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•

Meal and entertainment expenses not

Tax Computation Worksheet for Members of a Controlled Group

deductible under section 274(n).

(keep for your records)

•

Expenses for the use of an entertainment

facility.

Note: Each member of a controlled group (except a qualified personal service

•

The part of business gifts over $25.

corporation) must compute the tax using this worksheet.

•

Expenses of an individual over $2,000,

Enter taxable income (Schedule B, line 20)

which are allocable to conventions on cruise

Enter line 1 or the FSC’s share of the $50,000 taxable income bracket,

ships.

whichever is less

•

Employee achievement awards over

Subtract line 2 from line 1

$400.

•

Enter line 3 or the FSC’s share of the $25,000 taxable income bracket,

The cost of entertainment tickets over

whichever is less

face value (also subject to 50% limit under

Subtract line 4 from line 3

section 274(n)).

•

Enter line 5 or the FSC’s share of the $9,925,000 taxable income bracket,

The cost of skyboxes over the face value

whichever is less

of nonluxury box seat tickets.

•

Subtract line 6 from line 5

The part of luxury water travel expenses

Multiply line 2 by 15%

not deductible under section 274(m).

•

Multiply line 4 by 25%

Expenses for travel as a form of

10.

Multiply line 6 by 34%

10.

education.

•

Other nondeductible travel and

11.

Multiply line 7 by 35%

11.

entertainment expenses.

12.

If the taxable income of the controlled group exceeds $100,000, enter this

member’s share of the smaller of: 5% of the taxable income in excess of

For more information, see Pub. 542.

$100,000, or $11,750 (see the instructions for Schedule J, line 2b)

12.

Line 7a. Tax-exempt interest. Report any

13.

If the taxable income of the controlled group exceeds $15 million, enter this

tax-exempt interest received or accrued,

member’s share of the smaller of: 3% of the taxable income in excess of $15

including any exempt-interest dividends

million, or $100,000 (see the instructions for Schedule J, line 2b)

13.

received as a shareholder in a mutual fund

14.

Total. Add lines 8 through 13. Enter here and on Schedule J, line 3

14.

or other regulated investment company.

Also report this amount on line 2, Additional

Information, on page 2 of the form.

Line 5. Tax-exempt securities. Include on

If the total adjustment to be entered on

this line:

line 27 is a negative amount, enter the

•

State and local government obligations,

amount in parentheses.

the interest on which is excludible from

Schedule M-1

gross income under section 103(a) and

•

Stock in a mutual fund or other regulated

investment company that distributed

Reconciliation of Income (Loss)

exempt-interest dividends during the tax

per Books With Income per

year of the FSC.

Return

Line 27. Adjustments to shareholders’

equity. Some examples of adjustments to

Line 5c. Travel and entertainment.

report on this line include:

Include on line 5c any of the following:

•

Foreign currency translation adjustments.

•

The excess of additional pension liability

over unrecognized prior service cost.

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the

United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to

figure and collect the right amount of tax. Section 6109 requires return preparers to provide their identifying numbers on the return.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form

displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may

become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as

required by section 6103.

The time needed to complete and file this form and related schedule will vary depending on individual circumstances. The estimated

average times are:

Learning about the

Preparing and sending the form

Form

Recordkeeping

law or the form

to the IRS

1120-FSC

94 hr., 13 min.

19 hr., 45 min.

38 hr., 56 min.

Sch. P (1120-FSC)

9 hr., 48 min.

1 hr., 29 min.

1 hr., 43 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and related schedule simpler,

we would be happy to hear from you. You can write to Internal Revenue Service, Tax Products Coordinating Committee,

SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6406, Washington, DC 20224. Do not send the tax form to this office. Instead, see

Where To File on page 4.

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Instructions For Form 1120-Fsc - U.s. Income Tax Return Of A Foreign Sales Corporation - 2004 Page 13

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