Instructions For Form 1120-Fsc - 2016 (Page 9 of 14) in pdf

Schedule E

Form 1120-FSC a statement listing each

1. Enter total of columns (a) and

type of deduction. Show deductions related

(b), line 6a, Schedule B

For purposes of the Note at the top of

. . . .

to cost of goods sold separately. See the

Schedule E, a C corporation is a corporation

2. Enter total commission income

instructions for Schedule A, earlier, before

other than an S corporation. Shareholders,

reported on line 1 and line 2,

completing this line.

other than C corporations, are individuals,

Schedule B

. . . . . . . . . . .

partnerships, S corporations, trusts, and

Passive activity limitations. Section 469

3. Subtract line 2 from line 1

. . .

estates.

generally limits the deduction of passive

activity losses for closely held FSCs and

4. With respect to the commission

Use lines 2a through 2d to figure the

FSCs that are personal service corporations.

income reported on line 2 above,

exemption percentage for foreign trade

See section 469 and the Instructions for

enter total gross receipts on the

income determined by not using the

Form 8810 for details.

sale, lease, or rental of property

administrative pricing rules. See section

on which the commission income

Instructions for Dividends

923(a)(2).

arose (section 927(b)(2))

. . .

and Dividends-Received

Use lines 3a through 3d to figure the

5. Add lines 3 and 4. Enter here

exemption percentage for foreign trade

Deduction Worksheet

and on line 6f, Schedule B

. .

income that was determined by using the

For purposes of the 20% ownership test on

administrative pricing rules (see section

lines 1 through 7, the percentage of stock

923(a)(3)). If a qualified cooperative is a

owned by the FSC is based on voting power

Line 6h. When making the line 6h

shareholder of the FSC, see section 923(a)

and value of the stock. Preferred stock

allocation, allocate only the commission

(4).

income from the gross receipts on line 4

described in section 1504(a)(4) is not taken

Schedule F

into account.

above. If the small FSC's foreign trading

gross receipts for the tax year (line 6f,

Part I

Schedule B) exceed its allowable limitation

Line 1, Column (a)

(line 6e, Schedule B), the small FSC may

Enter net income from nonexempt foreign

Enter dividends (except those received on

select the gross receipts to which the

trade income and related expenses in Part I.

debt-financed stock acquired after July 18,

limitation is allocated. In such a case,

1984–see section 246A) that:

allocate the amount on line 6g between

Line 2. Enter FSC income that resulted from

Are received from less-than-20%-owned

columns (a) and (b) on line 6h based on

the FSC's cooperation with an international

domestic corporations subject to income tax

whether the administrative pricing rules were

boycott. See section 927(e)(2) and Form

and

used for the gross receipts selected. See

5713 and related schedules and instructions.

Qualify for the 70% deduction under

Regulations section 1.921-2(b), Q&A-4.

Line 3. Enter the amount, if any, of illegal

section 243(a)(1).

Part II

payments, bribes, or kickbacks that the FSC

paid, directly or indirectly, to government

Also include on line 1 dividends (except

Line 19a. Net operating loss deduction.

officials, employees, or agents. See section

those received on debt-financed stock

A FSC may use the NOL incurred in one tax

927(e)(2).

acquired after July 18, 1984) from a

year to reduce its taxable income in another

regulated investment company (RIC). The

Line 5. See the instructions for Schedule A

tax year. Enter on line 19a the total NOL

amount of dividends eligible for the

before completing this line.

carryovers from other tax years, but do not

dividends-received deduction under section

enter more than the FSC's taxable income

Part II

243 is limited by section 854(b). The FSC

(after the dividends-received deduction).

should receive a notice from the RIC

Enter the taxable portion of gross income of

Attach a statement showing the computation

specifying the amount of dividends that

the FSC that was not derived from foreign

of the NOL deduction. Also complete line 7

qualify for the deduction.

trading gross receipts. This type of income

in Additional Information on page 2 of the

includes:

form.

Report so-called dividends or earnings

Small FSCs only. Amounts specifically

For more details on the NOL deduction,

received from mutual savings banks, etc., as

excluded from foreign trade income because

see section 172 and the Instructions for

interest. Do not treat them as dividends.

of the small FSC limitation (the amount by

Form 1139.

which line 6f of Schedule B exceeds line 6e

Line 2, Column (a)

of Schedule B). (Enter the excess, if any, on

Line 19b. Dividends-received deduction.

line 7 of Schedule F.)

A FSC may be entitled to a deduction for

Enter dividends (except those received on

Investment type income. (Enter on lines 8

dividends it receives from other corporations.

debt-financed stock acquired after July 18,

through 12 of Schedule F.)

Complete the worksheet on page 11 using

1984) that are received from

Income from property that is subsidized,

the Instructions for Dividends and

20%-or-more-owned domestic corporations

deemed in short supply, or destined for use

Dividends-Received Deduction Worksheet,

subject to income tax and that are subject to

in the United States. (Enter on lines 13 and

later. Attach the completed worksheet to

the 80% deduction under section 243(c).

14 of Schedule F.)

Form 1120-FSC.

Amounts from transactions that did not

Line 20. Taxable income or (loss). If

Line 3, Column (a)

meet the foreign economic process

line 20 is zero or less, the FSC may have an

requirements. (Enter on line 15 of

Enter the following.

NOL that may be carried back or forward as

Schedule F.)

Dividends received on debt-financed

a deduction to other tax years. Generally, a

Other nonforeign trade income. (Enter on

stock acquired after July 18, 1984, from

FSC first carries back an NOL 2 tax years.

line 16 of Schedule F.)

domestic and foreign corporations subject to

However, the FSC may elect to waive the

For more details, see sections 924(f) and

income tax that would otherwise be subject

carryback period and instead carry the NOL

927(a)(2) and (3).

to the dividends-received deduction under

forward to future tax years. See the

section 243(a)(1), 243(c), or 245(a).

instructions for Additional Information, line 6,

Line 9. Complete the Dividends and

Generally, debt-financed stock is stock that

earlier.

Dividends-Received Deduction Worksheet,

the FSC acquired by incurring a debt (for

Special rules and exceptions to the

later, to figure the total dividends to report on

example, it borrowed money to buy the

2-year carryback period apply to certain

line 9. Attach the completed worksheet to

stock).

NOLs. See the Instructions for Form 1139 for

Form 1120-FSC.

Dividends received from a RIC on

details on these special rules and other

Line 18. Enter the deductions allocated or

debt-financed stock. The amount of

elections that may be available.

apportioned to line 17 income. Attach to

dividends eligible for the dividends-received

Instructions for Form 1120-FSC (Rev. 12-2016)

-9-

Instructions For Form 1120-Fsc - 2016 Page 9

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