Looking for a Form 1120 Templates? Download it for free!

•

Note. The 2004 Form 1120-FSC may also

parent of the group, complete lines 2a

The FSC is a large corporation computing

be used if:

through 2g for the common parent. Enter the

its first required installment based on the

•

The FSC has a tax year of less than 12

consolidated total assets on line 2d for a

prior year’s tax. (See the Form 2220

months that begins and ends in 2005 and

group that files a consolidated return;

instructions for the definition of a large

•

The 2005 Form 1120-FSC is not available

otherwise, enter only the common parent’s

corporation.)

at the time the FSC is required to file its

total assets.

If Form 2220 is attached, check the box

return.

Note. Check the “Yes” box on line 2 if the

on line 3, page 1, Form 1120-FSC, and

The FSC must show its 2005 tax year on

FSC is a subsidiary in a parent-subsidiary

enter the amount of any penalty on this line.

the 2004 Form 1120-FSC and take into

controlled group. This applies even if the

account any tax law changes that are

FSC is a subsidiary member of one group

Schedule A

effective for tax years beginning after

and the parent corporation of another.

December 31, 2004.

Cost of Goods Sold Related To

Name. Print or type the FSC’s true name

Foreign Trading Gross Receipts

The term “parent-subsidiary controlled

(as set forth in the charter or other legal

group” means one or more chains of

Complete Schedule A only for the cost of

document creating it).

corporations connected through stock

goods sold deduction related to foreign

ownership (sections 927(d)(4) and

Address. Enter the U.S. address where the

trading gross receipts reported on lines 1

1563(a)(1)). Both of the following

FSC maintains the records required under

through 5 of Schedule B.

requirements must be met.

section 6001. Include the suite, room, or

Complete column (a) to show the cost of

other unit number after the street address. If

1. More than 50% of the total combined

goods sold for inventory acquired in

the Post Office does not deliver mail to the

voting power of all classes of stock entitled

transactions using the administrative pricing

street address and the FSC has a P.O. box,

to vote or more than 50% of the total value

rules. Complete column (b) to show the cost

show the box number instead.

of all classes of stock of each corporation in

of goods sold for inventory acquired in

the group (except the parent) must be

If the FSC receives its mail in care of a

transactions that did not use the

owned by one or more of the other

third party (such as an accountant or an

administrative pricing rules. For details on

corporations in the group.

attorney), enter on the street address line

the administrative pricing rules, see the

2. The common parent must own more

“C/O” followed by the third party’s name and

Instructions for Schedule P (Form

than 50% of the total combined voting power

street address or P.O. box.

1120-FSC).

of all classes of stock entitled to vote or

Item A. Foreign country or U.S.

If the FSC acts as another person’s

more than 50% of the total value of all

possession of incorporation. See

commission agent on a sale, do not enter

classes of stock of at least one of the other

Definition of a Foreign Sales Corporation

any amount on Schedule A for the sale.

corporations in the group.

(FSC) on page 2.

Small FSCs will have to make two

Item E. Total assets. Enter the FSC’s total

Stock owned directly by other members

separate computations for cost of goods

assets (as determined by the accounting

of the group is not counted when computing

sold if their foreign trading gross receipts

method regularly used in keeping the FSC’s

the voting power or value.

exceed the limitation amount on line 6e of

books and records) at the end of the tax

Schedule B. In this case, a deduction for

See sections 927(d)(4) and 1563(d)(1)

year from page 6, Schedule L, column (d),

cost of goods sold will be figured separately

for the definition of “stock” for purposes of

line 15. If there are no assets at the end of

for the income on line 6h of Schedule B, and

determining stock ownership above.

the tax year, enter -0-.

separately for the income on line 7 of

Item F. Final return, name change,

Tax and Payments

Schedule F.

address change, or amended return.

Generally, inventories are required at the

•

Line 2h. Backup withholding. If the FSC

If the corporation ceases to exist, file

beginning and end of each tax year if the

had income tax withheld from any payments

Form 1120-FSC and check the “Final return”

purchase or sale of merchandise is an

it received due to backup withholding,

box.

income-producing factor. See Regulations

•

include the amount withheld in the total for

If the FSC changed its name since it last

section 1.471-1.

line 2h. Show the amount withheld in the

filed a return, check the box for “Name

However, if the FSC is a qualifying

blank space in the right-hand column

change.” Generally, a FSC also must have

taxpayer or a qualifying small business

between lines 1 and 2h, and write “backup

amended its articles of incorporation and

taxpayer, it may adopt or change its

withholding.”

filed the amendment with the jurisdiction in

accounting method to account for

which it was incorporated.

Note. Do not include backup withholding

•

inventoriable items in the same manner as

If the FSC has changed its address since

amounts on line 2g (i.e., include on line 2g

materials and supplies that are not

it last filed a return (including a change to an

only amounts withheld under Chapter 3 of

incidental (unless its business is a tax

“in care of” address), check the box for

the Code).

shelter (as defined in section 448(d)(3))).

“Address Change.”

A qualifying taxpayer is a taxpayer that,

Note. If a change of address occurs after

Line 3. Estimated tax penalty. A FSC that

for each prior tax year ending after

the return is filed, use Form 8822, Change

does not make estimated tax payments

December 16, 1998, has average annual

of Address, to notify the IRS of the new

when due may be subject to an

gross receipts of $1 million or less for the

address.

underpayment penalty for the period of

•

3-tax-year period ending with that prior year.

If the FSC is amending its return, check

underpayment. Generally, a FSC is subject

the box for “Amended return.”

A qualifying small business taxpayer is a

to the penalty if its tax liability is $500 or

taxpayer (a) that, for each prior tax year

more and it did not timely pay the smaller of:

FSC Information

•

ending on or after December 31, 2000, has

Its tax liability for 2004 or

•

average annual gross receipts of $10 million

Its prior year’s tax.

Line 1. Principal shareholder. Complete

or less for the 3-tax-year period ending with

lines 1a through 1h for the shareholder

See section 6655 for details and

that prior tax year and (b) whose principal

(individual, corporation, partnership, trust, or

exceptions, including special rules for large

business activity is not an ineligible activity.

estate) that was the principal shareholder at

corporations.

the beginning of the FSC’s tax year. See the

Under this accounting method, inventory

Use Form 2220, Underpayment of

Note on page 5 under Accounting Periods.

costs for merchandise purchased for resale

Estimated Tax by Corporations, to see if the

are deductible in the year the merchandise

Foreign address. Enter the information

FSC owes the penalty and to figure the

is sold (but not before the year the FSC paid

in the following order: city, province or state,

amount of the penalty. Generally, the FSC

for the merchandise, if it is also using the

and country. Follow the country’s practice

does not have to file this form because the

cash method). For additional guidance on

for entering the postal code. Do not

IRS can figure the amount of any penalty

this method of accounting for inventoriable

abbreviate the country name.

and bill the FSC for it. However, even if the

items, see Pub. 538, and the Instructions for

Line 2. Parent-subsidiary controlled

FSC does not owe the penalty, complete

Form 3115.

group. If the FSC is a subsidiary in a

and attach Form 2220 if:

•

parent-subsidiary controlled group and the

The annualized income or adjusted

Enter amounts paid for merchandise

principal shareholder is not the common

seasonal installment method is used or

during the tax year on line 2. The amount

-7-

Instructions For Form 1120-Fsc - U.s. Income Tax Return Of A Foreign Sales Corporation - 2004 Page 7

Related Articles

Related forms

Related Categories