Instructions For Form 1120-Pc - 2016 (Page 13 of 23) in pdf

Special rules apply to:

Corporations reporting taxable income

be obtained by the due date (including

Disqualified interest on certain

on the accrual method can elect to treat as

extensions) of the corporation's return, or,

indebtedness under section 163(j). See

paid during the tax year any contributions

if earlier, the date the return is filed. Do not

Form 8926, and the related instructions.

paid by the due date for filing the

attach the acknowledgment to the tax

Interest on which no tax is imposed

corporations’s tax return ( not including

return, but keep it with the corporation's

(see section 163(j)). A corporation that

extensions), if the contributions were

records.

owns an interest in a partnership, directly

authorized by the board of directors during

Contributions of property other than

or indirectly, must treat its distributive

the tax year. Attach a declaration to the

cash. If a corporation contributes

share of the partnership liabilities, interest

return stating that the resolution

property other than cash and claims over

income, and interest expense as liabilities,

authorizing the contributions was adopted

a $500 deduction for the property, it must,

income, and expenses of the corporation

by the board of directors during the tax

generally, attach a statement to the return

for purposes of applying the earnings

year. The declaration must include the

describing the kind of property contributed

stripping rules. For more details, see

date the resolution was adopted. See

and the method used to determine its fair

section 163(j)(8).

Regulations section 1.170A-11.

market value (FMV). Attach Form 8283,

Forgone interest on certain

Limitation on deduction. The total

Noncash Charitable Contributions, to the

below-market-rate loans (see section

amount claimed cannot be more than 10%

return for contributions of property (other

7872).

of taxable income (line 37, Schedule A)

than money) if the total claimed deduction

Original issue discount (OID) on certain

computed without regard to the following.

for all property contributed was more than

high-yield discount obligations. See

Any deduction for contributions.

$5,000. Special rules apply to the

section 163(e)(5) to determine the

The deduction for dividends received.

contribution of certain property. See the

disqualified amount of the deduction for

The domestic production activities

Instructions for Form 8283.

original issue discount that is deferred and

deduction under section 199.

Qualified conservation contributions.

the amount that is disallowed on a

Any net operating loss (NOL) carryback

Special rules apply to qualified

high-yield discount obligation. The rules

to the tax year under section 172.

under section 163(e)(5) do not apply to

conservation contributions, including

Any capital loss carryback to the tax

certain high-yield discount obligations

contributions of certain easements on

year under section 1212(a)(1).

issued before January 1, 2011. See

buildings located in a registered historic

Carryover. Charitable contributions

district. See section 170(h) and Pub. 526,

section 163(e)(5)(F), and Notice 2010-11,

over the 10% limitation cannot be

Charitable Contributions. For special rules

2010-4 I.R.B. 326.

deducted for the tax year but may be

Interest which is allocable to

applicable to certain qualified

carried over to the next 5 tax years.

unborrowed policy cash values of life

conservation contributions made by

insurance, endowment, or annuity

Native corporations, see section 170(b)(2)

Special rules apply if the corporation

(C).

contracts issued after June 8, 1997. See

has an NOL carryover to the tax year. In

section 264(f). Attach a statement

figuring the charitable contributions

Other special rules. The corporation

showing the computation of the deduction.

deduction for the current tax year, the 10%

must reduce its deduction for contributions

Section 108(i) OID deduction. If the

limit is applied using taxable income after

of certain capital gain property. See

corporation issued a debt instrument with

taking into account any deduction for the

sections 170(e)(1) and 170(e)(5).

OID that is subject to section 108(i)(2)

NOL.

A larger deduction is allowed for certain

because of an election to defer the income

To figure the amount of any remaining

contributions. See section 170(e)(3) and

from the cancellation of debt (COD), the

NOL carryover to later years, taxable

(4).

interest deduction for this OID is deferred

income must be modified (see section

until the COD is includible in income. The

For more information on charitable

172(b)). To the extent that contributions

accrued OID is allowed as a deduction

contributions, including substantiation and

are used to reduce taxable income for this

ratably over the 5-year period that the

recordkeeping requirements, see section

purpose and increase an NOL carryover, a

income from COD is includible in income.

170 and the related regulations and Pub.

contributions carryover is not allowed. See

The deduction is limited to the amount of

526. For other special rules that apply to

section 170(d)(2)(B).

COD subject to the section 108(i) election.

corporations, see Pub. 542.

Cash contributions. For contributions of

In addition, a deferred COD deduction

Line 22. Depreciation. Include on line 22

cash, check, or other monetary gifts

may be allowed as a deduction in the

depreciation and the cost of certain

(regardless of the amount), the

current year because of an accelerated

property that the corporation elected to

corporation must maintain a bank record,

event. See section 108(i)(5)(D).

expense under section 179. See Form

or a receipt, letter, or other written

Line 20b. Less tax-exempt interest ex-

4562 and the Instructions for Form 4562.

communication from the donee

pense. Enter interest paid or accrued

organization indicating the name of the

Line 23. Depletion. See sections 613

during the tax year on indebtedness

organization, the date of the contribution,

and 613A for percentage depletion rates

incurred or continued to purchase or carry

and the amount of the contribution.

applicable to natural deposits. Also, see

obligations if the interest is wholly exempt

section 291 for the limitation on the

Contributions of $250 or more. A

from income tax. For exceptions, see

depletion deduction for iron ore and coal

corporation can deduct a gift of $250 or

section 265(b).

(including lignite).

more only if it gets a written

Line 21. Charitable contributions.

acknowledgment from the donee

Attach Form T (Timber), Forest

Enter contributions or gifts actually paid

Activities Schedule, if a deduction for

organization that shows the amount of

within the tax year to or for the use of

depletion of timber is taken.

cash contributed, describes any property

charitable and governmental

contributed (but not its value), and either

Foreign intangible drilling costs and

organizations described in section 170(c)

gives a description and a good faith

foreign exploration and development costs

and any unused contributions carried over

estimate of the value of any goods or

must either be added to the corporation's

from prior years. Special rules and limits

services provided in return for the

basis for cost depletion purposes or be

apply to contributions to organizations

contribution or states that no goods or

deducted ratably over a 10-year period.

conducting lobbying activities. See section

services were provided in return for the

See sections 263(i), 616, and 617.

170(f)(9).

contribution. The acknowledgment must

Instructions for Form 1120-PC (2016)

-13-

Instructions For Form 1120-Pc - 2016 Page 13

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