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Filing Back Taxes For Free

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Filing Back Taxes For Free

Filing back taxes for free Index A Assistance (see Tax help) C Cancellation of indebtedness, Exclusion of Certain Cancellations of Indebtedness by Reason of the Severe Storms, Tornadoes, or Flooding Casualty and theft losses, Casualty and Theft Losses Charitable contributions, Temporary Suspension of Limits on Charitable Contributions Child tax credit, Earned Income Credit and Child Tax Credit Clean-up costs, Demolition and Clean-up Costs Copy of tax return, request for, Request for copy of tax return. Filing back taxes for free Credits: Child tax, Earned Income Credit and Child Tax Credit Earned income, Earned Income Credit and Child Tax Credit Education, Education Credits Employee retention, Employee Retention Credit Employer housing, Employer Housing Credit and Exclusion Rehabilitation tax, Increase in Rehabilitation Tax Credit D Demolition costs, Demolition and Clean-up Costs Distributions: Home purchase or construction, Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Qualified disaster recovery assistance, Qualified disaster recovery assistance distribution. Filing back taxes for free Repayment of, Repayment of Qualified Disaster Recovery Assistance Distributions Taxation of, Taxation of Qualified Disaster Recovery Assistance Distributions E Earned income credit, Earned Income Credit and Child Tax Credit Education credits, Education Credits Eligible retirement plan, Eligible retirement plan. Filing back taxes for free Employee retention credit, Employee Retention Credit Employer housing credit, Employer Housing Credit and Exclusion Exemption, additional for housing, Additional Exemption for Housing Individuals Displaced by the Severe Storms, Tornadoes, or Flooding F Federal mortgage subsidy, recapture of, Recapture of Federal Mortgage Subsidy Free tax services, How To Get Tax Help H Help (see Tax help) Hope credit (see Education credits) I Involuntary conversion (see Replacement period for nonrecognition of gain) IRAs and other retirement plans, IRAs and Other Retirement Plans L Lifetime learning credit (see Education credits) M Mileage reimbursements, charitable volunteers, Mileage Reimbursements to Charitable Volunteers More information (see Tax help) N Net operating losses, Net Operating Losses P Publications (see Tax help) Q Qualified disaster recovery assistance distribution, Qualified disaster recovery assistance distribution. Filing back taxes for free Qualified disaster recovery assistance loss, Qualified disaster recovery assistance loss. Filing back taxes for free R Rehabilitation tax credit, Increase in Rehabilitation Tax Credit Relocation, temporary, Tax Relief for Temporary Relocation Replacement period for nonrecognition of gain, Replacement Period for Nonrecognition of Gain Retirement plan, eligible, Eligible retirement plan. Filing back taxes for free Retirement plans, IRAs and Other Retirement Plans S Standard mileage rate, charitable use, Standard Mileage Rate for Charitable Use of Vehicles T Tax help, How To Get Tax Help Tax return: Request for copy, Request for copy of tax return. Filing back taxes for free Request for transcript, Request for transcript of tax return. Filing back taxes for free Taxpayer Advocate, Contacting your Taxpayer Advocate. Filing back taxes for free Temporary relocation, Tax Relief for Temporary Relocation Theft losses, Casualty and Theft Losses Transcript of tax return, request for, Request for transcript of tax return. Filing back taxes for free TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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Filing back taxes for free Publication 542 - Main Content Table of Contents Businesses Taxed as CorporationsPersonal services. Filing back taxes for free Employee-owners. Filing back taxes for free Other rules. Filing back taxes for free Other rules. Filing back taxes for free Property Exchanged for StockNonqualified preferred stock. Filing back taxes for free Liabilities. Filing back taxes for free Election to reduce basis. Filing back taxes for free Capital Contributions Filing and Paying Income TaxesIncome Tax Return Penalties Estimated Tax U. Filing back taxes for free S. Filing back taxes for free Real Property Interest Accounting MethodsSection 481(a) adjustment. Filing back taxes for free Accounting Periods Recordkeeping Income, Deductions, and Special ProvisionsCosts of Going Into Business Related Persons Income From Qualifying Shipping Activities Election to Expense Qualified Refinery Property Deduction to Comply With EPA Sulfur Regulations Energy-Efficient Commercial Building Property Deduction Corporate Preference Items Dividends-Received Deduction Extraordinary Dividends Below-Market Loans Charitable Contributions Capital Losses Net Operating Losses At-Risk Limits Passive Activity Limits Figuring TaxTax Rate Schedule Alternative Minimum Tax (AMT) Credits Recapture Taxes Accumulated Earnings Tax Distributions to ShareholdersMoney or Property Distributions Distributions of Stock or Stock Rights Constructive Distributions Reporting Dividends and Other Distributions How To Get Tax Help Businesses Taxed as Corporations The rules you must use to determine whether a business is taxed as a corporation changed for businesses formed after 1996. Filing back taxes for free Business formed before 1997. Filing back taxes for free   A business formed before 1997 and taxed as a corporation under the old rules will generally continue to be taxed as a corporation. Filing back taxes for free Business formed after 1996. Filing back taxes for free   The following businesses formed after 1996 are taxed as corporations. Filing back taxes for free A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic. Filing back taxes for free A business formed under a state law that refers to it as a joint-stock company or joint-stock association. Filing back taxes for free An insurance company. Filing back taxes for free Certain banks. Filing back taxes for free A business wholly owned by a state or local government. Filing back taxes for free A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). Filing back taxes for free Certain foreign businesses. Filing back taxes for free Any other business that elects to be taxed as a corporation. Filing back taxes for free For example, a limited liability company (LLC) can elect to be treated as an association taxable as a corporation by filing Form 8832, Entity Classification Election. Filing back taxes for free For more information about LLCs, see Publication 3402, Taxation of Limited Liability Companies. Filing back taxes for free S corporations. Filing back taxes for free   Some corporations may meet the qualifications for electing to be S corporations. Filing back taxes for free For information on S corporations, see the instructions for Form 1120S, U. Filing back taxes for free S. Filing back taxes for free Income Tax Return for an S Corporation. Filing back taxes for free Personal service corporations. Filing back taxes for free   A corporation is a personal service corporation if it meets all of the following requirements. Filing back taxes for free Its principal activity during the “testing period” is performing personal services (defined later). Filing back taxes for free Generally, the testing period for any tax year is the prior tax year. Filing back taxes for free If the corporation has just been formed, the testing period begins on the first day of its tax year and ends on the earlier of: The last day of its tax year, or The last day of the calendar year in which its tax year begins. Filing back taxes for free Its employee-owners substantially perform the services in (1), above. Filing back taxes for free This requirement is met if more than 20% of the corporation's compensation cost for its activities of performing personal services during the testing period is for personal services performed by employee-owners. Filing back taxes for free Its employee-owners own more than 10% of the fair market value of its outstanding stock on the last day of the testing period. Filing back taxes for free Personal services. Filing back taxes for free   Personal services include any activity performed in the fields of accounting, actuarial science, architecture, consulting, engineering, health (including veterinary services), law, and the performing arts. Filing back taxes for free Employee-owners. Filing back taxes for free   A person is an employee-owner of a personal service corporation if both of the following apply. Filing back taxes for free He or she is an employee of the corporation or performs personal services for, or on behalf of, the corporation (even if he or she is an independent contractor for other purposes) on any day of the testing period. Filing back taxes for free He or she owns any stock in the corporation at any time during the testing period. Filing back taxes for free Other rules. Filing back taxes for free   For other rules that apply to personal service corporations see Accounting Periods, later. Filing back taxes for free Closely held corporations. Filing back taxes for free   A corporation is closely held if all of the following apply. Filing back taxes for free It is not a personal service corporation. Filing back taxes for free At any time during the last half of the tax year, more than 50% of the value of its outstanding stock is, directly or indirectly, owned by or for five or fewer individuals. Filing back taxes for free “Individual” includes certain trusts and private foundations. Filing back taxes for free Other rules. Filing back taxes for free   For the at-risk rules that apply to closely held corporations, seeAt-Risk Limits, later. Filing back taxes for free Property Exchanged for Stock If you transfer property (or money and property) to a corporation in exchange for stock in that corporation (other than nonqualified preferred stock, described later), and immediately afterward you are in control of the corporation, the exchange is usually not taxable. Filing back taxes for free This rule applies both to individuals and to groups who transfer property to a corporation. Filing back taxes for free It also applies whether the corporation is being formed or is already operating. Filing back taxes for free It does not apply in the following situations. Filing back taxes for free The corporation is an investment company. Filing back taxes for free You transfer the property in a bankruptcy or similar proceeding in exchange for stock used to pay creditors. Filing back taxes for free The stock is received in exchange for the corporation's debt (other than a security) or for interest on the corporation's debt (including a security) that accrued while you held the debt. Filing back taxes for free Both the corporation and any person involved in a nontaxable exchange of property for stock must attach to their income tax returns a complete statement of all facts pertinent to the exchange. Filing back taxes for free For more information, see section 1. Filing back taxes for free 351-3 of the Regulations. Filing back taxes for free Control of a corporation. Filing back taxes for free   To be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock. Filing back taxes for free Example 1. Filing back taxes for free You and Bill Jones buy property for $100,000. Filing back taxes for free You both organize a corporation when the property has a fair market value of $300,000. Filing back taxes for free You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. Filing back taxes for free No gain is recognized by you, Bill, or the corporation. Filing back taxes for free Example 2. Filing back taxes for free You and Bill transfer the property with a basis of $100,000 to a corporation in exchange for stock with a fair market value of $300,000. Filing back taxes for free This represents only 75% of each class of stock of the corporation. Filing back taxes for free The other 25% was already issued to someone else. Filing back taxes for free You and Bill recognize a taxable gain of $200,000 on the transaction. Filing back taxes for free Services rendered. Filing back taxes for free   The term property does not include services rendered or to be rendered to the issuing corporation. Filing back taxes for free The value of stock received for services is income to the recipient. Filing back taxes for free Example. Filing back taxes for free You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. Filing back taxes for free Right after the exchange, you own 85% of the outstanding stock. Filing back taxes for free No gain is recognized on the exchange of property. Filing back taxes for free However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation. Filing back taxes for free Property of relatively small value. Filing back taxes for free   The term property does not include property of a relatively small value when it is compared to the value of stock and securities already owned or to be received for services by the transferor if the main purpose of the transfer is to qualify for the nonrecognition of gain or loss by other transferors. Filing back taxes for free   Property transferred will not be considered to be of relatively small value if its fair market value is at least 10% of the fair market value of the stock and securities already owned or to be received for services by the transferor. Filing back taxes for free Stock received in disproportion to property transferred. Filing back taxes for free   If a group of transferors exchange property for corporate stock, each transferor does not have to receive stock in proportion to his or her interest in the property transferred. Filing back taxes for free If a disproportionate transfer takes place, it will be treated for tax purposes in accordance with its true nature. Filing back taxes for free It may be treated as if the stock were first received in proportion and then some of it used to make gifts, pay compensation for services, or satisfy the transferor's obligations. Filing back taxes for free Money or other property received. Filing back taxes for free   If, in an otherwise nontaxable exchange of property for corporate stock, you also receive money or property other than stock, you may have to recognize gain. Filing back taxes for free You must recognize gain only up to the amount of money plus the fair market value of the other property you receive. Filing back taxes for free The rules for figuring the recognized gain in this situation generally follow those for a partially nontaxable exchange discussed in Publication 544 under Like-Kind Exchanges. Filing back taxes for free If the property you give up includes depreciable property, the recognized gain may have to be reported as ordinary income from depreciation. Filing back taxes for free See chapter 3 of Publication 544. Filing back taxes for free No loss is recognized. Filing back taxes for free Nonqualified preferred stock. Filing back taxes for free   Nonqualified preferred stock is treated as property other than stock. Filing back taxes for free Generally, it is preferred stock with any of the following features. Filing back taxes for free The holder has the right to require the issuer or a related person to redeem or buy the stock. Filing back taxes for free The issuer or a related person is required to redeem or buy the stock. Filing back taxes for free The issuer or a related person has the right to redeem or buy the stock and, on the issue date, it is more likely than not that the right will be exercised. Filing back taxes for free The dividend rate on the stock varies with reference to interest rates, commodity prices, or similar indices. Filing back taxes for free For a detailed definition of nonqualified preferred stock, see section 351(g)(2) of the Internal Revenue Code. Filing back taxes for free Liabilities. Filing back taxes for free   If the corporation assumes your liabilities, the exchange generally is not treated as if you received money or other property. Filing back taxes for free There are two exceptions to this treatment. Filing back taxes for free If the liabilities the corporation assumes are more than your adjusted basis in the property you transfer, gain is recognized up to the difference. Filing back taxes for free However, if the liabilities assumed give rise to a deduction when paid, such as a trade account payable or interest, no gain is recognized. Filing back taxes for free If there is no good business reason for the corporation to assume your liabilities, or if your main purpose in the exchange is to avoid federal income tax, the assumption is treated as if you received money in the amount of the liabilities. Filing back taxes for free For more information on the assumption of liabilities, see section 357(d) of the Internal Revenue Code. Filing back taxes for free Example. Filing back taxes for free You transfer property to a corporation for stock. Filing back taxes for free Immediately after the transfer, you control the corporation. Filing back taxes for free You also receive $10,000 in the exchange. Filing back taxes for free Your adjusted basis in the transferred property is $20,000. Filing back taxes for free The stock you receive has a fair market value (FMV) of $16,000. Filing back taxes for free The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. Filing back taxes for free Gain is realized as follows. Filing back taxes for free FMV of stock received $16,000 Cash received 10,000 Liability assumed by corporation 5,000 Total received $31,000 Minus: Adjusted basis of property transferred 20,000 Realized gain $11,000   The liability assumed is not treated as money or other property. Filing back taxes for free The recognized gain is limited to $10,000, the cash received. Filing back taxes for free Loss on exchange. Filing back taxes for free   If you have a loss from an exchange and own, directly or indirectly, more than 50% of the corporation's stock, you cannot deduct the loss. Filing back taxes for free For more information, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Filing back taxes for free Basis of stock or other property received. Filing back taxes for free   The basis of the stock you receive is generally the adjusted basis of the property you transfer. Filing back taxes for free Increase this amount by any amount treated as a dividend, plus any gain recognized on the exchange. Filing back taxes for free Decrease this amount by any cash you received, the fair market value of any other property you received, and any loss recognized on the exchange. Filing back taxes for free Also decrease this amount by the amount of any liability the corporation or another party to the exchange assumed from you, unless payment of the liability gives rise to a deduction when paid. Filing back taxes for free    Further decreases may be required when the corporation or another party to the exchange assumes from you a liability that gives rise to a deduction when paid, if the basis of the stock would otherwise be higher than its fair market value on the date of the exchange. Filing back taxes for free This rule does not apply if the entity assuming the liability acquired either substantially all of the assets or the trade or business with which the liability is associated. Filing back taxes for free The basis of any other property you receive is its fair market value on the date of the trade. Filing back taxes for free Basis of property transferred. Filing back taxes for free   A corporation that receives property from you in exchange for its stock generally has the same basis you had in the property, increased by any gain you recognized on the exchange. Filing back taxes for free However, the increase for the gain recognized may be limited. Filing back taxes for free For more information, see section 362 of the Internal Revenue Code. Filing back taxes for free Election to reduce basis. Filing back taxes for free   In a section 351 transaction, if the adjusted basis of the property transferred exceeds the property's fair market value, the transferor and transferee may make an irrevocable election to treat the basis of the stock received by the transferor as having a basis equal to the fair market value of the property transferred. Filing back taxes for free The transferor and transferee make this election by attaching a statement to their tax returns filed by the due date (including extensions) for the tax year in which the transaction occurred. Filing back taxes for free However, if the transferor makes the election by including the certification provided in Notice 2005-70, 2005-41, I. Filing back taxes for free R. Filing back taxes for free B. Filing back taxes for free 694, on or with its tax return filed by the due date (including extensions), then no election need be made by the transferee. Filing back taxes for free    For more information on making this election, see section 362(e)(2)(C) of the Internal Revenue Code, and Notice 2005-70. Filing back taxes for free Capital Contributions This section explains the tax treatment of contributions from shareholders and nonshareholders. Filing back taxes for free Paid-in capital. Filing back taxes for free   Contributions to the capital of a corporation, whether or not by shareholders, are paid-in capital. Filing back taxes for free These contributions are not taxable to the corporation. Filing back taxes for free Basis. Filing back taxes for free   The corporation's basis of property contributed to capital by a shareholder is the same as the basis the shareholder had in the property, increased by any gain the shareholder recognized on the exchange. Filing back taxes for free However, the increase for the gain recognized may be limited. Filing back taxes for free For more information, see Basis of property transferred, above, and section 362 of the Internal Revenue Code. Filing back taxes for free   The basis of property contributed to capital by a person other than a shareholder is zero. Filing back taxes for free   If a corporation receives a cash contribution from a person other than a shareholder, the corporation must reduce the basis of any property acquired with the contribution during the 12-month period beginning on the day it received the contribution by the amount of the contribution. Filing back taxes for free If the amount contributed is more than the cost of the property acquired, then reduce, but not below zero, the basis of the other properties held by the corporation on the last day of the 12-month period in the following order. Filing back taxes for free Depreciable property. Filing back taxes for free Amortizable property. Filing back taxes for free Property subject to cost depletion but not to percentage depletion. Filing back taxes for free All other remaining properties. Filing back taxes for free   Reduce the basis of property in each category to zero before going on to the next category. Filing back taxes for free   There may be more than one piece of property in each category. Filing back taxes for free Base the reduction of the basis of each property on the following ratio:   Basis of each piece of property   Bases of all properties (within that category) If the corporation wishes to make this adjustment in some other way, it must get IRS approval. Filing back taxes for free The corporation files a request for approval with its income tax return for the tax year in which it receives the contribution. Filing back taxes for free Filing and Paying Income Taxes The federal income tax is a pay-as-you-go tax. Filing back taxes for free A corporation generally must make estimated tax payments as it earns or receives income during its tax year. Filing back taxes for free After the end of the year, the corporation must file an income tax return. Filing back taxes for free This section will help you determine when and how to pay and file corporate income taxes. Filing back taxes for free For certain corporations affected by Presidentially declared disasters such as hurricanes, the due dates for filing returns, paying taxes, and performing other time-sensitive acts may be extended. Filing back taxes for free The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. Filing back taxes for free For more information, visit www. Filing back taxes for free irs. Filing back taxes for free gov/newsroom/article/0,,id=108362. Filing back taxes for free 00. Filing back taxes for free Income Tax Return This section will help you determine when and how to report a corporation's income tax. Filing back taxes for free Who must file. Filing back taxes for free   Unless exempt under section 501 of the Internal Revenue Code, all domestic corporations in existence for any part of a tax year (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income. Filing back taxes for free Which form to file. Filing back taxes for free   A corporation generally must file Form 1120, U. Filing back taxes for free S. Filing back taxes for free Corporation Income Tax Return, to report its income, gains, losses, deductions, credits, and to figure its income tax liability. Filing back taxes for free Certain organizations and entities must file special returns. Filing back taxes for free For more information, see Special Returns for Certain Organizations, in the Instructions for Form 1120. Filing back taxes for free Electronic filing. Filing back taxes for free   Corporations can generally electronically file (e-file) Form 1120 and certain related forms, schedules, and attachments. Filing back taxes for free Certain corporations with total assets of $10 million or more, that file at least 250 returns a year must e-file Form 1120. Filing back taxes for free However, in certain instances, these corporations can request a waiver. Filing back taxes for free For more information regarding electronic filing, visit www. Filing back taxes for free irs. Filing back taxes for free gov/efile. Filing back taxes for free When to file. Filing back taxes for free   Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. Filing back taxes for free A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. Filing back taxes for free A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved. Filing back taxes for free Example 1. Filing back taxes for free A corporation's tax year ends December 31. Filing back taxes for free It must file its income tax return by March 15th. Filing back taxes for free Example 2. Filing back taxes for free A corporation's tax year ends June 30. Filing back taxes for free It must file its income tax return by September 15th. Filing back taxes for free   If the due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day. Filing back taxes for free Extension of time to file. Filing back taxes for free   File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information and Other Returns, to request an extension of time to file a corporation income tax return. Filing back taxes for free The IRS will grant the extension if you complete the form properly, file it, and pay any tax due by the original due date for the return. Filing back taxes for free   Form 7004 does not extend the time for paying the tax due on the return. Filing back taxes for free Interest, and possibly penalties, will be charged on any part of the final tax due not shown as a balance due on Form 7004. Filing back taxes for free The interest is figured from the original due date of the return to the date of payment. Filing back taxes for free   For more information, see the instructions for Form 7004. Filing back taxes for free How to pay your taxes. Filing back taxes for free   A corporation must pay its tax due in full no later than the 15th day of the 3rd month after the end of its tax year. Filing back taxes for free Electronic Federal Tax Payment System (EFTPS). Filing back taxes for free   Corporations generally must use EFTPS to make deposits of all tax liabilities (including social security, Medicare, withheld income, excise, and corporate income taxes). Filing back taxes for free For more information on EFTPS and enrollment, visit www. Filing back taxes for free eftps. Filing back taxes for free gov or call 1-800-555-4477. Filing back taxes for free Also see Publication 966, The Secure Way to Pay Your Federal Taxes. Filing back taxes for free Note. Filing back taxes for free Forms 8109 and 8109-B, Federal Tax Deposit Coupon, can no longer be used to make federal tax deposits. Filing back taxes for free Penalties Generally, if the corporation receives a notice about interest and penalties after it files its return, send the IRS an explanation and we will determine if the corporation meets reasonable-cause criteria. Filing back taxes for free Do not attach an explanation when the corporation's return is filed. Filing back taxes for free See the instructions for your income tax return. Filing back taxes for free Late filing of return. Filing back taxes for free    A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. Filing back taxes for free If the corporation is charged a penalty for late payment of tax (discussed next) for the same period of time, the penalty for late filing is reduced by the amount of the penalty for late payment. Filing back taxes for free The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $100. Filing back taxes for free The penalty will not be imposed if the corporation can show the failure to file on time was due to a reasonable cause. Filing back taxes for free Late payment of tax. Filing back taxes for free    A corporation that does not pay the tax when due may be penalized ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. Filing back taxes for free The penalty will not be imposed if the corporation can show that the failure to pay on time was due to a reasonable cause. Filing back taxes for free Trust fund recovery penalty. Filing back taxes for free   If income, social security, and Medicare taxes that a corporation must withhold from employee wages are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Filing back taxes for free The penalty is the full amount of the unpaid trust fund tax. Filing back taxes for free This penalty may apply to you if these unpaid taxes cannot be immediately collected from the business. Filing back taxes for free   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying these taxes, and who acted willfully in not doing so. Filing back taxes for free   A responsible person can be an officer or employee of a corporation, an accountant, or a volunteer director/trustee. Filing back taxes for free A responsible person also may include one who signs checks for the corporation or otherwise has authority to cause the spending of business funds. Filing back taxes for free   Willfully means voluntarily, consciously, and intentionally. Filing back taxes for free A responsible person acts willfully if the person knows the required actions are not taking place. Filing back taxes for free   For more information on withholding and paying these taxes, see Publication 15 (Circular E), Employer's Tax Guide, and Publication 51, (Circular A), Agricultural Employer's Tax Guide. Filing back taxes for free Other penalties. Filing back taxes for free   Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. Filing back taxes for free See sections 6662, 6662A, and 6663 of the Internal Revenue Code. Filing back taxes for free Estimated Tax Generally, a corporation must make installment payments if it expects its estimated tax for the year to be $500 or more. Filing back taxes for free If the corporation does not pay the installments when they are due, it could be subject to an underpayment penalty. Filing back taxes for free This section will explain how to avoid this penalty. Filing back taxes for free When to pay estimated tax. Filing back taxes for free   Installment payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. Filing back taxes for free Example 1. Filing back taxes for free Your corporation's tax year ends December 31. Filing back taxes for free Installment payments are due on April 15, June 15, September 15, and December 15. Filing back taxes for free Example 2. Filing back taxes for free Your corporation's tax year ends June 30. Filing back taxes for free Installment payments are due on October 15, December 15, March 15, and June 15. Filing back taxes for free   If any due date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next business day. Filing back taxes for free How to figure each required installment. Filing back taxes for free   Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to figure each required installment of estimated tax. Filing back taxes for free You will generally use one of the following two methods to figure each required installment. Filing back taxes for free You should use the method that yields the smallest installment payments. Filing back taxes for free Note. Filing back taxes for free In these discussions, “return” generally refers to the corporation's original return. Filing back taxes for free However, an amended return is considered the original return if it is filed by the due date (including extensions) of the original return. Filing back taxes for free Method 1. Filing back taxes for free   Each required installment is 25% of the income tax the corporation will show on its return for the current year. Filing back taxes for free Method 2. Filing back taxes for free   Each required installment is 25% of the income tax shown on the corporation's return for the previous year. Filing back taxes for free   To use Method 2: The corporation must have filed a return for the previous year, The return must have been for a full 12 months, and The return must have shown a positive tax liability (not zero). Filing back taxes for free Also, if the corporation is a large corporation, it can use Method 2 to figure the first installment only. Filing back taxes for free   See the Instructions for Form 1120-W, for the definition of a large corporation and other special rules for large corporations. Filing back taxes for free Other methods. Filing back taxes for free   If a corporation's income is expected to vary during the year because, for example, its business is seasonal, it may be able to lower the amount of one or more required installments by using one or both of the following methods. Filing back taxes for free The annualized income installment method. Filing back taxes for free The adjusted seasonal installment method. Filing back taxes for free Use Schedule A of Form 1120-W to determine if using one or both of these methods will lower the amount of any required installments. Filing back taxes for free Refiguring required installments. Filing back taxes for free   If after the corporation figures and deposits its estimated tax it finds that its tax liability for the year will be more or less than originally estimated, it may have to refigure its required installments to see if an underpayment penalty may apply. Filing back taxes for free An immediate catchup payment should be made to reduce any penalty resulting from the underpayment of any earlier installments. Filing back taxes for free Underpayment penalty. Filing back taxes for free   If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty. Filing back taxes for free The penalty is figured separately for each installment due date. Filing back taxes for free The corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment. Filing back taxes for free This is true even if the corporation is due a refund when its return is filed. Filing back taxes for free Form 2220. Filing back taxes for free   Use Form 2220, Underpayment of Estimated Tax by Corporations, to determine if a corporation is subject to the penalty for underpayment of estimated tax and to figure the amount of the penalty. Filing back taxes for free   If the corporation is charged a penalty, the amount of the penalty depends on the following three factors. Filing back taxes for free The amount of the underpayment. Filing back taxes for free The period during which the underpayment was due and unpaid. Filing back taxes for free The interest rate for underpayments published quarterly by the IRS in the Internal Revenue Bulletin. Filing back taxes for free   A corporation generally does not have to file Form 2220 with its income tax return because the IRS will figure any penalty and bill the corporation. Filing back taxes for free However, even if the corporation does not owe a penalty, complete and attach the form to the corporation's tax return if any of the following apply. Filing back taxes for free The annualized income installment method was used to figure any required installment. Filing back taxes for free The adjusted seasonal installment method was used to figure any required installment. Filing back taxes for free The corporation is a large corporation figuring its first required installment based on the prior year's tax. Filing back taxes for free How to pay estimated tax. Filing back taxes for free   A corporation is generally required to use EFTPS to pay its taxes. Filing back taxes for free See Electronic Federal Tax Payment System (EFTPS), earlier. Filing back taxes for free Also see the Instructions for Form 1120-W. Filing back taxes for free Quick refund of overpayments. Filing back taxes for free   A corporation that has overpaid its estimated tax for the tax year may be able to apply for a quick refund. Filing back taxes for free Use Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, to apply for a quick refund of an overpayment of estimated tax. Filing back taxes for free A corporation can apply for a quick refund if the overpayment is: At least 10% of its expected tax liability, and At least $500. Filing back taxes for free Use Form 4466 to figure the corporation's expected tax liability and the overpayment of estimated tax. Filing back taxes for free File Form 4466 before the 16th day of the 3rd month after the end of the tax year, but before the corporation files its income tax return. Filing back taxes for free Do not file Form 4466 before the end of the corporation's tax year. Filing back taxes for free An extension of time to file the corporation's income tax return will not extend the time for filing Form 4466. Filing back taxes for free The IRS will act on the form within 45 days from the date you file it. Filing back taxes for free U. Filing back taxes for free S. Filing back taxes for free Real Property Interest If a domestic corporation acquires a U. Filing back taxes for free S. Filing back taxes for free real property interest from a foreign person or firm, the corporation may have to withhold tax on the amount it pays for the property. Filing back taxes for free The amount paid includes cash, the fair market value of other property, and any assumed liability. Filing back taxes for free If a domestic corporation distributes a U. Filing back taxes for free S. Filing back taxes for free real property interest to a foreign person or firm, it may have to withhold tax on the fair market value of the property. Filing back taxes for free A corporation that fails to withhold may be liable for the tax, and any penalties and interest that apply. Filing back taxes for free For more information, see section 1445 of the Internal Revenue Code; Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities; Form 8288, U. Filing back taxes for free S. Filing back taxes for free Withholding Tax Return for Dispositions by Foreign Persons of U. Filing back taxes for free S. Filing back taxes for free Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Filing back taxes for free S. Filing back taxes for free Real Property Interests. Filing back taxes for free Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Filing back taxes for free Taxable income should be determined using the method of accounting regularly used in keeping the corporation's books and records. Filing back taxes for free In all cases, the method used must clearly show taxable income. Filing back taxes for free Generally, permissible methods include: Cash, Accrual, or Any other method authorized by the Internal Revenue Code. Filing back taxes for free Accrual method. Filing back taxes for free   Generally, a corporation (other than a qualified personal service corporation) must use the accrual method of accounting if its average annual gross receipts exceed $5 million. Filing back taxes for free A corporation engaged in farming operations also must use the accrual method. Filing back taxes for free   If inventories are required, the accrual method generally must be used for sales and purchases of merchandise. Filing back taxes for free However, qualifying taxpayers and eligible businesses of qualifying small business taxpayers are excepted from using the accrual method for eligible trades or businesses and may account for inventoriable items as materials and supplies that are not incidental. Filing back taxes for free   Under the accrual method, an amount is includable in income when: All the events have occurred that fix the right to receive the income, which is the earliest of the date: The required performance takes place, Payment is due, or Payment is received; and The amount can be determined with reasonable accuracy. Filing back taxes for free   Generally, an accrual basis taxpayer can deduct accrued expenses in the tax year when: All events that determine the liability have occurred, The amount of the liability can be figured with reasonable accuracy, and Economic performance takes place with respect to the expense. Filing back taxes for free   There are exceptions to the economic performance rule for certain items, including recurring expenses. Filing back taxes for free See section 461(h) of the Internal Revenue Code and the related regulations for the rules for determining when economic performance takes place. Filing back taxes for free Nonaccrual experience method. Filing back taxes for free   Accrual method corporations are not required to maintain accruals for certain amounts from the performance of services that, on the basis of their experience, will not be collected, if: The services are in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; or The corporation's average annual gross receipts for the 3 prior tax years does not exceed $5 million. Filing back taxes for free   This provision does not apply if interest is required to be paid on the amount or if there is any penalty for failure to pay the amount timely. Filing back taxes for free Percentage of completion method. Filing back taxes for free   Long-term contracts (except for certain real property construction contracts) must generally be accounted for using the percentage of completion method described in section 460 of the Internal Revenue Code. Filing back taxes for free Mark-to-market accounting method. Filing back taxes for free   Generally, dealers in securities must use the mark-to-market accounting method described in section 475 of the Internal Revenue Code. Filing back taxes for free Under this method any security held by a dealer as inventory must be included in inventory at its FMV. Filing back taxes for free Any security not held as inventory at the close of the tax year is treated as sold at its FMV on the last business day of the tax year. Filing back taxes for free Any gain or loss must be taken into account in determining gross income. Filing back taxes for free The gain or loss taken into account is treated as ordinary gain or loss. Filing back taxes for free   Dealers in commodities and traders in securities and commodities can elect to use the mark-to-market accounting method. Filing back taxes for free Change in accounting method. Filing back taxes for free   A corporation can change its method of accounting used to report taxable income (for income as a whole or for the treatment of any material item). Filing back taxes for free The corporation must file Form 3115, Application for Change in Accounting Method. Filing back taxes for free For more information, see Form 3115 and Publication 538. Filing back taxes for free Section 481(a) adjustment. Filing back taxes for free   The corporation may have to make an adjustment under section 481(a) of the Internal Revenue Code to prevent amounts of income or expense from being duplicated or omitted. Filing back taxes for free The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years for a net positive adjustment. Filing back taxes for free However, a corporation can elect to use a 1-year adjustment period if the net section 481(a) adjustment for the change is less than $25,000. Filing back taxes for free The corporation must complete the appropriate lines of Form 3115 to make the election. Filing back taxes for free See the Instructions for Form 3115. Filing back taxes for free Accounting Periods A corporation must figure its taxable income on the basis of a tax year. Filing back taxes for free A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. Filing back taxes for free Generally, corporations can use either a calendar year or a fiscal year as its tax year. Filing back taxes for free Unless special rules apply, a corporation generally adopts a tax year by filing its first federal income tax return using that tax year. Filing back taxes for free For more information, see Publication 538. Filing back taxes for free Personal service corporation. Filing back taxes for free   A personal service corporation must use a calendar year as its tax year unless: It elects to use a 52–53 week tax year that ends with reference to the calendar year; It can establish a business purpose for a different tax year and obtains approval of the IRS. Filing back taxes for free See Form 1128, Application To Adopt, Change, or Retain a Tax Year, and Publication 538; or It elects under section 444 of the Internal Revenue Code to have a tax year other than a calendar year. Filing back taxes for free Use Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, to make the election. Filing back taxes for free   If a personal service corporation makes a section 444 election, its deduction for certain amounts paid to employee-owners may be limited. Filing back taxes for free See Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC), to figure the maximum deduction. Filing back taxes for free Change of tax year. Filing back taxes for free   Generally, a corporation must get the consent of the IRS before changing its tax year by filing Form 1128. Filing back taxes for free However, under certain conditions, a corporation can change its tax year without getting the consent. Filing back taxes for free For more information, see Form 1128 and Publication 538. Filing back taxes for free Recordkeeping A corporation should keep its records for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Filing back taxes for free Usually records that support items of income, deductions, or credits on the return must be kept for 3 years from the date the return is due or filed, whichever is later. Filing back taxes for free Keep records that verify the corporation's basis in property for as long as they are needed to figure the basis of the original or replacement property. Filing back taxes for free The corporation should keep copies of all filed returns. Filing back taxes for free They help in preparing future and amended returns and in the calculation of earnings and profits. Filing back taxes for free Income, Deductions, and Special Provisions Rules on income and deductions that apply to individuals also apply, for the most part, to corporations. Filing back taxes for free However, the following special provisions apply only to corporations. Filing back taxes for free Costs of Going Into Business When you go into business, treat all costs you incur to get your business started as capital expenses. Filing back taxes for free However, a corporation can elect to deduct a limited amount of start-up or organizational costs. Filing back taxes for free Any costs not deducted can be amortized. Filing back taxes for free Start-up costs are costs for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Filing back taxes for free Organizational costs are the direct costs of creating the corporation. Filing back taxes for free For more information on deducting or amortizing start-up and organizational costs, see the instructions for your income tax return. Filing back taxes for free Also see, Publication 535, chapter 7, Costs You Can Deduct or Capitalize, and chapter 8, Amortization. Filing back taxes for free Related Persons A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income. Filing back taxes for free Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Filing back taxes for free If a deduction is denied, the rule will continue to apply even if the corporation's relationship with the person ends before the expense or interest is includible in the gross income of that person. Filing back taxes for free These rules also deny the deduction of losses on the sale or exchange of property between related persons. Filing back taxes for free Related persons. Filing back taxes for free   For purposes of this rule, the following persons are related to a corporation. Filing back taxes for free Another corporation, that is a member of the same controlled group (as defined in section 267(f) of the Internal Revenue Code). Filing back taxes for free An individual who owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. Filing back taxes for free A trust fiduciary, when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation. Filing back taxes for free An S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Filing back taxes for free A partnership, if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership. Filing back taxes for free Any employee-owner, if the corporation is a personal service corporation (see Personal service corporation, earlier), regardless of the amount of stock owned by the employee-owner. Filing back taxes for free Ownership of stock. Filing back taxes for free   To determine whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following apply. Filing back taxes for free Stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust, is treated as being owned proportionately by or for its shareholders, partners, or beneficiaries. Filing back taxes for free An individual is treated as owning the stock owned, directly or indirectly, by or for the individual's family. Filing back taxes for free Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants. Filing back taxes for free Any individual owning (other than by applying (2), above) stock in a corporation, is treated as also owning the stock owned directly or indirectly by that individual's partner. Filing back taxes for free To apply (1), (2), or (3), above, stock constructively owned by a person under (1) is treated as actually owned by that person. Filing back taxes for free But stock constructively owned by an individual under (2) or (3) is not treated as actually owned by the individual for applying either (2) or (3) to make another person the constructive owner of that stock. Filing back taxes for free Reallocation of income and deductions. Filing back taxes for free   Where it is necessary to clearly show income or prevent tax evasion, the IRS can reallocate gross income, deductions, credits, or allowances between two or more organizations, trades, or businesses owned or controlled directly, or indirectly, by the same interests. Filing back taxes for free Complete liquidations. Filing back taxes for free   The disallowance of losses from the sale or exchange of property between related persons does not apply to liquidating distributions. Filing back taxes for free More information. Filing back taxes for free   For more information about the related person rules, see Publication 544. Filing back taxes for free Income From Qualifying Shipping Activities A corporation may make an election to be taxed on its notional shipping income at the highest corporate tax rate. Filing back taxes for free If a corporation makes this election it may exclude income from qualifying shipping activities from gross income. Filing back taxes for free Also if the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. Filing back taxes for free A corporation making this election may also elect to defer gain on the disposition of a qualifying vessel. Filing back taxes for free A corporation uses Form 8902, Alternative Tax on Qualifying Shipping Activities, to make the election and figure the alternative tax. Filing back taxes for free For more information regarding the election, see Form 8902. Filing back taxes for free Election to Expense Qualified Refinery Property A corporation can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct 50% of the cost of qualified refinery property (defined in section 179C(c) of the Internal Revenue Code), placed in service before January 1, 2014. Filing back taxes for free The deduction is allowed for the year in which the property is placed in service. Filing back taxes for free A subchapter T cooperative can make an irrevocable election on its return by the due date (including extensions) to allocate this deduction to its owners based on their ownership interest. Filing back taxes for free For more information, see section 179C of the Internal Revenue Code and the related Regulations. Filing back taxes for free Deduction to Comply With EPA Sulfur Regulations A small business refiner can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct up to 75% of qualified costs paid or incurred to comply with the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency (EPA). Filing back taxes for free A subchapter T cooperative can make an irrevocable election on its return filed by the due date (including extensions) to allocate the deduction to its owners based on their ownership interest. Filing back taxes for free For more information, see sections 45H and 179B of the Internal Revenue Code and the related Regulations. Filing back taxes for free Energy-Efficient Commercial Building Property Deduction A corporation can claim a deduction for costs associated with energy-efficient commercial building property, placed in service before January 1, 2014. Filing back taxes for free In order to qualify for the deduction: The costs must be associated with depreciable or amortizable property in a Standard 90. Filing back taxes for free 1-2001 domestic building; The property must be either a part of the interior lighting system, the heating, cooling, ventilation and hot water system, or the building envelope (defined in section 179D(c)(1)(C) of the Internal Revenue Code); and The property must be installed as part of a plan to reduce the total annual energy and power costs of the building by 50% or more. Filing back taxes for free The deduction is limited to $1. Filing back taxes for free 80 per square foot of the building less the total amount of deductions taken for this property in prior tax years. Filing back taxes for free Other rules and limitations apply. Filing back taxes for free The corporation must reduce the basis of any property by any deduction taken. Filing back taxes for free The deduction is subject to recapture if the corporation fails to fully implement an energy savings plan. Filing back taxes for free For more information, see section 179D of the Internal Revenue Code. Filing back taxes for free Also see Notice 2006-52, 2006-26 I. Filing back taxes for free R. Filing back taxes for free B. Filing back taxes for free 1175, clarified and amplified by Notice 2008-40, 2008-14 I. Filing back taxes for free R. Filing back taxes for free B. Filing back taxes for free 725, and any successor. Filing back taxes for free Corporate Preference Items A corporation must make special adjustments to certain items before it takes them into account in determining its taxable income. Filing back taxes for free These items are known as corporate preference items and they include the following. Filing back taxes for free Gain on the disposition of section 1250 property. Filing back taxes for free For more information, see section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Filing back taxes for free Percentage depletion for iron ore and coal (including lignite). Filing back taxes for free For more information, see Mines and Geothermal Deposits under Mineral Property in chapter 9 of Publication 535. Filing back taxes for free Amortization of pollution control facilities. Filing back taxes for free For more information, see Pollution Control Facilities in chapter 8 of Publication 535 and section 291(a)(5) of the Internal Revenue Code. Filing back taxes for free Mineral exploration and development costs. Filing back taxes for free For more information, see Exploration Costs and Development Costs in chapter 7 of Publication 535. Filing back taxes for free For more information on corporate preference items, see section 291 of the Internal Revenue Code. Filing back taxes for free Dividends-Received Deduction A corporation can deduct a percentage of certain dividends received during its tax year. Filing back taxes for free This section discusses the general rules that apply. Filing back taxes for free The deduction is figured on Form 1120, Schedule C, or the applicable schedule of your income tax return. Filing back taxes for free For more information, see the Instructions for Form 1120, or the instructions for your applicable income tax return. Filing back taxes for free Dividends from domestic corporations. Filing back taxes for free   A corporation can deduct, within certain limits, 70% of the dividends received if the corporation receiving the dividend owns less than 20% of the corporation distributing the dividend. Filing back taxes for free If the corporation owns 20% or more of the distributing corporation's stock, it can, subject to certain limits, deduct 80% of the dividends received. Filing back taxes for free Ownership. Filing back taxes for free   Determine ownership, for these rules, by the amount of voting power and value of the paying corporation's stock (other than certain preferred stock) the receiving corporation owns. Filing back taxes for free Small business investment companies. Filing back taxes for free   Small business investment companies can deduct 100% of the dividends received from taxable domestic corporations. Filing back taxes for free Dividends from regulated investment companies. Filing back taxes for free   Regulated investment company dividends received are subject to certain limits. Filing back taxes for free Capital gain dividends received from a regulated investment company do not qualify for the deduction. Filing back taxes for free For more information, see section 854 of the Internal Revenue Code. Filing back taxes for free No deduction allowed for certain dividends. Filing back taxes for free   Corporations cannot take a deduction for dividends received from the following entities. Filing back taxes for free A real estate investment trust (REIT). Filing back taxes for free A corporation exempt from tax under section 501 or 521 of the Internal Revenue Code either for the tax year of the distribution or the preceding tax year. Filing back taxes for free A corporation whose stock was held less than 46 days during the 91-day period beginning 45 days before the stock became ex-dividend with respect to the dividend. Filing back taxes for free Ex-dividend means the holder has no rights to the dividend. Filing back taxes for free A corporation whose preferred stock was held less than 91 days during the 181-day period beginning 90 days before the stock became ex-dividend with respect to the dividend if the dividends received are for a period or periods totaling more than 366 days. Filing back taxes for free Any corporation, if your corporation is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Filing back taxes for free Dividends on deposits. Filing back taxes for free   Dividends on deposits or withdrawable accounts in domestic building and loan associations, mutual savings banks, cooperative banks, and similar organizations are interest, not dividends. Filing back taxes for free They do not qualify for this deduction. Filing back taxes for free Limit on deduction for dividends. Filing back taxes for free   The total deduction for dividends received or accrued is generally limited (in the following order) to: 80% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from 20%-owned corporations, then 70% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from less-than-20%-owned corporations (reducing taxable income by the total dividends received from 20%-owned corporations). Filing back taxes for free Figuring the limit. Filing back taxes for free   In figuring the limit, determine taxable income without the following items. Filing back taxes for free The net operating loss deduction. Filing back taxes for free The domestic production activities deduction. Filing back taxes for free The deduction for dividends received. Filing back taxes for free Any adjustment due to the nontaxable part of an extraordinary dividend (see Extraordinary Dividends, below). Filing back taxes for free Any capital loss carryback to the tax year. Filing back taxes for free Effect of net operating loss. Filing back taxes for free   If a corporation has a net operating loss (NOL) for a tax year, the limit of 80% (or 70%) of taxable income does not apply. Filing back taxes for free To determine whether a corporation has an NOL, figure the dividends-received deduction without the 80% (or 70%) of taxable income limit. Filing back taxes for free Example 1. Filing back taxes for free A corporation loses $25,000 from operations. Filing back taxes for free It receives $100,000 in dividends from a 20%-owned corporation. Filing back taxes for free Its taxable income is $75,000 ($100,000 – $25,000) before the deduction for dividends received. Filing back taxes for free If it claims the full dividends-received deduction of $80,000 ($100,000 × 80%) and combines it with an operations loss of $25,000, it will have an NOL of ($5,000). Filing back taxes for free Therefore, the 80% of taxable income limit does not apply. Filing back taxes for free The corporation can deduct the full $80,000. Filing back taxes for free Example 2. Filing back taxes for free Assume the same facts as in Example 1, except that the corporation only loses $15,000 from operations. Filing back taxes for free Its taxable income is $85,000 before the deduction for dividends received. Filing back taxes for free After claiming the dividends-received deduction of $80,000 ($100,000 × 80%), its taxable income is $5,000. Filing back taxes for free Because the corporation will not have an NOL after applying a full dividends-received deduction, its allowable dividends-received deduction is limited to 80% of its taxable income, or $68,000 ($85,000 × 80%). Filing back taxes for free Extraordinary Dividends If a corporation receives an extraordinary dividend on stock held 2 years or less before the dividend announcement date, it generally must reduce its basis in the stock by the nontaxed part of the dividend. Filing back taxes for free The nontaxed part is any dividends-received deduction allowable for the dividends. Filing back taxes for free Extraordinary dividend. Filing back taxes for free   An extraordinary dividend is any dividend on stock that equals or exceeds a certain percentage of the corporation's adjusted basis in the stock. Filing back taxes for free The percentages are: 5% for stock preferred as to dividends, or 10% for other stock. Filing back taxes for free Treat all dividends received that have ex-dividend dates within an 85-consecutive-day period as one dividend. Filing back taxes for free Treat all dividends received that have ex-dividend dates within a 365-consecutive-day period as extraordinary dividends if the total of the dividends exceeds 20% of the corporation's adjusted basis in the stock. Filing back taxes for free Disqualified preferred stock. Filing back taxes for free   Any dividend on disqualified preferred stock is treated as an extraordinary dividend regardless of the period of time the corporation held the stock. Filing back taxes for free   Disqualified preferred stock is any stock preferred as to dividends if any of the following apply. Filing back taxes for free The stock when issued has a dividend rate that declines (or can reasonably be expected to decline) in the future. Filing back taxes for free The issue price of the stock exceeds its liquidation rights or stated redemption price. Filing back taxes for free The stock is otherwise structured to avoid the rules for extraordinary dividends and to enable corporate shareholders to reduce tax through a combination of dividends-received deductions and loss on the disposition of the stock. Filing back taxes for free   These rules apply to stock issued after July 10, 1989, unless it was issued under a written binding contract in effect on that date, and thereafter, before the issuance of the stock. Filing back taxes for free More information. Filing back taxes for free   For more information on extraordinary dividends, see section 1059 of the Internal Revenue Code. Filing back taxes for free Below-Market Loans If a corporation receives a below-market loan and uses the proceeds for its trade or business, it may be able to deduct the forgone interest. Filing back taxes for free A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Filing back taxes for free A below-market loan generally is treated as an arm's-length transaction in which the borrower is considered as having received both the following: A loan in exchange for a note that requires payment of interest at the applicable federal rate, and An additional payment in an amount equal to the forgone interest. Filing back taxes for free Treat the additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Filing back taxes for free Foregone interest. Filing back taxes for free   For any period, forgone interest is equal to: The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Filing back taxes for free See Below-market loans, in chapter 4 of Publication 535 for more information. Filing back taxes for free Charitable Contributions A corporation can claim a limited deduction for charitable contributions made in cash or other property. Filing back taxes for free The contribution is deductible if made to, or for the use of, a qualified organization. Filing back taxes for free For more information on qualified organizations, see Publication 526, Charitable Contributions. Filing back taxes for free Also see, Exempt Organizations Select Check (EO Select Check) at www. Filing back taxes for free irs. Filing back taxes for free gov/charities, the on-line search tool for finding information on organizations eligible to receive tax-deductible contributions. Filing back taxes for free Note. Filing back taxes for free You cannot take a deduction if any of the net earnings of an organization receiving contributions benefit any private shareholder or individual. Filing back taxes for free Cash method corporation. Filing back taxes for free   A corporation using the cash method of accounting deducts contributions in the tax year paid. Filing back taxes for free Accrual method corporation. Filing back taxes for free   A corporation using an accrual method of accounting can choose to deduct unpaid contributions for the tax year the board of directors authorizes them if it pays them by the 15th day of the 3rd month after the close of that tax year. Filing back taxes for free Make the choice by reporting the contribution on the corporation's return for the tax year. Filing back taxes for free A declaration stating that the board of directors adopted the resolution during the tax year must accompany the return. Filing back taxes for free The declaration must include the date the resolution was adopted. Filing back taxes for free Limitations on deduction. Filing back taxes for free   A corporation cannot deduct charitable contributions that exceed 10% of its taxable income for the tax year. Filing back taxes for free Figure taxable income for this purpose without the following. Filing back taxes for free The deduction for charitable contributions. Filing back taxes for free The dividends-received deduction. Filing back taxes for free The deduction allowed under section 249 of the Internal Revenue Code. Filing back taxes for free The domestic production activities deduction. Filing back taxes for free Any net operating loss carryback to the tax year. Filing back taxes for free Any capital loss carryback to the tax year. Filing back taxes for free Farmers and ranchers. Filing back taxes for free    Corporations that are farmers and ranchers should see section 170(b)(2) of the Internal Revenue Code for special rules that may affect the deduction limit. Filing back taxes for free Carryover of excess contributions. Filing back taxes for free   You can carry over, within certain limits, to each of the subsequent 5 years any charitable contributions made during the current year that exceed the 10% limit. Filing back taxes for free You lose any excess not used within that period. Filing back taxes for free For example, if a corporation has a carryover of excess contributions paid in 2010 and it does not use all the excess on its return for 2011, it can carry any excess over to 2012, 2013, 2014, and 2015, if applicable. Filing back taxes for free Any excess not used in 2015 is lost. Filing back taxes for free Do not deduct a carryover of excess contributions in the carryover year until after you deduct contributions made in that year (subject to the 10% limit). Filing back taxes for free You cannot deduct a carryover of excess contributions to the extent it increases a net operating loss carryover. Filing back taxes for free Cash contributions. Filing back taxes for free   A corporation must maintain a record of any contribution of cash, check, or other monetary contribution, regardless of the amount. Filing back taxes for free The record can be a bank record, receipt, letter, or other written communication from the donee indicating the name of the organization, the date of the contribution, and the amount of the contribution. Filing back taxes for free Keep the record of the contribution with the other corporate records. Filing back taxes for free Do not attach the records to the corporation's return. Filing back taxes for free For more information on cash contributions, see Publication 526. Filing back taxes for free Gifts of $250 or more. Filing back taxes for free   Generally, no deduction is allowed for any contribution of $250 or more unless the corporation gets a written acknowledgement from the donee organization. Filing back taxes for free The acknowledgement should show the amount of cash contributed, a description of the property contributed, and either gives a description and a good faith estimate of the value of any goods or services provided in return for the contribution or states that no goods or services were provided in return for the contribution. Filing back taxes for free The acknowledgement should be received by the due date (including extensions) of the return, or, if earlier, the date the return was filed. Filing back taxes for free Keep the acknowledgement with other corporate records. Filing back taxes for free Do not attach the acknowledgement to the return. Filing back taxes for free Contributions of property other than cash. Filing back taxes for free   If a corporation (other than a closely-held or a personal service corporation) claims a deduction of more than $500 for contributions of property other than cash, a schedule describing the property and the method used to determine its fair market value must be attached to the corporation's return. Filing back taxes for free In addition the corporation should keep a record of: The approximate date and manner of acquisition of the donated property and The cost or other basis of the donated property held by the donor for less than 12 months prior to contribution. Filing back taxes for free   Closely held and personal service corporations must complete and attach Form 8283, Noncash Charitable Contributions, to their returns if they claim a deduction of more than $500 for non-cash contributions. Filing back taxes for free For all other corporations, if the deduction claimed for donated property exceeds $5,000, complete Form 8283 and attach it to the corporation's return. Filing back taxes for free   A corporation must obtain a qualified appraisal for all deductions of property claimed in excess of $5,000. Filing back taxes for free A qualified appraisal is not required for the donation of cash, publicly traded securities, inventory, and any qualified vehicles sold by a donee organization without any significant intervening use or material improvement. Filing back taxes for free The appraisal should be maintained with other corporate records and only attached to the corporation's return when the deduction claimed exceeds $500,000; $20,000 for donated art work. Filing back taxes for free   See Form 8283 for more information. Filing back taxes for free Qualified conservation contributions. Filing back taxes for free   If a corporation makes a qualified conservation contribution, the corporation must provide information regarding the legal interest being donated, the fair market value of the underlying property before and after the donation, and a description of the conservation purpose for which the property will be used. Filing back taxes for free For more information, see section 170(h) of the Internal Revenue Code. Filing back taxes for free Contributions of used vehicles. Filing back taxes for free   A corporation is allowed a deduction for the contribution of used motor vehicles, boats, and airplanes. Filing back taxes for free The deduction is limited, and other special rules apply. Filing back taxes for free For more information, see Publication 526. Filing back taxes for free Reduction for contributions of certain property. Filing back taxes for free   For a charitable contribution of property, the corporation must reduce the contribution by the sum of: The ordinary income and short-term capital gain that would have resulted if the property were sold at its FMV and For certain contributions, the long-term capital gain that would have resulted if the property were sold at its FMV. Filing back taxes for free   The reduction for the long-term capital gain applies to: Contributions of tangible personal property for use by an exempt organization for a purpose or function unrelated to the basis for its exemption; Contributions of any property to or for the use of certain private foundations except for stock for which market quotations are readily available; and Contributions of any patent, certain copyrights, trademark, trade name, trade secret, know-how, software (that is a section 197 intangible), or similar property, or applications or registrations of such property. Filing back taxes for free Larger deduction. Filing back taxes for free   A corporation (other than an S corporation) may be able to claim a deduction equal to the lesser of (a) the basis of the donated inventory or property plus one-half of the inventory or property's appreciation (gain if the donated inventory or property was sold at fair market value on the date of the donation), or (b) two times basis of the donated inventory or property. Filing back taxes for free This deduction may be allowed for certain contributions of: Certain inventory and other property made to a donee organization and used solely for the care of the ill, the needy, and infants. Filing back taxes for free Scientific property constructed by the corporation (other than an S corporation, personal holding company, or personal service corporation) and donated no later than 2 years after substantial completion of the construction. Filing back taxes for free The property must be donated to a qualified organization and its original use must be by the donee for research, experimentation, or research training within the United States in the area of physical or biological science. Filing back taxes for free Computer technology and equipment acquired or constructed and donated no later than 3 years after either acquisition or substantial completion of construction to an educational organization for educational purposes within the United States. Filing back taxes for free Contributions to organizations conducting lobbying activities. Filing back taxes for free   Contributions made to an organization that conducts lobbying activities are not deductible if: The lobbying activities relate to matters of direct financial interest to the donor's trade or business and The principal purpose of the contribution was to avoid federal income tax by obtaining a deduction for activities that would have been nondeductible under the lobbying expense rules if conducted directly by the donor. Filing back taxes for free More information. Filing back taxes for free   For more information on charitable contributions, including substantiation and recordkeeping requirements, see section 170 of the Internal Revenue Code, the related regulations, and Publication 526. Filing back taxes for free Capital Losses A corporation can deduct capital losses only up to the amount of its capital gains. Filing back taxes for free In other words, if a corporation has an excess capital loss, it cannot deduct the loss in the current tax year. Filing back taxes for free Instead, it carries the loss to other tax years and deducts it from any net capital gains that occur in those years. Filing back taxes for free A capital loss is carried to other years in the following order. Filing back taxes for free 3 years prior to the loss year. Filing back taxes for free 2 years prior to the loss year. Filing back taxes for free 1 year prior to the loss year. Filing back taxes for free Any loss remaining is carried forward for 5 years. Filing back taxes for free When you carry a net capital loss to another tax year, treat it as a short-term loss. Filing back taxes for free It does not retain its original identity as long term or short term. Filing back taxes for free Example. Filing back taxes for free A calendar year corporation has a net short-term capital gain of $3,000 and a net long-term capital loss of $9,000. Filing back taxes for free The short-term gain offsets some of the long-term loss, leaving a net capital loss of $6,000. Filing back taxes for free The corporation treats this $6,000 as a short-term loss when carried back or forward. Filing back taxes for free The corporation carries the $6,000 short-term loss back 3 years. Filing back taxes for free In year 1, the corporation had a net short-term capital gain of $8,000 and a net long-term capital gain of $5,000. Filing back taxes for free It subtracts the $6,000 short-term loss first from the net short-term gain. Filing back taxes for free This results in a net capital gain for year 1 of $7,000. Filing back taxes for free This consists of a net short-term capital gain of $2,000 ($8,000 − $6,000) and a net long-term capital gain of $5,000. Filing back taxes for free S corporation status. Filing back taxes for free   A corporation may not carry a capital loss from, or to, a year for which it is an S corporation. Filing back taxes for free Rules for carryover and carryback. Filing back taxes for free   When carrying a capital loss from one year to another, the following rules apply. Filing back taxes for free When figuring the current year's net capital loss, you cannot combine it with a capital loss carried from another year. Filing back taxes for free In other words, you can carry capital losses only to years that would otherwise have a total net capital gain. Filing back taxes for free If you carry capital losses from 2 or more years to the same year, deduct the loss from the earliest year first. Filing back taxes for free You cannot use a capital loss carried from another year to produce or increase a net operating loss in the year to which you carry it back. Filing back taxes for free Refunds. Filing back taxes for free   When you carry back a capital loss to an earlier tax year, refigure your tax for that year. Filing back taxes for free If your corrected tax is less than the tax you originally owed, use either Form 1139, Corporate Application for Tentative Refund, or Form 1120X, Amended U. Filing back taxes for free S. Filing back taxes for free Corporation Income Tax Return, to apply for a refund. Filing back taxes for free Form 1139. Filing back taxes for free    A corporation can get a refund faster by using Form 1139. Filing back taxes for free It cannot file Form 1139 before filing the return for the corporation's capital loss year, but it must file Form 1139 no later than 1 year after the year it sustains the capital loss. Filing back taxes for free Form 1120X. Filing back taxes for free   If the corporation does not file Form 1139, it must file Form 1120X to apply for a refund. Filing back taxes for free The corporation must file the Form 1120X within 3 years of the due date, includin