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as appropriate. Also sign the form at

needed. On the additional Forms 8697,

amounts in the columns for the affected

the bottom of page 2 if interest is to be

enter your name, identifying number,

years so that the net adjustment shown

refunded to you. A signature is not

and tax year. Complete lines 1 through

in each column on the attached

required if you are filing the form with

8 (as applicable), but do not enter totals

schedule agrees with the amounts

your tax return.

in column (c). Enter totals only in

shown on line 2.

column (c) of the first Form 8697.

Filing Year

An owner of an interest in a

Line 1

pass-through entity is not required to

Fill in the filing year line at the top of the

provide the detail listed in 1 and 2

Do not reduce taxable income or

form to show the tax year in which the

above with respect to prior years. The

increase a loss on line 1 by any

contracts for which this form is being

entity should provide the line 2 amounts

carryback of a net operating loss,

filed were completed or adjusted in a

with Schedule K-1 or on a separate

capital loss, or net section 1256

post-completion year. If you were an

statement for its tax year in which the

contracts loss, except to the extent that

owner of an interest in a pass-through

contracts are completed or adjusted.

carryback resulted from or was

entity that has completed or adjusted

adjusted by the redetermination of your

Note. Taxpayers reporting line 2

one or more contracts, enter your tax

income from a long-term contract for

amounts from more than one Schedule

year that ends with or includes the end

look-back purposes.

K-1 (or a similar statement) must attach

of the entity’s tax year in which the

a schedule detailing by entity the net

contracts were completed or adjusted.

Line 2

change to income from long-term

In each column, show a net increase to

Name

contracts.

income as a positive amount and a net

Enter the name shown on your Federal

decrease to income as a negative

Line 3

income tax return for the filing year. If

amount.

If line 3 results in a negative amount, it

you are an individual filing a joint return,

In figuring the net adjustment to be

represents a look-back net operating

also enter your spouse’s name as

entered in each column on line 2, be

loss (NOL). The adjustment in line 2

shown on Form 1040.

sure to take into account any other

either, created, increased, or decreased

income and expense adjustments that

Address

the net operating loss. The change in

may result from the increase (or

the amount of the net operating loss

Enter your address only if you are filing

decrease) to income from long-term

would be carried back or forward to the

this form separately. Include the

contracts (e.g., a change to adjusted

appropriate tax year and the

apartment, suite, room, or other unit

gross income affecting investment

hypothetical tax would be recomputed

number after the street address. If the

expenses under section 212, medical

in the carryback/forward year. See

Post Office does not deliver mail to the

expenses under section 213, etc.; and

Regulations section 1.460 – 6(c)(3)(v).

street address and you have a P.O.

the deduction for state income taxes by

However, the computation period for

box, show the box number instead.

an accrual basis taxpayer). If there are

computing interest on NOLs is different.

no adjustments besides the look-back

See the exceptions listed on lines 7 and

Item A—Identifying

adjustments, the sum of all line 2

8 below.

amounts should be zero and reflected

Number

Lines 4 and 5

in column 2(c). If there are additional

If you are an individual, enter your

adjustments that result from the

Reduce the tax liability to be entered on

social security number. Other filers

application of the look-back, leave

lines 4 and 5 by allowable credits (other

must use their EIN.

column 2(c) blank and reflect the

than refundable credits, e.g., the credit

amounts in the schedule below as

for taxes withheld on wages, the

Part I—Regular Method

described in item 3.

earned income credit, the credit for

Use Part I only if you are not electing,

Include the following on an attached

federal tax on fuels, etc.), but do not

do not have an election in effect, or are

schedule.

take into account any credit carrybacks

not required to use the simplified

to the prior year in computing the

1. Identify each completed

marginal impact method as described in

amount to enter on lines 4 and 5 (other

long-term contract by contract number,

the instructions for Part II, later.

than carrybacks that resulted from or

job name, or any other reasonable

were adjusted by the redetermination of

method used in your records to identify

Filing year column

your income from a long-term contract

each contract.

Enter the filing year listed at the top of

for look-back purposes). Include on

2. For each contract, report in

this form.

lines 4 and 5 any taxes (such as

columns for each prior year: (a) the

alternative minimum tax) required to be

amount of income previously reported

Columns (a) and (b)

taken into account in the computation

based on estimated contract price and

Enter at the top of each column the

of your tax liability (as originally

costs and (b) the amount of income

ending month and year for:

reported or as redetermined).

allocable to each prior year based on

•

Each prior tax year in which you were

actual contract price and costs. Total

Lines 7 and 8

required to report income from the

the columns for each prior year and

completed long-term contract(s) and

show the net adjustment to income

For the increase or decrease in tax for

•

Any other tax year affected by such

from long-term contracts.

each prior year, interest due or to be

years.

3. Identify any other adjustments

refunded must be computed at the

Note. If there were more than 2 prior

that result from a change in income

applicable interest rate and

years, attach additional Forms 8697 as

from long-term contracts and show the

compounded on a daily basis, generally

-4-

Instructions For Form 8697 Draft (Rev. December 2011) - Interest Computation Under The Look-Back Method For Completed Long-Term Contracts Page 4

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