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Item F —Initial Return, Final

transactions involving products or product

enter the result on line 1. If there is a

Return, Name Change, Address

lines, attach Schedule P (Form

difference between last year’s closing

1120-IC-DISC). Show in detail the

inventory and the refigured amount,

Change, or Amended Return

IC-DISC’s taxable income attributable to

attach an explanation and take it into

•

If this is the IC-DISC’s initial or final

each such transaction or group of

account when figuring the IC-DISC’s

return, check the applicable box in item F

transactions.

section 481(a) adjustment (explained on

at the top of the form.

page 7).

•

Line 8. Refundable Credit for

If the IC-DISC has changed its address

Line 4. Additional Section 263A

since it last filed a return, check the box

Federal Tax Paid on Fuels

for “Address change.”

Costs

Enter the credit from Form 4136.

Note. If a change in address occurs after

An entry is required on this line only for

Schedule A

the return is filed, use Form 8822-B,

IC-DISCs that have elected a simplified

Change of Address — Business, to notify

method of accounting.

Cost of Goods Sold

the IRS of the new address.

For IC-DISCs that have elected the

•

If the IC-DISC changed its name since

Generally, inventories are required at the

simplified production method, additional

it last filed a return, check the box for

beginning and end of each tax year if the

section 263A costs are generally those

“Name change.” Generally, an IC-DISC

purchase or sale of merchandise is an

costs, other than interest, that were not

also must have amended its articles of

income-producing factor. See Regulations

capitalized under the IC-DISC’s method

incorporation and filed the amendment

section 1.471-1.

of accounting immediately prior to the

with the state in which it was

effective date of section 263A but are now

However, if the IC-DISC is a qualifying

incorporated.

required to be capitalized under section

taxpayer or a qualifying small business

•

To correct an error on a Form

263A. For details, see Regulations

taxpayer, it can adopt or change its

1120-IC-DISC already filed, file an

section 1.263A-2(b).

accounting method to account for

amended Form 1120-IC-DISC and check

inventoriable items in the same manner

For IC-DISCs that have elected the

the “Amended return” box. If the amended

as materials and supplies that are not

simplified resale method, additional

return changes the income or distributions

incidental.

section 263A costs are generally those

of income to shareholders, an amended

costs incurred with respect to the

A qualifying taxpayer is a taxpayer

Schedule K (Form 1120-IC-DISC) must

following categories:

that, for each prior tax year ending after

be filed with the amended Form

•

Off-site storage or warehousing.

December 16, 1998, has average annual

1120-IC-DISC and given to each

•

Purchasing.

gross receipts of $1 million or less for the

shareholder. Write “AMENDED” across

•

Handling, such as processing,

3 prior tax years.

the top of the corrected Schedule K you

assembling, repackaging, and

give to each shareholder.

A qualifying small business

transporting.

taxpayer is a taxpayer (a) that, for each

Question G(1)

•

General and administrative costs

prior tax year ending on or after

(mixed service costs).

For rules of stock attribution, see section

December 31, 2000, has average annual

267(c). If the owner of the voting stock of

For details, see Regulations section

gross receipts of $10 million or less for

the IC-DISC was an alien individual or a

1.263A-3(d).

the 3 prior tax years and (b) whose

foreign corporation, partnership, trust, or

principal business activity is not an

Enter on line 4 the balance of section

estate, check the “Yes” box in the

ineligible activity.

263A costs paid or incurred during the tax

“Foreign owner” column and enter the

year not includible on lines 2, 3, and 5.

Under this accounting method,

name of the owner’s country, in

inventory costs for merchandise

Line 5. Other Costs

parentheses, in the address column.

purchased for resale are deductible in the

“Owner’s country” for individuals is their

Enter on line 5 any costs paid or incurred

year the merchandise is sold (but not

country of residence; for other foreign

during the tax year not entered on lines 2

before the year the IC-DISC paid for the

entities, it is the country in which

through 4.

merchandise, if it is also using the cash

organized or otherwise created, or in

method). For additional guidance on this

Line 7. Inventory at End of Year

which administered.

method of accounting for inventoriable

See Regulations sections 1.263A-1

Taxable Income

items, see Pub. 538.

through 1.263A-3 for details on figuring

An IC-DISC must figure its taxable

Enter amounts paid for merchandise

the amount of additional section 263A

income although it does not pay most

during the tax year on line 2. The amount

costs to be included in ending inventory. If

taxes. An IC-DISC is exempt from the

the IC-DISC may deduct for the tax year

the IC-DISC accounts for inventoriable

corporate income tax, alternative

is figured on line 8.

items in the same manner as materials

minimum tax, and accumulated earnings

and supplies that are not incidental, enter

All filers not using the cash method of

tax.

on line 7 the portion of its merchandise

accounting should see Section 263A

An IC-DISC may not claim the general

purchased for resale that is included on

uniform capitalization rules on page 8

business credit or the credit for fuel

line 6 and was not sold during the year.

before completing Schedule A.

produced from a nonconventional source.

If the IC-DISC uses intercompany

Lines 9a through 9f. Inventory

In addition, these credits may not be

pricing rules (for purchases from a related

Valuation Methods

passed through to shareholders of the

supplier), use the transfer price figured in

Inventories may be valued at:

corporation.

Part II of Schedule P (Form

•

Cost;

Line 6a. Net Operating Loss

1120-IC-DISC).

•

Cost or market value (whichever is

Deduction

If the IC-DISC acts as another

lower); or

person’s commission agent on a sale, do

•

The net operating loss deduction is the

Any other method approved by the IRS

not enter any amount in Schedule A for

amount of the net operating loss

that conforms to the requirements of the

the sale. See Schedule P (Form

carryover and carryback that may be

applicable regulations cited below.

1120-IC-DISC).

deducted in the tax year. See section 172

However, if the IC-DISC is using the

for details.

Line 1. Inventory at Beginning

cash method of accounting, it is required

Line 7. Taxable Income

of Year

to use cost.

If the IC-DISC uses either the gross

If the IC-DISC is changing its method of

IC-DISCs that account for

receipts method or combined taxable

accounting for the current tax year, it

inventoriable items in the same manner

income method to compute the IC-DISC’s

must refigure last year’s closing inventory

as materials and supplies that are not

taxable income attributable to any

using the new method of accounting and

incidental may currently deduct

-5-

Instructions for Form 1120-IC-DISC (Rev. 12-2011)

Instructions For Form 1120-Ic Disc - Interest Charge Domestic International Sales Corporation Return - 2011 Page 5

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