Form 1120-Ric - Instructions Income Tax - 2001 (Page 8 of 12) in pdf

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substantially completed the construction of the

His or her travel is for a bona fide business

engaged in any activity as a trade or business

property;

purpose and would otherwise be deductible by

or for the production of income. These funds

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The original use of the property is by the

that individual.

may have to adjust the amount on line 24.

donor or the donee;

Meals and entertainment. Generally, the

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The at-risk rules do not apply to:

The property is not transferred by the donee

fund can deduct only 50% of the amount

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Holding real property placed in service by

for money, services, or other property, except

otherwise allowable for meals and

the fund before 1987;

for shipping, transfer, and installation costs;

entertainment expenses paid or incurred in its

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Equipment leasing under sections 465(c)(4),

The property fits productively into the

trade or business. In addition (subject to

(5), and (6); and

donee’s education plan; and

exceptions under section 274(k)(2)):

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Any qualifying business of a qualified

The property meets standards, if any, that

Meals must not be lavish or extravagant;

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corporation under section 465(c)(7).

may be prescribed by future regulations, to

A bona fide business discussion must occur

However, the at-risk rules do apply to the

assure it meets minimum functionality and

during, immediately before, or immediately

holding of mineral property. For more

suitability for educational purposes.

after the meal; and

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information, see section 465 and Form 6198,

An employee of the fund must be present at

Eligible donee. The term “eligible donee”

At-Risk Limitations.

the meal.

means:

See section 274(n)(3) for a special rule that

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An educational organization that normally

Tax and Payments

applies to expenses for meals consumed by

maintains a regular faculty and curriculum and

individuals subject to the hours of service limits

has a regularly enrolled body of pupils in

of the Department of Transportation.

Line 28b– Estimated Tax Payments

attendance at the place where its educational

Membership dues. The fund may deduct

activities are regularly conducted,

Enter any estimated tax payments the fund

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A section 501(c)(3) entity organized primarily

amounts paid or incurred for membership dues

made for the tax year.

for purposes of supporting elementary and

in civic or public service organizations,

professional organizations (such as bar and

Line 28f–Credit for Tax Paid on

secondary education, or

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A public library (as described in section

medical associations), business leagues, trade

Undistributed Capital Gains

170(e)(6)(B)(i)(lll)).

associations, chambers of commerce, boards

Enter the credit (from Form 2439, Notice to

of trade, and real estate boards. However, no

Exceptions. The following exceptions

Shareholder of Undistributed Long-Term

deduction is allowed if a principal purpose of

apply to the above rules for computer

Capital Gains), for the fund’s share of the tax

the organization is to entertain, or provide

technology and equipment:

paid by another RIC or a REIT on undistributed

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entertainment facilities for, members or their

Contributions to private foundations may

long-term capital gains included in the fund’s

guests. In addition, funds may not deduct

qualify if the foundation contributes the

income. Attach Form 2439 to Form 1120-RIC.

membership dues in any club organized for

property to an eligible donee within 30 days

business, pleasure, recreation, or other social

after the contribution and notifies the donor of

Line 28g– Credit for

purpose. This includes country clubs, golf and

the contribution. For more details, see section

Federal Tax on Fuels

athletic clubs, airline and hotel clubs, and clubs

170(e)(6)(C).

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operated to provide means under conditions

For contributions of property reacquired by

Complete and attach Form 4136, Credit for

favorable to business discussion.

the manufacturer of the property, the 3 year

Federal Tax Paid on Fuels, if the fund qualifies

period begins on the date that the original

to take this credit.

Entertainment facilities. The fund cannot

construction of the property was substantially

deduct an expense paid or incurred for a

completed. Also, the original use of the

Line 28h

facility (such as a yacht or hunting lodge) used

property may be by someone other than the

for an activity usually considered

Add the amounts on lines 28d through 28g and

donor or the donee.

entertainment, amusement, or recreation.

enter the total on line 28h.

Pension, profit-sharing, etc., plans. Also

Note: The fund may be able to deduct

Backup withholding. If the fund had income

include on line 22 the deduction for

otherwise nondeductible meals, travel, and

tax withheld from any payments it received,

contributions to qualified pension,

entertainment expenses if the amounts are

because, for example, it failed to give the payer

profit-sharing, or other funded-deferred

treated as compensation and reported on Form

its correct EIN, include the amount withheld in

compensation plans. Employers who maintain

W-2 for an employee or on Form 1099-MISC

the total for line 28h. This type of withholding is

such a plan generally must file one of the forms

for an independent contractor.

called “Backup Withholding.” Show the amount

listed below, even if the plan is not a qualified

withheld in the blank space in the right-hand

Deduction for clean-fuel vehicles and

plan under the Internal Revenue Code. The

column between lines 27 and 28h, and write

certain refueling property. Section 179A

filing requirement applies even if the fund does

“Backup Withholding.”

allows a deduction for part of the cost of

not claim a deduction for the current tax year.

qualified clean-fuel vehicle property and

There are penalties for failure to file these

Line 29– Estimated Tax Penalty

qualified clean-fuel vehicle refueling property

forms on time and for overstating the pension

placed in service during the tax year. For more

plan deduction. See sections 6652(e) and

A fund that does not make estimated tax

information, see Pub. 535, Business

6662(f).

payments when due may be subject to an

Expenses.

underpayment penalty for the period of

Form 5500, Annual Return/Report of

underpayment. Generally, a fund is subject to

Lobbying expenses. Generally, lobbying

Employee Benefit Plan. File this form for a plan

the penalty if its tax liability is $500 or more

that is not a one-participant plan (see below).

expenses are not deductible. These expenses

and it did not timely pay the smaller of:

include:

Form 5500-EZ, Annual Return of

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100% of its alternative minimum tax minus

Amounts paid or incurred in connection with

One-Participant (Owners and Their Spouses)

the credit for Federal tax paid on fuels for 2001

influencing Federal or state legislation (but not

Retirement Plan. File this form for a plan that

as shown on the return or

local legislation) or

only covers the owner (or the owner and his or

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100% of its prior year’s tax.

Amounts paid or incurred in connection with

her spouse) but only if the owner (or the owner

See section 6655 for details and exceptions,

any communication with certain Federal

and his or her spouse) owns the entire

including special rules for large corporations.

executive branch officials in an attempt to

business.

Use Form 2220, Underpayment of

influence the official actions or positions of the

Travel, meals, and entertainment. Subject to

Estimated Tax by Corporations, to see if the

officials. See Regulations section 1.162-29 for

the limitations and restrictions discussed

fund owes a penalty and to figure the amount

the definition of “influencing legislation.”

below, the fund can deduct ordinary and

of the penalty. Generally, the fund does not

Dues and other similar amounts paid to

necessary travel, meals, and entertainment

have to file this form because the IRS can

certain tax-exempt organizations may not be

expenses paid or incurred in its trade or

figure the amount of any penalty and bill the

deductible. See section 162(e)(3). If certain

business. Also, special rules apply to

fund for it. However, even if the fund does not

in-house lobbying expenditures do not exceed

deductions for gifts, skybox rentals, luxury

owe the penalty, the fund must complete and

$2,000, they are deductible. For information on

water travel, convention expenses, and

attach Form 2220 if:

contributions to charitable organizations that

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entertainment tickets. For details, see section

The annualized income or adjusted seasonal

conduct lobbying activities, see the instructions

274 and Pub. 463.

installment method is used or

on page 7. For more information on lobbying

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Travel. The fund cannot deduct travel

The fund is a large corporation computing its

expenses, see section 162(e).

expenses of any individual accompanying a

first required installment based on the prior

corporate officer or employee, including a

Line 24– Taxable Income Before

year’s tax. See the Instructions for Form 2220

spouse or dependent of the officer or

for the definition of a large corporation.

Deduction for Dividends Paid

employee, unless:

If Form 2220 is attached, check the box on

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That individual is an employee of the

At-risk rules. Generally, special at-risk rules

line 29, page 1, Form 1120-RIC, and enter the

corporation and

under section 465 apply to closely held funds

amount of any penalty on this line.

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Form 1120-Ric - Instructions Income Tax - 2001 Page 8

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