Instructions For Form 1120-Ic Disc - Interest Charge Domestic International Sales Corporation Return - 2011

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Instructions for
Department of the Treasury
Internal Revenue Service
Form 1120-IC-DISC
(Rev. December 2011)
Interest Charge Domestic International
Sales Corporation Return
Information about any future
conforms to that of any one of the
Section references are to the Internal
developments affecting Form
principal shareholders. See section
Revenue Code unless otherwise noted.
1120-IC-DISC (such as legislation
441(h) and its regulations for more
Contents
Page
enacted after we release it) will be posted
information.
General Instructions . . . . . . . . . . . . . 1
on that page.
Its election to be treated as an IC-DISC
Purpose of Form . . . . . . . . . . . . . . . . 1
is in effect for the tax year.
Who Must File . . . . . . . . . . . . . . . . . . 1
See Definitions on page 3 and section
When To File . . . . . . . . . . . . . . . . . . . 2
General Instructions
992 and related regulations for details.
Where To File . . . . . . . . . . . . . . . . . . 2
Who Must Sign . . . . . . . . . . . . . . . . . 2
Distribution to meet qualification
Purpose of Form
Other Forms and Statements
requirements.
That May Be Required . . . . . . . . . . 2
Form 1120-IC-DISC is an information
An IC-DISC that does not meet the
return filed by interest charge domestic
Assembling the Return . . . . . . . . . . . . 2
gross receipts test or qualified export
international sales corporations
Accounting Methods . . . . . . . . . . . . . . 2
asset test during the tax year will still be
(IC-DISCs), former DISCs, and former
considered to have met them if, after the
Accounting Periods . . . . . . . . . . . . . . 3
IC-DISCs.
tax year ends, the IC-DISC makes a pro
Rounding Off to Whole Dollars . . . . . . 3
rata property distribution to its
Recordkeeping . . . . . . . . . . . . . . . . . . 3
What Is an IC-DISC?
shareholders and specifies at the time
Definitions . . . . . . . . . . . . . . . . . . . . . 3
An IC-DISC is a domestic corporation that
that this is a distribution to meet the
Penalties . . . . . . . . . . . . . . . . . . . . . . 4
has elected to be an IC-DISC and its
qualification requirements.
Specific Instructions . . . . . . . . . . . . 4
election is still in effect. The IC-DISC
If the IC-DISC did not meet the gross
Taxable Income . . . . . . . . . . . . . . . . . 5
election is made by filing Form 4876-A,
receipts test, the distribution equals the
Schedule A — Cost of Goods
Election To Be Treated as an Interest
part of its taxable income attributable to
Sold . . . . . . . . . . . . . . . . . . . . . . . . 5
Charge DISC.
gross receipts that are not qualified export
Schedule B — Gross Income . . . . . . . . 6
gross receipts.
Generally, an IC-DISC is not taxed on
Schedule C — Dividends and
If it did not meet the qualified export
its income. Shareholders of an IC-DISC
Dividends-Received Deduction . . . . 7
asset test, the distribution equals the fair
are taxed on its income when the income
market value of the assets that are not
Schedule E — Deductions . . . . . . . . . . 8
is actually (or deemed) distributed. In
qualified export assets on the last day of
Schedule J — Deemed and
addition, section 995(f) imposes an
the tax year.
Actual Distributions and
interest charge on shareholders for their
If the IC-DISC did not meet either test,
Deferred DISC Income for the
share of DISC-related deferred tax
the distribution equals the sum of both
Tax Year . . . . . . . . . . . . . . . . . . . 10
liability. See Form 8404, Interest Charge
amounts.
Schedule K — Shareholder’s
on DISC-Related Deferred Tax Liability,
Statement of IC-DISC
for details.
Regulations section 1.992-3 explains
Distributions . . . . . . . . . . . . . . . . . 11
how to figure the distribution.
To be an IC-DISC, a corporation must
Schedule L — Balance Sheets
be organized under the laws of a state or
Interest on late distribution. If the
per Books . . . . . . . . . . . . . . . . . . 11
the District of Columbia and meet the
IC-DISC makes a distribution after Form
Schedule N — Export Gross
following tests.
1120-IC-DISC is due, interest must be
Receipts of the IC-DISC and
At least 95% of its gross receipts during
paid to the United States Treasury. The
Related U.S. Persons . . . . . . . . . . 11
the tax year are qualified export receipts.
interest charge is 4
/
% of the distribution
1
2
Schedule O — Other Information
. . . 12
At the end of the tax year, the adjusted
times the number of tax years that begin
basis of its qualified export assets is at
Schedule P — Intercompany
after the tax year to which the distribution
least 95% of the sum of the adjusted
Transfer Price or Commission
. . . 12
relates until the date the IC-DISC made
basis of all of its assets.
Codes for Principal Business
the distribution.
It has only one class of stock, and its
Activity . . . . . . . . . . . . . . . . . . . . . 13
If the IC-DISC must pay this interest,
outstanding stock has a par or stated
Schedule N Product Code
send the payment to the Internal Revenue
value of at least $2,500 on each day of
System . . . . . . . . . . . . . . . . . . . . 14
Service Center where you filed Form
the tax year (or, for a new corporation, on
1120-IC-DISC within 30 days of making
the last day to elect IC-DISC status for
What’s New
the distribution. On the payment, write the
the year and on each later day).
IC-DISC’s name, address, and employer
It maintains separate books and
identification number; the tax year; and a
Form 8822-B, Change of Address —
records.
statement that the payment represents
Business, has been created specifically
It is not a member of any controlled
the interest charge under Regulations
for business use. A corporation uses this
group of which a foreign sales corporation
section 1.992-3(c)(4).
form to notify the IRS of its new business
(FSC) is a member.
address or location. See Item F under
Its tax year must conform to the tax
Who Must File
Specific Instructions.
year of the principal shareholder who has
The IRS has created a page on
the highest percentage of voting power. If
The corporation must file Form
IRS.gov that includes information about
two or more shareholders have the
1120-IC-DISC if it elected, by filing Form
Form 1120-IC-DISC and its instructions,
highest percentage of voting power, the
4876-A, to be treated as an IC-DISC and
at
IC-DISC must elect a tax year that
its election is in effect for the tax year.
Jan 20, 2012
Cat. No. 11476W

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