business income reported on line 11 was a loss.
credit.
Note: To benefit from a loss adjustment, the total
The loss adjustment worksheet should always be
loss available for the current year, line 13, must equal
calculated initially using $95,000 on line 5. This
or exceed the loss adjustment required on line 14.
calculation will establish your eligibility without the
need to reduce the small business credit. However, if
Keep a copy of this worksheet for your records.
26

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