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Tax Rate Schedule

Exemption for small corporations. A fund is

the “Form(s)” box, write the form number in the

treated as a small corporation exempt from the

space provided, and include the allowable

If the investment company taxable income

AMT for its tax year beginning in 2002 if that

credit on line 4c.

(line 26, page 1) is:

year is the fund’s first tax year in existence

If the fund is required to file Form 3800,

(regardless of its gross receipts) or:

Of the

General Business Credit, check the “Form

But not

amount

1. It was treated as a small corporation

3800” box and include the allowable credit on

Over —

over —

Tax is:

over —

exempt from the AMT for all prior tax years

line 4c. If the fund is not required to file Form

beginning after 1997 and

3800, check the “Form(s)” box, write the form

$50,000

15%

2. Its average annual gross receipts for the

number in the space provided, and include on

3-tax-year period (or portion thereof during

50,000

75,000

$ 7,500 + 25%

50,000

line 4c the allowable credit from the applicable

which the fund was in existence) ending before

form listed below.

75,000

100,000

13,750 + 34%

75,000

•

its tax year beginning in 2002 did not exceed

Investment Credit (Form 3468).

100,000

335,000

22,250 + 39%

100,000

•

$7.5 million ($5 million if the fund had only 1

Work Opportunity Credit (Form 5884).

335,000

10,000,000

113,900 + 34%

335,000

•

prior tax year).

Credit for Alcohol Used as Fuel (Form 6478).

•

10,000,000

15,000,000

3,400,000 + 35% 10,000,000

Credit for Increasing Research Activities

15,000,000

18,333,333

5,150,000 + 38% 15,000,000

Line 3d

(Form 6765).

•

18,333,333

- - - - -

35%

Low-Income Housing Credit (Form 8586).

•

Deferred tax under section 1291. If the fund

Orphan Drug Credit (Form 8820).

was a shareholder in a passive foreign

•

2. A fund that is a personal holding

Disabled Access Credit (Form 8826).

investment company (PFIC), and the fund

•

company or that is not in compliance with

Enhanced Oil Recovery Credit (Form 8830).

•

received an excess distribution or disposed of

Regulations section 1.852-6 is taxed at a flat

Renewable Electricity Production Credit

its investment in the PFIC during the year, it

rate of 35% on its investment company taxable

(Form 8835).

must include the increase in taxes due under

•

income.

Indian Employment Credit (Form 8845).

•

section 1291(c)(2) in the total for line 3d,

Credit for Employer Social Security and

Schedule J. On the dotted line to the left of line

Medicare Taxes Paid on Certain Employee

Tax Computation Worksheet for Members

3d, Schedule J, write “Section 1291” and the

Tips (Form 8846).

•

of a Controlled Group (keep for your records)

amount.

Credit for Contributions to Selected

Do not include on line 3d any interest due

Community Development Corporations (Form

Note: Each member of a controlled group must compute the

under section 1291(c)(3). Instead, show the

8847).

tax on its investment company taxable income using this

•

amount of interest owed in the bottom margin

Welfare-to-Work Credit (Form 8861).

worksheet (except funds that are personal holding companies

•

or that are not in compliance with Regulations section 1.852-6,

of page 1, Form 1120-RIC, and write “Section

New Markets Credit (Form 8874).

•

see item 2 of Line 3a above.)

1291 interest.” For details, see Form 8621,

Credit for Small Employer Pension Plan

Return by a Shareholder of a Passive Foreign

Startup Costs (Form 8881).

1. Enter investment company taxable income

•

Investment Company or Qualified Electing

Credit for Employer-Provided Child Care

(line 26, page 1) . . . . . . . . . . . . . . . .

Fund.

Facilities and Services (Form 8882).

2. Enter line 1 or the fund’s share of the

Additional tax under section 197(f). A fund

$50,000 taxable income bracket, whichever

Line 4d –Credit for Prior

that elects to pay tax on the gain from the sale

is less . . . . . . . . . . . . . . . . . . . . . .

Year Minimum Tax

of an intangible under the related person

3. Subtract line 2 from line 1 . . . . . . . . . . .

exception to the anti-churning rules should

To figure the minimum tax credit and any

include any additional tax due under section

4. Enter line 3 or the fund’s share of the

carryforward of that credit, use Form 8827,

197(f)(9)(B) in the total for line 3d. On the

$25,000 taxable income bracket, whichever

Credit for Prior Year Minimum Tax —

is less . . . . . . . . . . . . . . . . . . . . . .

dotted line to the left of line 3d, write “Section

Corporations. Also see Form 8827 if any of the

197” and the amount. For more information,

fund’s 2001 nonconventional source fuel credit

5. Subtract line 4 from line 3 . . . . . . . . . . .

see Pub. 535.

or qualified electric vehicle credit was

6. Enter line 5 or the fund’s share of the

disallowed solely because of the tentative

Line 4a –Foreign Tax Credit

$9,925,000 taxable income bracket,

minimum tax limitation. See section 53(d).

whichever is less . . . . . . . . . . . . . . . .

To find out when a fund can take this credit for

payment of income tax to a foreign country or

Line 6 –Personal

7. Subtract line 6 from line 5 . . . . . . . . . . .

U.S. possession, see Form 1118, Foreign Tax

Holding Company Tax

8. Multiply line 2 by 15% . . . . . . . . . . . . .

Credit – Corporations. The fund may not claim

A fund is taxed as a personal holding company

this credit if an election under section 853 was

9. Multiply line 4 by 25% . . . . . . . . . . . . .

under section 542 if:

made for the tax year. See Item 10, Schedule

•

At least 60% of its adjusted ordinary gross

10. Multiply line 6 by 34% . . . . . . . . . . . . .

K, on page 12.

income for the tax year is personal holding

11. Multiply line 7 by 35% . . . . . . . . . . . . .

Line 4b

company income and

•

At any time during the last half of the tax

If the fund can take either of the following

12. If the taxable income of the controlled group

year more than 50% in value of its outstanding

exceeds $100,000, enter this member’s

credits, check the appropriate box(es) and

stock is owned, directly or indirectly, by five or

share of the smaller of: 5% of the taxable

include the amount of the credits in the total for

income in excess of $100,000, or $11,750.

fewer individuals.

line 4b.

(See the instructions for line 2b above.) . . .

See Schedule PH (Form 1120), U.S.

Nonconventional source fuel credit. A credit

Personal Holding Company (PHC) Tax, for

13. If the taxable income of the controlled group

is allowed for the sale of qualified fuels

definitions and details on how to figure the tax.

exceeds $15 million, enter this member’s

produced from a nonconventional source.

share of the smaller of 3% of the taxable

Section 29 contains a definition of qualified

income in excess of $15 million, or $100,000.

Line 7 –Other Taxes

(See the instructions for line 2b above.) . . .

fuels, provisions for figuring the credit, and

Include any of the following taxes and interest

other special rules. Attach a separate schedule

14. Total. Add lines 8 through 13. Enter here and

in the total on line 7. Check the appropriate

to the return showing the computation of the

on line 3a, Schedule J . . . . . . . . . . . . .

box(es) for the form, if any, used to compute

credit.

the total.

Qualified electric vehicle credit. Use Form

Line 3c – Alternative Minimum Tax

8834, Qualified Electric Vehicle Credit, if the

Recapture of Investment Credit

(AMT)

corporation can claim a credit for the purchase

If the fund disposed of investment credit

of a new qualified electric vehicle. Vehicles that

property or changed its use before the end of

Unless the fund is treated as a small

qualify for this credit are not eligible for the

its useful life or recovery period, it may owe a

corporation exempt from the AMT, it may owe

deduction for clean-fuel vehicles under section

tax. See Form 4255, Recapture of Investment

the AMT if it has any of the adjustments and

179A.

Credit.

tax preference items listed on Form 4626. The

fund must file Form 4626 if its investment

Line 4c –General Business Credit

Recapture of Low-Income Housing

company taxable income (or loss) and retained

Enter on line 4c the fund’s total general

Credit

capital gains not designated under section

business credit.

852(b)(3)(D) plus adjustments and tax

If the fund disposed of property (or there was a

preference items is more than the smaller of

If the fund is filing Form 8844,

reduction in the qualified basis of the property)

$40,000 or the fund’s allowable exemption

Empowerment Zone and Renewal Community

for which it took the low-income housing credit,

amount (from Form 4626). Get Form 4626 for

Employment Credit, or Form 8884, New York

it may owe a tax. See Form 8611, Recapture

details.

Liberty Zone Business Employee Credit, check

of Low-Income Housing Credit.

-10-

Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2002 Page 10

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