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Filing Amended Return

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Filing Amended Return

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

Filing amended return Tax Changes for Individuals Table of Contents 2001 ChangesNew 5-Year Carryback Rule for Net Operating Losses (NOLs) Wash Sale Rules Do Not Apply to Section 1256 Contracts Other 2001 Changes 2002 ChangesDeduction for Educator Expenses Personal Credits Still Allowed Against Alternative Minimum Tax Later ChangeChild and Dependent Care Expenses 2001 Changes New 5-Year Carryback Rule for Net Operating Losses (NOLs) If you have an NOL from a tax year ending during 2001 or 2002, you must generally carry back the entire amount of the NOL to the 5 tax years before the NOL year (the carryback period). Filing amended return However, you can still choose to use the previous carryback period. Filing amended return You also can choose not to carry back an NOL and only carry it forward. Filing amended return Individuals, estates, and trusts can file Form 1045, Application for Tentative Refund. Filing amended return The instructions for this form will be revised to reflect the new law. Filing amended return Wash Sale Rules Do Not Apply to Section 1256 Contracts The wash sale rules that generally apply to losses from the sale of stock or securities, do not apply to any loss arising from a section 1256 contract. Filing amended return A section 1256 contract is any: Regulated futures contract, Foreign currency contract, Nonequity option, Dealer equity option, or Dealer securities futures contract. Filing amended return Wash sales and section 1256 contracts are explained in detail in Publication 550, Investment Income and Expenses. Filing amended return Other 2001 Changes Other changes are discussed in the following chapters. Filing amended return Chapter 4 Car Expenses Chapter 5 Depreciation 2002 Changes Deduction for Educator Expenses If you are an eligible educator, you can deduct as an adjustment to income up to $250 in qualified expenses. Filing amended return You can deduct these expenses even if you do not itemize deductions on Schedule A (Form 1040). Filing amended return This adjustment to income is for expenses paid or incurred in tax years beginning during 2002 or 2003. Filing amended return Previously, these expenses were deductible only as a miscellaneous itemized deduction subject to the 2% of adjusted gross income limit. Filing amended return Eligible educator. Filing amended return   You are an eligible educator if, for the tax year, you meet the following requirements. Filing amended return You are a kindergarten through grade 12: Teacher, Instructor, Counselor, Principal, or Aide. Filing amended return You work at least 900 hours during a school year in a school that provides elementary or secondary education, as determined under state law. Filing amended return Qualified expenses. Filing amended return   These are unreimbursed expenses you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. Filing amended return For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics. Filing amended return   To be deductible as an adjustment to income, the qualified expenses must be more than the following amounts for the tax year. Filing amended return The interest on qualified U. Filing amended return S. Filing amended return savings bonds that you excluded from income because you paid qualified higher education expenses, Any distribution from a qualified tuition program that you excluded from income, or Any tax-free withdrawals from your Coverdell education savings account. Filing amended return Personal Credits Still Allowed Against Alternative Minimum Tax The provision that allowed certain nonrefundable personal credits to reduce both your regular tax and any alternative minimum tax (AMT) has been extended and will be in effect for 2002 and 2003. Filing amended return This provision, as it applies to the AMT, was originally scheduled to expire after 2001. Filing amended return Without the extension, these credits could not have been used to reduce any AMT in 2002 or 2003. Filing amended return Later Change Child and Dependent Care Expenses For the purpose of figuring the child and dependent care credit, your spouse is treated as having at least a minimum amount of earned income for any month that he or she is a full-time student or not able to care for himself or herself. Filing amended return Beginning in 2003, this amount is increased to $250 a month if there is one qualifying person and to $500 a month if there are two or more qualifying persons. Filing amended return Before 2003, the amounts were $200 and $400. Filing amended return The same rule applies for the exclusion of employer-provided dependent care benefits. Filing amended return For more information about the credit and exclusion, see Publication 503, Child and Dependent Care Expenses. Filing amended return Prev  Up  Next   Home   More Online Publications