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Print Tax Form 1040x

File A 2010 Tax ReturnTax AmendedFill Out 1040xFree Electronic Tax Filing2012 Tax Return OnlineFree State Only Tax FilingState Free File2010 Tax Return OnlineH&r Block 2011H&r Block State TaxesBerkheimer Online Tax FilingTaxes 20092012 TaxesWww Myfreetaxes Com GoodwillwmAmend Tax Return InstructionsState Tax Return Free E FileDo Students Have To File TaxesFreetaxusa 20111040ez Form 20141040ez Worksheet2013 Form 1040ezH&r Block Advantage Free FileHow To File State And Federal Taxes For Free OnlineH&r Block Federal FreeIrs Form 1040ez Tax TablesHappens If I Didn't File Taxes Last YearIrs Gov FormsHr Block 2010File Form 1040x OnlineCan I Amend My 2013 Tax ReturnOnline Amended Tax ReturnPa Direct FileFile State Taxes Only FreeFreetaxusa ComFillable 1040ez 2013I Need Prior Year 1040ez Form 2010 I Caot Access Anywhere AnyoneIrs 1040x Form Instructions2011 Tax Form 1040Filing Amended Tax ReturnsFederal Tax Form 1040ez

Print Tax Form 1040x

Print tax form 1040x 2. Print tax form 1040x   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. Print tax form 1040x The pay may be in cash, property, or services. Print tax form 1040x It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. Print tax form 1040x For information about deducting employment taxes, see chapter 5. Print tax form 1040x You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. Print tax form 1040x Empowerment zone employment credit (Form 8844). Print tax form 1040x Indian employment credit (Form 8845). Print tax form 1040x Work opportunity credit (Form 5884). Print tax form 1040x Credit for employer differential wage payments (Form 8932). Print tax form 1040x Reduce your deduction for employee wages by the amount of employment credits you claim. Print tax form 1040x For more information about these credits, see the form on which the credit is claimed. Print tax form 1040x Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. Print tax form 1040x Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. Print tax form 1040x These and other requirements that apply to all business expenses are explained in chapter 1. Print tax form 1040x In addition, the pay must meet both of the following tests. Print tax form 1040x Test 1. Print tax form 1040x It must be reasonable. Print tax form 1040x Test 2. Print tax form 1040x It must be for services performed. Print tax form 1040x The form or method of figuring the pay does not affect its deductibility. Print tax form 1040x For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. Print tax form 1040x Test 1—Reasonableness You must be able to prove that the pay is reasonable. Print tax form 1040x Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. Print tax form 1040x If the pay is excessive, the excess pay is disallowed as a deduction. Print tax form 1040x Factors to consider. Print tax form 1040x   Determine the reasonableness of pay by the facts and circumstances. Print tax form 1040x Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. Print tax form 1040x   To determine if pay is reasonable, also consider the following items and any other pertinent facts. Print tax form 1040x The duties performed by the employee. Print tax form 1040x The volume of business handled. Print tax form 1040x The character and amount of responsibility. Print tax form 1040x The complexities of your business. Print tax form 1040x The amount of time required. Print tax form 1040x The cost of living in the locality. Print tax form 1040x The ability and achievements of the individual employee performing the service. Print tax form 1040x The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. Print tax form 1040x Your policy regarding pay for all your employees. Print tax form 1040x The history of pay for each employee. Print tax form 1040x Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. Print tax form 1040x Employee-shareholder salaries. Print tax form 1040x   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. Print tax form 1040x The excessive part of the salary would not be allowed as a salary deduction by the corporation. Print tax form 1040x For more information on corporate distributions to shareholders, see Publication 542, Corporations. Print tax form 1040x Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. Print tax form 1040x For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. Print tax form 1040x Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. Print tax form 1040x If you give property to an employee as an employee achievement award, your deduction may be limited. Print tax form 1040x Achievement awards. Print tax form 1040x   An achievement award is an item of tangible personal property that meets all the following requirements. Print tax form 1040x It is given to an employee for length of service or safety achievement. Print tax form 1040x It is awarded as part of a meaningful presentation. Print tax form 1040x It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. Print tax form 1040x Length-of-service award. Print tax form 1040x    An award will qualify as a length-of-service award only if either of the following applies. Print tax form 1040x The employee receives the award after his or her first 5 years of employment. Print tax form 1040x The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. Print tax form 1040x Safety achievement award. Print tax form 1040x    An award for safety achievement will qualify as an achievement award unless one of the following applies. Print tax form 1040x It is given to a manager, administrator, clerical employee, or other professional employee. Print tax form 1040x During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). Print tax form 1040x Deduction limit. Print tax form 1040x   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. Print tax form 1040x $400 for awards that are not qualified plan awards. Print tax form 1040x $1,600 for all awards, whether or not qualified plan awards. Print tax form 1040x   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. Print tax form 1040x   A highly compensated employee is an employee who meets either of the following tests. Print tax form 1040x The employee was a 5% owner at any time during the year or the preceding year. Print tax form 1040x The employee received more than $115,000 in pay for the preceding year. Print tax form 1040x You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. Print tax form 1040x   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. Print tax form 1040x To figure this average cost, ignore awards of nominal value. Print tax form 1040x Deduct achievement awards as a nonwage business expense on your return or business schedule. Print tax form 1040x You may not owe employment taxes on the value of some achievement awards you provide to an employee. Print tax form 1040x See Publication 15-B. Print tax form 1040x Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. Print tax form 1040x However, the total bonuses, salaries, and other pay must be reasonable for the services performed. Print tax form 1040x If the bonus is paid in property, see Property , later. Print tax form 1040x Gifts of nominal value. Print tax form 1040x    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. Print tax form 1040x Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. Print tax form 1040x For more information on this deduction limit, see Meals and lodging , later. Print tax form 1040x Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. Print tax form 1040x Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. Print tax form 1040x For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. Print tax form 1040x Fringe Benefits A fringe benefit is a form of pay for the performance of services. Print tax form 1040x You can generally deduct the cost of fringe benefits. Print tax form 1040x You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. Print tax form 1040x You also may not owe employment taxes on the value of the fringe benefits. Print tax form 1040x See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. Print tax form 1040x Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. Print tax form 1040x Certain fringe benefits are discussed next. Print tax form 1040x See Publication 15-B for more details on these and other fringe benefits. Print tax form 1040x Meals and lodging. Print tax form 1040x   You can usually deduct the cost of furnishing meals and lodging to your employees. Print tax form 1040x Deduct the cost in whatever category the expense falls. Print tax form 1040x For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. Print tax form 1040x If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. Print tax form 1040x Deduction limit on meals. Print tax form 1040x   You can generally deduct only 50% of the cost of furnishing meals to your employees. Print tax form 1040x However, you can deduct the full cost of the following meals. Print tax form 1040x Meals whose value you include in an employee's wages. Print tax form 1040x Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. Print tax form 1040x This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. Print tax form 1040x Meals you furnish to your employees at the work site when you operate a restaurant or catering service. Print tax form 1040x Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. Print tax form 1040x Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). Print tax form 1040x This does not include meals you furnish on vessels primarily providing luxury water transportation. Print tax form 1040x Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. Print tax form 1040x This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. Print tax form 1040x Employee benefit programs. Print tax form 1040x   Employee benefit programs include the following. Print tax form 1040x Accident and health plans. Print tax form 1040x Adoption assistance. Print tax form 1040x Cafeteria plans. Print tax form 1040x Dependent care assistance. Print tax form 1040x Education assistance. Print tax form 1040x Life insurance coverage. Print tax form 1040x Welfare benefit funds. Print tax form 1040x   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. Print tax form 1040x For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. Print tax form 1040x ). Print tax form 1040x Life insurance coverage. Print tax form 1040x   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. Print tax form 1040x See Regulations section 1. Print tax form 1040x 264-1 for more information. Print tax form 1040x Welfare benefit funds. Print tax form 1040x   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. Print tax form 1040x Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. Print tax form 1040x   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. Print tax form 1040x If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. Print tax form 1040x   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. Print tax form 1040x The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. Print tax form 1040x The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. Print tax form 1040x These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. Print tax form 1040x   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. Print tax form 1040x Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. Print tax form 1040x However, if the employee performs no services, treat the amount you advanced as a loan. Print tax form 1040x If the employee does not repay the loan, treat it as income to the employee. Print tax form 1040x Below-market interest rate loans. Print tax form 1040x   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. Print tax form 1040x See Below-Market Loans in chapter 4. Print tax form 1040x Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. Print tax form 1040x The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. Print tax form 1040x You can claim the deduction only for the tax year in which your employee includes the property's value in income. Print tax form 1040x Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. Print tax form 1040x You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. Print tax form 1040x Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. Print tax form 1040x These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. Print tax form 1040x Restricted property. Print tax form 1040x   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. Print tax form 1040x However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. Print tax form 1040x    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. Print tax form 1040x This means that the recipient is not likely to have to give up his or her rights in the property in the future. Print tax form 1040x Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. Print tax form 1040x However, your deduction may be limited. Print tax form 1040x If you make the payment under an accountable plan, deduct it in the category of the expense paid. Print tax form 1040x For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. Print tax form 1040x If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. Print tax form 1040x See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. Print tax form 1040x Sick and Vacation Pay Sick pay. Print tax form 1040x   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. Print tax form 1040x However, your deduction is limited to amounts not compensated by insurance or other means. Print tax form 1040x Vacation pay. Print tax form 1040x   Vacation pay is an employee benefit. Print tax form 1040x It includes amounts paid for unused vacation leave. Print tax form 1040x You can deduct vacation pay only in the tax year in which the employee actually receives it. Print tax form 1040x This rule applies regardless of whether you use the cash or accrual method of accounting. Print tax form 1040x Prev  Up  Next   Home   More Online Publications
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CP 91 - Final Notice Before Levy on Social Security Benefits

Details About This Notice:
Sample Content: Page 1, Page 2
Purpose:   We send CP 91 to inform the recipient of our intent to levy on their Social Security Benefits.
Reason for Issuance:   The recipient has a balance due on their account that we've previously sent a notice about. That balance due is still unpaid. We send a CP 91 to inform the recipient that the amount is still due, that we intend to take up to 15% of their their Social Security Benefits to pay it, and what steps they need to take within 30 days to prevent us from taking this action.
Account Balance:   Balance Due
     

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Page Last Reviewed or Updated: 25-Feb-2014

The Print Tax Form 1040x

Print tax form 1040x Publication 542 - Main Content Table of Contents Businesses Taxed as CorporationsPersonal services. Print tax form 1040x Employee-owners. Print tax form 1040x Other rules. Print tax form 1040x Other rules. Print tax form 1040x Property Exchanged for StockNonqualified preferred stock. Print tax form 1040x Liabilities. Print tax form 1040x Election to reduce basis. Print tax form 1040x Capital Contributions Filing and Paying Income TaxesIncome Tax Return Penalties Estimated Tax U. Print tax form 1040x S. Print tax form 1040x Real Property Interest Accounting MethodsSection 481(a) adjustment. Print tax form 1040x 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. Print tax form 1040x Business formed before 1997. Print tax form 1040x   A business formed before 1997 and taxed as a corporation under the old rules will generally continue to be taxed as a corporation. Print tax form 1040x Business formed after 1996. Print tax form 1040x   The following businesses formed after 1996 are taxed as corporations. Print tax form 1040x A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic. Print tax form 1040x A business formed under a state law that refers to it as a joint-stock company or joint-stock association. Print tax form 1040x An insurance company. Print tax form 1040x Certain banks. Print tax form 1040x A business wholly owned by a state or local government. Print tax form 1040x A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). Print tax form 1040x Certain foreign businesses. Print tax form 1040x Any other business that elects to be taxed as a corporation. Print tax form 1040x 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. Print tax form 1040x For more information about LLCs, see Publication 3402, Taxation of Limited Liability Companies. Print tax form 1040x S corporations. Print tax form 1040x   Some corporations may meet the qualifications for electing to be S corporations. Print tax form 1040x For information on S corporations, see the instructions for Form 1120S, U. Print tax form 1040x S. Print tax form 1040x Income Tax Return for an S Corporation. Print tax form 1040x Personal service corporations. Print tax form 1040x   A corporation is a personal service corporation if it meets all of the following requirements. Print tax form 1040x Its principal activity during the “testing period” is performing personal services (defined later). Print tax form 1040x Generally, the testing period for any tax year is the prior tax year. Print tax form 1040x 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. Print tax form 1040x Its employee-owners substantially perform the services in (1), above. Print tax form 1040x 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. Print tax form 1040x Its employee-owners own more than 10% of the fair market value of its outstanding stock on the last day of the testing period. Print tax form 1040x Personal services. Print tax form 1040x   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. Print tax form 1040x Employee-owners. Print tax form 1040x   A person is an employee-owner of a personal service corporation if both of the following apply. Print tax form 1040x 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. Print tax form 1040x He or she owns any stock in the corporation at any time during the testing period. Print tax form 1040x Other rules. Print tax form 1040x   For other rules that apply to personal service corporations see Accounting Periods, later. Print tax form 1040x Closely held corporations. Print tax form 1040x   A corporation is closely held if all of the following apply. Print tax form 1040x It is not a personal service corporation. Print tax form 1040x 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. Print tax form 1040x “Individual” includes certain trusts and private foundations. Print tax form 1040x Other rules. Print tax form 1040x   For the at-risk rules that apply to closely held corporations, seeAt-Risk Limits, later. Print tax form 1040x 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. Print tax form 1040x This rule applies both to individuals and to groups who transfer property to a corporation. Print tax form 1040x It also applies whether the corporation is being formed or is already operating. Print tax form 1040x It does not apply in the following situations. Print tax form 1040x The corporation is an investment company. Print tax form 1040x You transfer the property in a bankruptcy or similar proceeding in exchange for stock used to pay creditors. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x For more information, see section 1. Print tax form 1040x 351-3 of the Regulations. Print tax form 1040x Control of a corporation. Print tax form 1040x   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. Print tax form 1040x Example 1. Print tax form 1040x You and Bill Jones buy property for $100,000. Print tax form 1040x You both organize a corporation when the property has a fair market value of $300,000. Print tax form 1040x You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. Print tax form 1040x No gain is recognized by you, Bill, or the corporation. Print tax form 1040x Example 2. Print tax form 1040x 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. Print tax form 1040x This represents only 75% of each class of stock of the corporation. Print tax form 1040x The other 25% was already issued to someone else. Print tax form 1040x You and Bill recognize a taxable gain of $200,000 on the transaction. Print tax form 1040x Services rendered. Print tax form 1040x   The term property does not include services rendered or to be rendered to the issuing corporation. Print tax form 1040x The value of stock received for services is income to the recipient. Print tax form 1040x Example. Print tax form 1040x You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. Print tax form 1040x Right after the exchange, you own 85% of the outstanding stock. Print tax form 1040x No gain is recognized on the exchange of property. Print tax form 1040x However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation. Print tax form 1040x Property of relatively small value. Print tax form 1040x   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. Print tax form 1040x   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. Print tax form 1040x Stock received in disproportion to property transferred. Print tax form 1040x   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. Print tax form 1040x If a disproportionate transfer takes place, it will be treated for tax purposes in accordance with its true nature. Print tax form 1040x 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. Print tax form 1040x Money or other property received. Print tax form 1040x   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. Print tax form 1040x You must recognize gain only up to the amount of money plus the fair market value of the other property you receive. Print tax form 1040x 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. Print tax form 1040x If the property you give up includes depreciable property, the recognized gain may have to be reported as ordinary income from depreciation. Print tax form 1040x See chapter 3 of Publication 544. Print tax form 1040x No loss is recognized. Print tax form 1040x Nonqualified preferred stock. Print tax form 1040x   Nonqualified preferred stock is treated as property other than stock. Print tax form 1040x Generally, it is preferred stock with any of the following features. Print tax form 1040x The holder has the right to require the issuer or a related person to redeem or buy the stock. Print tax form 1040x The issuer or a related person is required to redeem or buy the stock. Print tax form 1040x 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. Print tax form 1040x The dividend rate on the stock varies with reference to interest rates, commodity prices, or similar indices. Print tax form 1040x For a detailed definition of nonqualified preferred stock, see section 351(g)(2) of the Internal Revenue Code. Print tax form 1040x Liabilities. Print tax form 1040x   If the corporation assumes your liabilities, the exchange generally is not treated as if you received money or other property. Print tax form 1040x There are two exceptions to this treatment. Print tax form 1040x If the liabilities the corporation assumes are more than your adjusted basis in the property you transfer, gain is recognized up to the difference. Print tax form 1040x However, if the liabilities assumed give rise to a deduction when paid, such as a trade account payable or interest, no gain is recognized. Print tax form 1040x 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. Print tax form 1040x For more information on the assumption of liabilities, see section 357(d) of the Internal Revenue Code. Print tax form 1040x Example. Print tax form 1040x You transfer property to a corporation for stock. Print tax form 1040x Immediately after the transfer, you control the corporation. Print tax form 1040x You also receive $10,000 in the exchange. Print tax form 1040x Your adjusted basis in the transferred property is $20,000. Print tax form 1040x The stock you receive has a fair market value (FMV) of $16,000. Print tax form 1040x The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. Print tax form 1040x Gain is realized as follows. Print tax form 1040x 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. Print tax form 1040x The recognized gain is limited to $10,000, the cash received. Print tax form 1040x Loss on exchange. Print tax form 1040x   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. Print tax form 1040x For more information, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Print tax form 1040x Basis of stock or other property received. Print tax form 1040x   The basis of the stock you receive is generally the adjusted basis of the property you transfer. Print tax form 1040x Increase this amount by any amount treated as a dividend, plus any gain recognized on the exchange. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x    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. Print tax form 1040x 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. Print tax form 1040x The basis of any other property you receive is its fair market value on the date of the trade. Print tax form 1040x Basis of property transferred. Print tax form 1040x   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. Print tax form 1040x However, the increase for the gain recognized may be limited. Print tax form 1040x For more information, see section 362 of the Internal Revenue Code. Print tax form 1040x Election to reduce basis. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x However, if the transferor makes the election by including the certification provided in Notice 2005-70, 2005-41, I. Print tax form 1040x R. Print tax form 1040x B. Print tax form 1040x 694, on or with its tax return filed by the due date (including extensions), then no election need be made by the transferee. Print tax form 1040x    For more information on making this election, see section 362(e)(2)(C) of the Internal Revenue Code, and Notice 2005-70. Print tax form 1040x Capital Contributions This section explains the tax treatment of contributions from shareholders and nonshareholders. Print tax form 1040x Paid-in capital. Print tax form 1040x   Contributions to the capital of a corporation, whether or not by shareholders, are paid-in capital. Print tax form 1040x These contributions are not taxable to the corporation. Print tax form 1040x Basis. Print tax form 1040x   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. Print tax form 1040x However, the increase for the gain recognized may be limited. Print tax form 1040x For more information, see Basis of property transferred, above, and section 362 of the Internal Revenue Code. Print tax form 1040x   The basis of property contributed to capital by a person other than a shareholder is zero. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x Depreciable property. Print tax form 1040x Amortizable property. Print tax form 1040x Property subject to cost depletion but not to percentage depletion. Print tax form 1040x All other remaining properties. Print tax form 1040x   Reduce the basis of property in each category to zero before going on to the next category. Print tax form 1040x   There may be more than one piece of property in each category. Print tax form 1040x 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. Print tax form 1040x The corporation files a request for approval with its income tax return for the tax year in which it receives the contribution. Print tax form 1040x Filing and Paying Income Taxes The federal income tax is a pay-as-you-go tax. Print tax form 1040x A corporation generally must make estimated tax payments as it earns or receives income during its tax year. Print tax form 1040x After the end of the year, the corporation must file an income tax return. Print tax form 1040x This section will help you determine when and how to pay and file corporate income taxes. Print tax form 1040x 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. Print tax form 1040x The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. Print tax form 1040x For more information, visit www. Print tax form 1040x irs. Print tax form 1040x gov/newsroom/article/0,,id=108362. Print tax form 1040x 00. Print tax form 1040x Income Tax Return This section will help you determine when and how to report a corporation's income tax. Print tax form 1040x Who must file. Print tax form 1040x   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. Print tax form 1040x Which form to file. Print tax form 1040x   A corporation generally must file Form 1120, U. Print tax form 1040x S. Print tax form 1040x Corporation Income Tax Return, to report its income, gains, losses, deductions, credits, and to figure its income tax liability. Print tax form 1040x Certain organizations and entities must file special returns. Print tax form 1040x For more information, see Special Returns for Certain Organizations, in the Instructions for Form 1120. Print tax form 1040x Electronic filing. Print tax form 1040x   Corporations can generally electronically file (e-file) Form 1120 and certain related forms, schedules, and attachments. Print tax form 1040x Certain corporations with total assets of $10 million or more, that file at least 250 returns a year must e-file Form 1120. Print tax form 1040x However, in certain instances, these corporations can request a waiver. Print tax form 1040x For more information regarding electronic filing, visit www. Print tax form 1040x irs. Print tax form 1040x gov/efile. Print tax form 1040x When to file. Print tax form 1040x   Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. Print tax form 1040x A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. Print tax form 1040x A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved. Print tax form 1040x Example 1. Print tax form 1040x A corporation's tax year ends December 31. Print tax form 1040x It must file its income tax return by March 15th. Print tax form 1040x Example 2. Print tax form 1040x A corporation's tax year ends June 30. Print tax form 1040x It must file its income tax return by September 15th. Print tax form 1040x   If the due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day. Print tax form 1040x Extension of time to file. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x   Form 7004 does not extend the time for paying the tax due on the return. Print tax form 1040x Interest, and possibly penalties, will be charged on any part of the final tax due not shown as a balance due on Form 7004. Print tax form 1040x The interest is figured from the original due date of the return to the date of payment. Print tax form 1040x   For more information, see the instructions for Form 7004. Print tax form 1040x How to pay your taxes. Print tax form 1040x   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. Print tax form 1040x Electronic Federal Tax Payment System (EFTPS). Print tax form 1040x   Corporations generally must use EFTPS to make deposits of all tax liabilities (including social security, Medicare, withheld income, excise, and corporate income taxes). Print tax form 1040x For more information on EFTPS and enrollment, visit www. Print tax form 1040x eftps. Print tax form 1040x gov or call 1-800-555-4477. Print tax form 1040x Also see Publication 966, The Secure Way to Pay Your Federal Taxes. Print tax form 1040x Note. Print tax form 1040x Forms 8109 and 8109-B, Federal Tax Deposit Coupon, can no longer be used to make federal tax deposits. Print tax form 1040x 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. Print tax form 1040x Do not attach an explanation when the corporation's return is filed. Print tax form 1040x See the instructions for your income tax return. Print tax form 1040x Late filing of return. Print tax form 1040x    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. Print tax form 1040x 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. Print tax form 1040x The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $100. Print tax form 1040x The penalty will not be imposed if the corporation can show the failure to file on time was due to a reasonable cause. Print tax form 1040x Late payment of tax. Print tax form 1040x    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. Print tax form 1040x The penalty will not be imposed if the corporation can show that the failure to pay on time was due to a reasonable cause. Print tax form 1040x Trust fund recovery penalty. Print tax form 1040x   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. Print tax form 1040x The penalty is the full amount of the unpaid trust fund tax. Print tax form 1040x This penalty may apply to you if these unpaid taxes cannot be immediately collected from the business. Print tax form 1040x   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. Print tax form 1040x   A responsible person can be an officer or employee of a corporation, an accountant, or a volunteer director/trustee. Print tax form 1040x A responsible person also may include one who signs checks for the corporation or otherwise has authority to cause the spending of business funds. Print tax form 1040x   Willfully means voluntarily, consciously, and intentionally. Print tax form 1040x A responsible person acts willfully if the person knows the required actions are not taking place. Print tax form 1040x   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. Print tax form 1040x Other penalties. Print tax form 1040x   Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. Print tax form 1040x See sections 6662, 6662A, and 6663 of the Internal Revenue Code. Print tax form 1040x Estimated Tax Generally, a corporation must make installment payments if it expects its estimated tax for the year to be $500 or more. Print tax form 1040x If the corporation does not pay the installments when they are due, it could be subject to an underpayment penalty. Print tax form 1040x This section will explain how to avoid this penalty. Print tax form 1040x When to pay estimated tax. Print tax form 1040x   Installment payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. Print tax form 1040x Example 1. Print tax form 1040x Your corporation's tax year ends December 31. Print tax form 1040x Installment payments are due on April 15, June 15, September 15, and December 15. Print tax form 1040x Example 2. Print tax form 1040x Your corporation's tax year ends June 30. Print tax form 1040x Installment payments are due on October 15, December 15, March 15, and June 15. Print tax form 1040x   If any due date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next business day. Print tax form 1040x How to figure each required installment. Print tax form 1040x   Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to figure each required installment of estimated tax. Print tax form 1040x You will generally use one of the following two methods to figure each required installment. Print tax form 1040x You should use the method that yields the smallest installment payments. Print tax form 1040x Note. Print tax form 1040x In these discussions, “return” generally refers to the corporation's original return. Print tax form 1040x However, an amended return is considered the original return if it is filed by the due date (including extensions) of the original return. Print tax form 1040x Method 1. Print tax form 1040x   Each required installment is 25% of the income tax the corporation will show on its return for the current year. Print tax form 1040x Method 2. Print tax form 1040x   Each required installment is 25% of the income tax shown on the corporation's return for the previous year. Print tax form 1040x   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). Print tax form 1040x Also, if the corporation is a large corporation, it can use Method 2 to figure the first installment only. Print tax form 1040x   See the Instructions for Form 1120-W, for the definition of a large corporation and other special rules for large corporations. Print tax form 1040x Other methods. Print tax form 1040x   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. Print tax form 1040x The annualized income installment method. Print tax form 1040x The adjusted seasonal installment method. Print tax form 1040x 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. Print tax form 1040x Refiguring required installments. Print tax form 1040x   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. Print tax form 1040x An immediate catchup payment should be made to reduce any penalty resulting from the underpayment of any earlier installments. Print tax form 1040x Underpayment penalty. Print tax form 1040x   If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty. Print tax form 1040x The penalty is figured separately for each installment due date. Print tax form 1040x The corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment. Print tax form 1040x This is true even if the corporation is due a refund when its return is filed. Print tax form 1040x Form 2220. Print tax form 1040x   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. Print tax form 1040x   If the corporation is charged a penalty, the amount of the penalty depends on the following three factors. Print tax form 1040x The amount of the underpayment. Print tax form 1040x The period during which the underpayment was due and unpaid. Print tax form 1040x The interest rate for underpayments published quarterly by the IRS in the Internal Revenue Bulletin. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x The annualized income installment method was used to figure any required installment. Print tax form 1040x The adjusted seasonal installment method was used to figure any required installment. Print tax form 1040x The corporation is a large corporation figuring its first required installment based on the prior year's tax. Print tax form 1040x How to pay estimated tax. Print tax form 1040x   A corporation is generally required to use EFTPS to pay its taxes. Print tax form 1040x See Electronic Federal Tax Payment System (EFTPS), earlier. Print tax form 1040x Also see the Instructions for Form 1120-W. Print tax form 1040x Quick refund of overpayments. Print tax form 1040x   A corporation that has overpaid its estimated tax for the tax year may be able to apply for a quick refund. Print tax form 1040x 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. Print tax form 1040x A corporation can apply for a quick refund if the overpayment is: At least 10% of its expected tax liability, and At least $500. Print tax form 1040x Use Form 4466 to figure the corporation's expected tax liability and the overpayment of estimated tax. Print tax form 1040x 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. Print tax form 1040x Do not file Form 4466 before the end of the corporation's tax year. Print tax form 1040x An extension of time to file the corporation's income tax return will not extend the time for filing Form 4466. Print tax form 1040x The IRS will act on the form within 45 days from the date you file it. Print tax form 1040x U. Print tax form 1040x S. Print tax form 1040x Real Property Interest If a domestic corporation acquires a U. Print tax form 1040x S. Print tax form 1040x real property interest from a foreign person or firm, the corporation may have to withhold tax on the amount it pays for the property. Print tax form 1040x The amount paid includes cash, the fair market value of other property, and any assumed liability. Print tax form 1040x If a domestic corporation distributes a U. Print tax form 1040x S. Print tax form 1040x real property interest to a foreign person or firm, it may have to withhold tax on the fair market value of the property. Print tax form 1040x A corporation that fails to withhold may be liable for the tax, and any penalties and interest that apply. Print tax form 1040x 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. Print tax form 1040x S. Print tax form 1040x Withholding Tax Return for Dispositions by Foreign Persons of U. Print tax form 1040x S. Print tax form 1040x Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Print tax form 1040x S. Print tax form 1040x Real Property Interests. Print tax form 1040x Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Print tax form 1040x Taxable income should be determined using the method of accounting regularly used in keeping the corporation's books and records. Print tax form 1040x In all cases, the method used must clearly show taxable income. Print tax form 1040x Generally, permissible methods include: Cash, Accrual, or Any other method authorized by the Internal Revenue Code. Print tax form 1040x Accrual method. Print tax form 1040x   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. Print tax form 1040x A corporation engaged in farming operations also must use the accrual method. Print tax form 1040x   If inventories are required, the accrual method generally must be used for sales and purchases of merchandise. Print tax form 1040x 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. Print tax form 1040x   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. Print tax form 1040x   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. Print tax form 1040x   There are exceptions to the economic performance rule for certain items, including recurring expenses. Print tax form 1040x See section 461(h) of the Internal Revenue Code and the related regulations for the rules for determining when economic performance takes place. Print tax form 1040x Nonaccrual experience method. Print tax form 1040x   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. Print tax form 1040x   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. Print tax form 1040x Percentage of completion method. Print tax form 1040x   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. Print tax form 1040x Mark-to-market accounting method. Print tax form 1040x   Generally, dealers in securities must use the mark-to-market accounting method described in section 475 of the Internal Revenue Code. Print tax form 1040x Under this method any security held by a dealer as inventory must be included in inventory at its FMV. Print tax form 1040x 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. Print tax form 1040x Any gain or loss must be taken into account in determining gross income. Print tax form 1040x The gain or loss taken into account is treated as ordinary gain or loss. Print tax form 1040x   Dealers in commodities and traders in securities and commodities can elect to use the mark-to-market accounting method. Print tax form 1040x Change in accounting method. Print tax form 1040x   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). Print tax form 1040x The corporation must file Form 3115, Application for Change in Accounting Method. Print tax form 1040x For more information, see Form 3115 and Publication 538. Print tax form 1040x Section 481(a) adjustment. Print tax form 1040x   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. Print tax form 1040x The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years for a net positive adjustment. Print tax form 1040x 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. Print tax form 1040x The corporation must complete the appropriate lines of Form 3115 to make the election. Print tax form 1040x See the Instructions for Form 3115. Print tax form 1040x Accounting Periods A corporation must figure its taxable income on the basis of a tax year. Print tax form 1040x A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. Print tax form 1040x Generally, corporations can use either a calendar year or a fiscal year as its tax year. Print tax form 1040x Unless special rules apply, a corporation generally adopts a tax year by filing its first federal income tax return using that tax year. Print tax form 1040x For more information, see Publication 538. Print tax form 1040x Personal service corporation. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x Use Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, to make the election. Print tax form 1040x   If a personal service corporation makes a section 444 election, its deduction for certain amounts paid to employee-owners may be limited. Print tax form 1040x See Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC), to figure the maximum deduction. Print tax form 1040x Change of tax year. Print tax form 1040x   Generally, a corporation must get the consent of the IRS before changing its tax year by filing Form 1128. Print tax form 1040x However, under certain conditions, a corporation can change its tax year without getting the consent. Print tax form 1040x For more information, see Form 1128 and Publication 538. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x The corporation should keep copies of all filed returns. Print tax form 1040x They help in preparing future and amended returns and in the calculation of earnings and profits. Print tax form 1040x Income, Deductions, and Special Provisions Rules on income and deductions that apply to individuals also apply, for the most part, to corporations. Print tax form 1040x However, the following special provisions apply only to corporations. Print tax form 1040x Costs of Going Into Business When you go into business, treat all costs you incur to get your business started as capital expenses. Print tax form 1040x However, a corporation can elect to deduct a limited amount of start-up or organizational costs. Print tax form 1040x Any costs not deducted can be amortized. Print tax form 1040x Start-up costs are costs for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Print tax form 1040x Organizational costs are the direct costs of creating the corporation. Print tax form 1040x For more information on deducting or amortizing start-up and organizational costs, see the instructions for your income tax return. Print tax form 1040x Also see, Publication 535, chapter 7, Costs You Can Deduct or Capitalize, and chapter 8, Amortization. Print tax form 1040x 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. Print tax form 1040x Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Print tax form 1040x 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. Print tax form 1040x These rules also deny the deduction of losses on the sale or exchange of property between related persons. Print tax form 1040x Related persons. Print tax form 1040x   For purposes of this rule, the following persons are related to a corporation. Print tax form 1040x Another corporation, that is a member of the same controlled group (as defined in section 267(f) of the Internal Revenue Code). Print tax form 1040x An individual who owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. Print tax form 1040x 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. Print tax form 1040x An S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x Ownership of stock. Print tax form 1040x   To determine whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following apply. Print tax form 1040x 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. Print tax form 1040x An individual is treated as owning the stock owned, directly or indirectly, by or for the individual's family. Print tax form 1040x Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants. Print tax form 1040x 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. Print tax form 1040x To apply (1), (2), or (3), above, stock constructively owned by a person under (1) is treated as actually owned by that person. Print tax form 1040x 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. Print tax form 1040x Reallocation of income and deductions. Print tax form 1040x   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. Print tax form 1040x Complete liquidations. Print tax form 1040x   The disallowance of losses from the sale or exchange of property between related persons does not apply to liquidating distributions. Print tax form 1040x More information. Print tax form 1040x   For more information about the related person rules, see Publication 544. Print tax form 1040x 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. Print tax form 1040x If a corporation makes this election it may exclude income from qualifying shipping activities from gross income. Print tax form 1040x Also if the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. Print tax form 1040x A corporation making this election may also elect to defer gain on the disposition of a qualifying vessel. Print tax form 1040x A corporation uses Form 8902, Alternative Tax on Qualifying Shipping Activities, to make the election and figure the alternative tax. Print tax form 1040x For more information regarding the election, see Form 8902. Print tax form 1040x 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. Print tax form 1040x The deduction is allowed for the year in which the property is placed in service. Print tax form 1040x 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. Print tax form 1040x For more information, see section 179C of the Internal Revenue Code and the related Regulations. Print tax form 1040x 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). Print tax form 1040x 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. Print tax form 1040x For more information, see sections 45H and 179B of the Internal Revenue Code and the related Regulations. Print tax form 1040x 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. Print tax form 1040x In order to qualify for the deduction: The costs must be associated with depreciable or amortizable property in a Standard 90. Print tax form 1040x 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. Print tax form 1040x The deduction is limited to $1. Print tax form 1040x 80 per square foot of the building less the total amount of deductions taken for this property in prior tax years. Print tax form 1040x Other rules and limitations apply. Print tax form 1040x The corporation must reduce the basis of any property by any deduction taken. Print tax form 1040x The deduction is subject to recapture if the corporation fails to fully implement an energy savings plan. Print tax form 1040x For more information, see section 179D of the Internal Revenue Code. Print tax form 1040x Also see Notice 2006-52, 2006-26 I. Print tax form 1040x R. Print tax form 1040x B. Print tax form 1040x 1175, clarified and amplified by Notice 2008-40, 2008-14 I. Print tax form 1040x R. Print tax form 1040x B. Print tax form 1040x 725, and any successor. Print tax form 1040x Corporate Preference Items A corporation must make special adjustments to certain items before it takes them into account in determining its taxable income. Print tax form 1040x These items are known as corporate preference items and they include the following. Print tax form 1040x Gain on the disposition of section 1250 property. Print tax form 1040x For more information, see section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Print tax form 1040x Percentage depletion for iron ore and coal (including lignite). Print tax form 1040x For more information, see Mines and Geothermal Deposits under Mineral Property in chapter 9 of Publication 535. Print tax form 1040x Amortization of pollution control facilities. Print tax form 1040x For more information, see Pollution Control Facilities in chapter 8 of Publication 535 and section 291(a)(5) of the Internal Revenue Code. Print tax form 1040x Mineral exploration and development costs. Print tax form 1040x For more information, see Exploration Costs and Development Costs in chapter 7 of Publication 535. Print tax form 1040x For more information on corporate preference items, see section 291 of the Internal Revenue Code. Print tax form 1040x Dividends-Received Deduction A corporation can deduct a percentage of certain dividends received during its tax year. Print tax form 1040x This section discusses the general rules that apply. Print tax form 1040x The deduction is figured on Form 1120, Schedule C, or the applicable schedule of your income tax return. Print tax form 1040x For more information, see the Instructions for Form 1120, or the instructions for your applicable income tax return. Print tax form 1040x Dividends from domestic corporations. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x Ownership. Print tax form 1040x   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. Print tax form 1040x Small business investment companies. Print tax form 1040x   Small business investment companies can deduct 100% of the dividends received from taxable domestic corporations. Print tax form 1040x Dividends from regulated investment companies. Print tax form 1040x   Regulated investment company dividends received are subject to certain limits. Print tax form 1040x Capital gain dividends received from a regulated investment company do not qualify for the deduction. Print tax form 1040x For more information, see section 854 of the Internal Revenue Code. Print tax form 1040x No deduction allowed for certain dividends. Print tax form 1040x   Corporations cannot take a deduction for dividends received from the following entities. Print tax form 1040x A real estate investment trust (REIT). Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x Ex-dividend means the holder has no rights to the dividend. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x Dividends on deposits. Print tax form 1040x   Dividends on deposits or withdrawable accounts in domestic building and loan associations, mutual savings banks, cooperative banks, and similar organizations are interest, not dividends. Print tax form 1040x They do not qualify for this deduction. Print tax form 1040x Limit on deduction for dividends. Print tax form 1040x   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). Print tax form 1040x Figuring the limit. Print tax form 1040x   In figuring the limit, determine taxable income without the following items. Print tax form 1040x The net operating loss deduction. Print tax form 1040x The domestic production activities deduction. Print tax form 1040x The deduction for dividends received. Print tax form 1040x Any adjustment due to the nontaxable part of an extraordinary dividend (see Extraordinary Dividends, below). Print tax form 1040x Any capital loss carryback to the tax year. Print tax form 1040x Effect of net operating loss. Print tax form 1040x   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. Print tax form 1040x To determine whether a corporation has an NOL, figure the dividends-received deduction without the 80% (or 70%) of taxable income limit. Print tax form 1040x Example 1. Print tax form 1040x A corporation loses $25,000 from operations. Print tax form 1040x It receives $100,000 in dividends from a 20%-owned corporation. Print tax form 1040x Its taxable income is $75,000 ($100,000 – $25,000) before the deduction for dividends received. Print tax form 1040x 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). Print tax form 1040x Therefore, the 80% of taxable income limit does not apply. Print tax form 1040x The corporation can deduct the full $80,000. Print tax form 1040x Example 2. Print tax form 1040x Assume the same facts as in Example 1, except that the corporation only loses $15,000 from operations. Print tax form 1040x Its taxable income is $85,000 before the deduction for dividends received. Print tax form 1040x After claiming the dividends-received deduction of $80,000 ($100,000 × 80%), its taxable income is $5,000. Print tax form 1040x 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%). Print tax form 1040x 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. Print tax form 1040x The nontaxed part is any dividends-received deduction allowable for the dividends. Print tax form 1040x Extraordinary dividend. Print tax form 1040x   An extraordinary dividend is any dividend on stock that equals or exceeds a certain percentage of the corporation's adjusted basis in the stock. Print tax form 1040x The percentages are: 5% for stock preferred as to dividends, or 10% for other stock. Print tax form 1040x Treat all dividends received that have ex-dividend dates within an 85-consecutive-day period as one dividend. Print tax form 1040x 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. Print tax form 1040x Disqualified preferred stock. Print tax form 1040x   Any dividend on disqualified preferred stock is treated as an extraordinary dividend regardless of the period of time the corporation held the stock. Print tax form 1040x   Disqualified preferred stock is any stock preferred as to dividends if any of the following apply. Print tax form 1040x The stock when issued has a dividend rate that declines (or can reasonably be expected to decline) in the future. Print tax form 1040x The issue price of the stock exceeds its liquidation rights or stated redemption price. Print tax form 1040x 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. Print tax form 1040x   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. Print tax form 1040x More information. Print tax form 1040x   For more information on extraordinary dividends, see section 1059 of the Internal Revenue Code. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x Treat the additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Print tax form 1040x Foregone interest. Print tax form 1040x   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. Print tax form 1040x See Below-market loans, in chapter 4 of Publication 535 for more information. Print tax form 1040x Charitable Contributions A corporation can claim a limited deduction for charitable contributions made in cash or other property. Print tax form 1040x The contribution is deductible if made to, or for the use of, a qualified organization. Print tax form 1040x For more information on qualified organizations, see Publication 526, Charitable Contributions. Print tax form 1040x Also see, Exempt Organizations Select Check (EO Select Check) at www. Print tax form 1040x irs. Print tax form 1040x gov/charities, the on-line search tool for finding information on organizations eligible to receive tax-deductible contributions. Print tax form 1040x Note. Print tax form 1040x You cannot take a deduction if any of the net earnings of an organization receiving contributions benefit any private shareholder or individual. Print tax form 1040x Cash method corporation. Print tax form 1040x   A corporation using the cash method of accounting deducts contributions in the tax year paid. Print tax form 1040x Accrual method corporation. Print tax form 1040x   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. Print tax form 1040x Make the choice by reporting the contribution on the corporation's return for the tax year. Print tax form 1040x A declaration stating that the board of directors adopted the resolution during the tax year must accompany the return. Print tax form 1040x The declaration must include the date the resolution was adopted. Print tax form 1040x Limitations on deduction. Print tax form 1040x   A corporation cannot deduct charitable contributions that exceed 10% of its taxable income for the tax year. Print tax form 1040x Figure taxable income for this purpose without the following. Print tax form 1040x The deduction for charitable contributions. Print tax form 1040x The dividends-received deduction. Print tax form 1040x The deduction allowed under section 249 of the Internal Revenue Code. Print tax form 1040x The domestic production activities deduction. Print tax form 1040x Any net operating loss carryback to the tax year. Print tax form 1040x Any capital loss carryback to the tax year. Print tax form 1040x Farmers and ranchers. Print tax form 1040x    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. Print tax form 1040x Carryover of excess contributions. Print tax form 1040x   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. Print tax form 1040x You lose any excess not used within that period. Print tax form 1040x 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. Print tax form 1040x Any excess not used in 2015 is lost. Print tax form 1040x 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). Print tax form 1040x You cannot deduct a carryover of excess contributions to the extent it increases a net operating loss carryover. Print tax form 1040x Cash contributions. Print tax form 1040x   A corporation must maintain a record of any contribution of cash, check, or other monetary contribution, regardless of the amount. Print tax form 1040x 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. Print tax form 1040x Keep the record of the contribution with the other corporate records. Print tax form 1040x Do not attach the records to the corporation's return. Print tax form 1040x For more information on cash contributions, see Publication 526. Print tax form 1040x Gifts of $250 or more. Print tax form 1040x   Generally, no deduction is allowed for any contribution of $250 or more unless the corporation gets a written acknowledgement from the donee organization. Print tax form 1040x 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. Print tax form 1040x The acknowledgement should be received by the due date (including extensions) of the return, or, if earlier, the date the return was filed. Print tax form 1040x Keep the acknowledgement with other corporate records. Print tax form 1040x Do not attach the acknowledgement to the return. Print tax form 1040x Contributions of property other than cash. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x   A corporation must obtain a qualified appraisal for all deductions of property claimed in excess of $5,000. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x   See Form 8283 for more information. Print tax form 1040x Qualified conservation contributions. Print tax form 1040x   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. Print tax form 1040x For more information, see section 170(h) of the Internal Revenue Code. Print tax form 1040x Contributions of used vehicles. Print tax form 1040x   A corporation is allowed a deduction for the contribution of used motor vehicles, boats, and airplanes. Print tax form 1040x The deduction is limited, and other special rules apply. Print tax form 1040x For more information, see Publication 526. Print tax form 1040x Reduction for contributions of certain property. Print tax form 1040x   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. Print tax form 1040x   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. Print tax form 1040x Larger deduction. Print tax form 1040x   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. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x 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. Print tax form 1040x Contributions to organizations conducting lobbying activities. Print tax form 1040x   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. Print tax form 1040x More information. Print tax form 1040x   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. Print tax form 1040x Capital Losses A corporation can deduct capital losses only up to the amount of its capital gains. Print tax form 1040x In other words, if a corporation has an excess capital loss, it cannot deduct the loss in the current tax year. Print tax form 1040x Instead, it carries the loss to other tax years and deducts it from any net capital gains that occur in those years. Print tax form 1040x A capital loss is carried to other years in the following order. Print tax form 1040x 3 years prior to the loss year. Print tax form 1040x 2 years prior to the loss year. Print tax form 1040x 1 year prior to the loss year. Print tax form 1040x Any loss remaining is carried forward for 5 years. Print tax form 1040x When you carry a net capital loss to another tax year, treat it as a short-term loss. Print tax form 1040x It does not retain its original identity as long term or short term. Print tax form 1040x Example. Print tax form 1040x A calendar year corporation has a net short-term capital gain of $3,000 and a net long-term capital loss of $9,000. Print tax form 1040x The short-term gain offsets some of the long-term loss, leaving a net capital loss of $6,000. Print tax form 1040x The corporation treats this $6,000 as a short-term loss when carried back or forward. Print tax form 1040x The corporation carries the $6,000 short-term loss back 3 years. Print tax form 1040x 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. Print tax form 1040x It subtracts the $6,000 short-term loss first from the net short-term gain. Print tax form 1040x This results in a net capital gain for year 1 of $7,000. Print tax form 1040x 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. Print tax form 1040x S corporation status. Print tax form 1040x   A corporation may not carry a capital loss from, or to, a year for which it is an S corporation. Print tax form 1040x Rules for carryover and carryback. Print tax form 1040x   When carrying a capital loss from one year to another, the following rules apply. Print tax form 1040x When figuring the current year's net capital loss, you cannot combine it with a capital loss carried from another year. Print tax form 1040x In other words, you can carry capital losses only to years that would otherwise have a total net capital gain. Print tax form 1040x If you carry capital losses from 2 or more years to the same year, deduct the loss from the earliest year first. Print tax form 1040x 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. Print tax form 1040x Refunds. Print tax form 1040x   When you carry back a capital loss to an earlier tax year, refigure your tax for that year. Print tax form 1040x 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. Print tax form 1040x S. Print tax form 1040x Corporation Income Tax Return, to apply for a refund. Print tax form 1040x Form 1139. Print tax form 1040x    A corporation can get a refund faster by using Form 1139. Print tax form 1040x 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. Print tax form 1040x Form 1120X. Print tax form 1040x   If the corporation does not file Form 1139, it must file Form 1120X to apply for a refund. Print tax form 1040x The corporation must file the Form 1120X within 3 years of the due date, includin