Instructions For Schedule O (Form 1120) - 2011 (Page 8 of 9) in pdf

Note. If a corporation has a loss,

component members of its group (for

determined as explained in

enter zero in columns (c) through (g).

Determining the amount of additional

example, because those other

component members have adopted

taxes.

Column (c). Enter the lesser of the

substantially different tax years), it

Column (h). Enter here the total

corporation’s taxable income (as

can avoid underpayment of tax by

shown on Form 1120, page 1, line 30,

apportioned income tax for each

applying the maximum tax rate of

component member. Combine all the

or on the comparable line of the

35% to the entire amount of its

amounts of apportioned tax of each

corporation’s income tax return) or

taxable income. If the corporation

the corporation’s computed share of

such member, as shown in columns

later determines its tax liability is less,

the $50,000 bracket.

(b) through (g).

it may file a claim for refund of

Column (d). Enter the lesser of the

overpayment.

Part IV. Other

corporation’s taxable income (as

shown on Form 1120, page 1, line 30,

Apportionments

Line 7a. A corporation choosing

or on the comparable line of the

to compute its tax liability by applying

Brother-sister controlled group.

corporation’s income tax return)

the maximum 35% rate to the entire

For purposes of apportioning the

minus the amount entered for this

amount of its taxable income should

amounts included in columns (b)

corporation in column (c), or the

check box 7a. Further, a corporation

through (d), determine the component

corporation’s computed share of the

checking box 7a does not have to

members of a brother-sister

$25,000 bracket.

provide taxable income or tax

controlled group, using only the 50%

apportionment information with

Column (e). Enter the lesser of the

test as provided in section 1563(a)(2).

respect to the other component

corporation’s taxable income (as

For purposes of apportioning the

members of the group. Instead, only

shown on Form 1120, page 1, line 30,

amounts included in column (e) and,

provide the identifying information (for

or on the comparable line of the

except as provided elsewhere in the

example, name, EIN, and ending date

corporation’s income tax return)

Internal Revenue Code, in column (f),

of the tax year) for these other

minus the amounts entered for this

determine the component members

members. Enter zero in the other

corporation in columns (c) and (d), or

of a brother-sister controlled group

columns for these members.

the corporation’s computed share of

using both the 50% and 80% tests as

the $9,925,000 bracket.

Line 7b. The controlled group

provided in section 1563(f)(5). See

Column (f). Enter the corporation’s

may elect to apportion their additional

Brother-sister group, earlier.

taxable income (Form 1120, page 1,

taxes liability under the FIFO method,

Column (a). If a corporation

line 30, or the comparable line of the

rather than the proportionate method.

qualifies as a component member of

corporation’s income tax return)

To make this election, each

a brother-sister controlled group,

minus the amounts entered for this

component member of the group

solely because it satisfies only the

corporation in columns (c) through

must check box 7b. If the members

50% ownership affiliation test, insert

(e).

do not check box 7b, they will be

the notation “(50)” after that

Column (g). Enter the total

required to apportion their additional

corporation’s name. If a corporation is

allocated taxable income amounts of

taxes liability using the proportionate

a component member of that group

each component member (add

method of allocation. See The

because it satisfies both the 50% and

columns (c) through (f)). Each total in

proportionate method and The FIFO

80% ownership affiliation tests, no

Part II, column (g), for each

method.

notation is necessary.

component member must equal Form

Line 7c. If a component member

Column (b). The component

1120, page 1, line 30, or the

of a controlled group of corporations

members of a controlled group may

comparable line of such component

has a short tax year that does not

allocate the $250,000 accumulated

member’s income tax return.

include a December 31 date, check

earnings credit unequally if they

Part III. Income Tax

box 7c. If a corporation checks box

adopt an apportionment plan or have

7c, it does not have to provide

an apportionment plan in effect.

Apportionment

taxable income or tax apportionment

Note. If any component member of

information with regard to the other

Column (b). Multiply the taxable

a controlled group is the type of

component members of the group.

income amount in Part II, column (c)

service corporation described in

Instead, only provide the identifying

by 15% (0.15) and enter the result

section 535(c)(2)(B), the amount to

information (for example, name, EIN,

here.

be apportioned among the

and ending date of the tax year) for

component members is $150,000

Column (c). Multiply the taxable

these other members. See Special

(rather than $250,000).

income amount in Part II, column (d)

allocation rules for a short tax year.

by 25% (0.25) and enter the result

Column (c). The component

here.

Part II. Taxable Income

members of a controlled group may

Column (d). Multiply the taxable

allocate the $40,000 AMT exemption

Apportionment

income amount in Part II, column (e)

amount unequally if they adopt an

by 34% (0.34) and enter the result

apportionment plan or have an

Enter each component member’s

here.

apportionment plan in effect.

share of the taxable income used

Column (e). Multiply the taxable

from each tax bracket, as is

Column (d). The component

income amount in Part II, column (f)

applicable. The component members

members of a controlled group must

by 35% (0.35) and enter the result

of a controlled group, collectively, are

apportion the reduction to the AMT

here.

entitled to one $50,000, one $25,000,

exemption amount to the same

and one $9,925,000 taxable income

Column (f) and (g). A corporation’s

corporations, and in the same

bracket amount (in that order) for

share of any additional taxes liability

proportions, as the AMT exemption

columns (c), (d), and (e).

imposed by section 11(b)(1) is

amount was apportioned in Column

-8-

Instructions For Schedule O (Form 1120) - 2011 Page 8

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