Fillable Form 851 - Affiliations Schedule (Page 4 of 4) in pdf

Form 851 (Rev. 12-2010)

Page

Instructions

Part I

Item (e). The term “equitable owners” of

stock means those that essentially have all

Portion of overpayment credits and

Section references are to the Internal Revenue

the rights to enjoy the benefits of stock

estimated tax payments. Enter for the

Code unless otherwise noted.

ownership without actually holding the stock,

common parent corporation and for each

e.g., beneficiary of a trust.

Purpose of Form

subsidiary corporation the amount of:

Part IV

• Overpayments of tax from the prior tax year

Use Form 851 to:

that each corporation elected to credit to the

Question 1. For purposes of question 1 only,

1. Identify the common parent corporation

current year’s tax, and

disregard certain preferred stock as described

and each member of the affiliated group;

• Estimated tax payments made by each

in section 1504(a)(4).

2. Report the amount of overpayment

corporation.

Question 3. The term “arrangement”

credits, estimated tax payments, and tax

The total must be the same as the amounts

includes, but is not limited to, phantom stock,

deposits attributable to each corporation; and

entered on the lines for overpayments and

stock appreciation rights, an option, warrant,

3. Determine that each subsidiary

estimated tax payments on the consolidated

conversion feature, or similar arrangements.

corporation qualifies as a member of the

income tax return.

Item 3a. Show the percentage of the value of

affiliated group.

Tax deposited with Form 7004. Enter for the

the outstanding stock that the person(s) could

Who Must File

common parent the tax deposited with Form

acquire.

7004, Application for Automatic 6-Month

Item 3b. If the arrangement was associated

The parent corporation must file Form 851 for

Extension of Time To File Certain Business,

with voting stock, show the percentage of

itself and for corporations in the affiliated

Income Tax, Information, and other Returns,

outstanding voting stock that the person(s)

group. File Form 851 by attaching it to the

that is attributable to each corporation. The

could acquire.

consolidated tax return for the group.

total must be the same as the amount

Item 3c. If the arrangement was associated

Affiliated Group

entered on the “Tax deposited with Form

with the acquisition of voting power without

7004” line on the consolidated income tax

the acquisition of the related stock, show the

An affiliated group is one or more chains of

return.

percentage of voting power that the person(s)

includible corporations connected through

Part II

could acquire.

stock ownership with a common parent

corporation. See sections 1504(a) and (b). The

Item 3d. Give a brief description of any

Principal Business Activity (PBA) and PBA

common parent must be an includible

arrangement (defined above) by which a

Code No. Enter the PBA and the PBA code

corporation and the following requirements

person that is not a member of the affiliated

number for the common parent corporation

must be met.

group could acquire any stock, or acquire any

and for each subsidiary corporation. Use the

1. The common parent must own directly

voting power without acquiring stock, in the

activity for the specific industry group from

stock that represents at least 80% of the total

corporation.

which the largest percentage of each

voting power and at least 80% of the total

corporation’s total receipts is based.

value of the stock of at least one of the other

Paperwork Reduction

includible corporations.

A list of the PBAs and code numbers is

Act Notice

located in the Instructions for Form 1120.

2. Stock that represents at least 80% of

the total voting power, and at least 80% of

Nondividend distributions. Nondividend

We ask for the information on this form to

the total value of the stock of each of the

distributions are any distributions (other than

carry out the Internal Revenue laws of the

other corporations (except for the common

stock dividends and distributions in exchange

United States. You are required to give us the

parent) must be owned directly by one or

for stock) made to shareholders during the

information. We need it to ensure that you are

more of the other includible corporations.

tax year for which the consolidated tax return

complying with these laws and to allow us to

is filed that were in excess of the

For this purpose, the term “stock” generally

figure and collect the right amount of tax.

corporation’s current and accumulated

does not include any stock that:

You are not required to provide the

earnings and profits. See sections 301 and

1. Is nonvoting,

information requested on a form that is

316 and Form 5452, Corporate Report of

2. Is nonconvertible,

subject to the Paperwork Reduction Act

Nondividend Distributions.

unless the form displays a valid OMB control

3. Is limited and preferred as to dividends

Part III

number. Books or records relating to a form

and does not participate significantly in

or its instructions must be retained as long as

corporate growth, and

Question (c). For this purpose, the term

their contents may become material in the

4. Has redemption and liquidation rights

“transfer” includes transactions in which (1) a

administration of any Internal Revenue law.

that do not exceed the issue price of the

shareholder-member ceases to own a share

Generally, tax returns and return information

stock (except for a reasonable redemption or

of subsidiary stock in a transaction in which

are confidential, as required by section 6103.

liquidation premium).

the shareholder-member recognizes income,

The time needed to complete and file this

gain, deduction, or loss on the stock; (2) a

Address

form will vary depending on individual

shareholder-member and the subsidiary

circumstances. The estimated average time

Include the suite, room, or other unit number

cease to be members of the same

is:

after the street address. If the Post Office

consolidated group; and (3) a non-member

Recordkeeping

. 10 hr., 45 min.

does not deliver mail to the street address

acquires the share from a member. If any type

and the corporation has a P.O. box, show the

of transfer occurs and the share's basis would

Learning about the

box number instead.

law or the form

otherwise exceed its value at the time of the

53 min.

transfer, certain adjustments to members'

Preparing and sending

Corporation Numbers

bases in shares of the subsidiary's stock and

the form to the IRS

1 hr., 6 min.

to the subsidiary's attributes may be required.

When listing information in Parts II, III, and IV,

If you have comments concerning the

See Regulations section 1.1502-36.

use the same number for the common parent

accuracy of these time estimates or

corporation and for each subsidiary

Question (d). If a share of subsidiary stock

suggestions for making this form simpler, we

corporation as the number listed in Part I.

becomes worthless within the meaning of

would be happy to hear from you. See the

section 165 (taking into account the

instructions for the tax return with which this

provisions of Regulations section

form is filed.

1.1502-80(c)) during the group's taxable year,

certain adjustments to shareholder-members'

bases in shares of the subsidiary's stock and/

or to the subsidiary's attributes may be

required. See Regulations sections 1.1502-19

(b)(1)(iv) (if the basis of the share is equal to or

less than zero) and 1.1502-36 (if the basis of

the share is greater than zero).

Form 851 - Affiliations Schedule Page 4

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