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Include any net positive section 481(a)

Report so-called dividends or earnings

allowed the deduction under section 247

adjustment on Schedule B, line 2j or 3f

received from mutual savings banks, etc.,

for dividends paid.

(depending on whether the inventory,

as interest. Do not treat them as

when sold, will generate qualified export

dividends.

Line 6, Column (a)

receipts). If the net section 481(a)

Enter the U.S.-source portion of dividends

adjustment is negative, report it on

Line 2, Column (a)

that:

Schedule E, line 2g.

Enter on line 2:

Are received from

Line 3b. Enter receipts from selling

Dividends (except those received on

less-than-20%-owned foreign

products subsidized under a U.S. program

debt-financed stock acquired after July 18,

corporations, and

if they have been designated as excluded

1984) that are received from

Qualify for the 70% deduction under

receipts.

20%-or-more-owned domestic

section 245(a). To qualify for the 70%

corporations subject to income tax and

deduction, the corporation must own at

Line 3c. Enter receipts from selling or

that are eligible for the 80% deduction

least 10% of the stock of the foreign

leasing property or services for use by any

under section 243(c), and

corporation by vote and value.

part of the U.S. Government if law or

Taxable distributions from an IC-DISC

regulations require U.S. products or

or former DISC that are considered

services to be used.

Line 7, Column (a)

eligible for the 80% deduction.

Line 3d. Enter receipts from any IC-DISC

Enter the U.S.-source portion of dividends

that belongs to the same controlled group

that are received from

Line 3, Column (a)

(as defined in section 993(a)(3)).

20%-or-more-owned foreign corporations

Enter the following.

and that qualify for the 80% deduction

Line 3f. Include in an attached statement

Dividends received on debt-financed

under section 245(a).

any nonqualifying gross receipts not

stock acquired after July 18, 1984, from

reported on lines 3a through 3e. Do not

domestic and foreign corporations subject

Line 8, Column (a)

offset an income item against a similar

to income tax and that would otherwise be

expense item.

Enter dividends received from wholly

subject to the dividends-received

owned foreign subsidiaries that are

The IC-DISC may have to report a

deduction under section 243(a)(1), 243(c),

section 481(a) adjustment on line 3f. See

eligible for the 100% deduction under

or 245(a). Generally, debt-financed stock

Section 481(a)

adjustment, earlier, for

section 245(b).

is stock that the corporation acquired by

additional information.

incurring a debt (for example, it borrowed

In general, the deduction under section

money to buy the stock).

Schedule C

245(b) applies to dividends paid out of the

Dividends received from a RIC on

earnings and profits of a foreign

debt-financed stock. The amount of

Dividends and

corporation for a tax year during which:

dividends eligible for the

All of its outstanding stock is owned

Dividends-Received Deduction

dividends-received deduction is limited by

(directly or indirectly) by the domestic

section 854(b). The corporation should

For purposes of the 20% ownership test

corporation receiving the dividends, and

receive a notice from the RIC specifying

on lines 1 through 7, the percentage of

All of its gross income from all sources

the amount of dividends that qualify for the

stock owned by the corporation is based

is effectively connected with the conduct

deduction.

on voting power and value of the stock.

of a trade or business within the United

Preferred stock described in section

States.

1504(a)(4) is not taken into account.

Line 3, Columns (b) and (c)

Dividends received on debt-financed

Line 9, Column (c)

Line 1, Column (a)

stock acquired after July 18, 1984, are not

Generally, line 9, column (c), may not

entitled to the full 70% or 80%

Enter dividends (except those received on

exceed the amount from the following

dividends-received deduction. The 70% or

debt-financed stock acquired after July 18,

worksheet. However, in a year in which an

80% deduction is reduced by a

1984—see section 246A) that:

NOL occurs, this limitation does not apply

percentage that is related to the amount of

Are received from

even if the loss is created by the

debt incurred to acquire the stock. See

less-than-20%-owned domestic

dividends-received deduction. See

section 246A. Also see section 245(a)

corporations subject to income tax, and

sections 172(d) and 246(b).

before making this computation for an

Qualify for the 70% deduction under

additional limitation that applies to

section 243(a)(1).

dividends received from foreign

Line 9, Column (c) Worksheet

Also include the following on line 1.

corporations. Attach a statement to Form

Taxable distributions from an IC-DISC

1120-IC-DISC showing how the amount

or former DISC that are designated as

1. Refigure line 5, page 1, Form

on line 3, column (c), was figured.

1120-IC-DISC, without any

being eligible for the 70% deduction and

adjustment under section 1059

certain dividends of Federal Home Loan

Line 4, Column (a)

and without any capital loss

Banks. See section 246(a)(2).

carryback to the tax year under

Dividends received (except those

Enter dividends received on the preferred

section 1212(a)(1)

. . . . . .

received on debt-financed stock acquired

stock of a less-than-20%-owned public

2. Multiply line 1 by 80%

after July 18, 1984) from a regulated

utility that is subject to income tax and is

(0.80)

. . . . . . . . . . . . .

investment company (RIC). The amount of

allowed the deduction provided in section

3. Add lines 2, 5, 7, and 8, column

dividends eligible for the

(c), and the part of the deduction

247 for dividends paid.

dividends-received deduction under

on line 3, column (c), that is

attributable to dividends received

section 243 is limited by section 854(b).

Line 5, Column (a)

from 20%-or-more-owned

The corporation should receive a notice

corporations

. . . . . . . . . .

from the RIC specifying the amount of

Enter dividends received on preferred

stock of a 20%-or-more-owned public

dividends that qualify for the deduction.

utility that is subject to income tax and is

Instructions for Form 1120-IC-DISC (Rev. 9-2017)

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Instructions For Form 1120-Ic-Disc - Interest Charge Domestic International Sales Corporation Return - 2017 Page 8

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