Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free File Form 4868

File 2011 Federal Taxes2012 Tax Forms 1040Taxact 2011 Returning User2010 Federal Tax Forms InstructionsForm 1040ezState TaxesH And R Block E FileIrs Tax Forms 1040ez1040x Amended Tax FormFile 2010 Taxes LateHow To File State Taxes Online For FreeState Tax Return AddressAmended Tax FormsTax Forms 1040 For 2012Tax Form 1040xHr Block Free TaxNon Resident State Tax ReturnFile State Taxes FreeFile A Free Tax ExtensionFree State Tax Software2012 Federal Tax Forms 1040ez1040ez Form 20122012 Free Taxes2007 Tax FormsHow Can I File My State Taxes For Free2009 Form 1040 EzFiling Amended Tax Return 20132012 Tax ReturnsWww H & R BlockFree Filing State Taxes OnlineIrs 2009 Tax FormsH R Block Free FileFile My 2011 Taxes Online FreeCan You E File An Amended ReturnAmend A 2011 Tax ReturnFederal Income Tax Forms 2012Tax Cut Free FileFederal Ez Tax Form 20111040ez TaxesIrs Instructions

Free File Form 4868

Free file form 4868 Index Symbols 403(b) plans, 403(b) Plans A Accounting methods, Nonaccrual-Experience Method Acquisition date: Special depreciation allowance, Acquisition date test. Free file form 4868 Special Liberty Zone depreciation allowance, Acquisition date test. Free file form 4868 Annuities, tax-sheltered 403(b) plans, 403(b) Plans Assistance (see Tax help) Automobile (see Passenger automobile) B Bonds: New York Liberty, Tax Incentives for New York Liberty Zone Qualified zone academy, Issuance of Qualified Zone Academy Bonds C Car (see Passenger automobile) Car expenses, Car Expenses Catch-up contributions, 403(b), 403(b) Plans Child and dependent care, Child and Dependent Care Expenses Church employees and ministers, Years of service for church employees and ministers. Free file form 4868 Clean-fuel vehicle, Electric and Clean-Fuel Vehicles Comments, Comments and suggestions. Free file form 4868 Credit: Child and dependent care, Child and Dependent Care Expenses Credit for pension plan startup, Credit For Pension Plan Startup Costs Electric vehicles, Electric and Clean-Fuel Vehicles Indian employment, Indian Employment Credit Extended Renewable electricity production, Renewable Electricity Production Credit Welfare-to-work, Welfare-to-Work Credit Extended Work opportunity, Work Opportunity Credit Expanded in New York Liberty Zone , Work Opportunity Credit Extended D Deduction limit, automobile, Passenger Automobiles Deemed IRAs, Deemed IRAs Depletion, Depletion Depreciation: New property, Special Depreciation Allowance Property on reservations, Depreciation of Property Used on Indian Reservations Special depreciation allowance, Special Depreciation Allowance Special Liberty Zone depreciation allowance, Special Liberty Zone Depreciation Allowance Supplement to Publication 946, Depreciation E Election: Deemed not to claim special allowance, Deemed election. Free file form 4868 Not to claim special allowance, Election Not To Claim the Allowance Not to claim special Liberty Zone allowance, Election Not To Claim the Liberty Zone Allowance Electric vehicle, Electric and Clean-Fuel Vehicles Eligible educator, Deduction for Educator Expenses Estimated tax payments, Adjusting your withholding or estimated tax payments for 2002. Free file form 4868 Excepted property: Special depreciation allowance, Excepted Property Special Liberty Zone depreciation allowance, Excepted property. Free file form 4868 F Foreign missionaries, Foreign missionaries. Free file form 4868 Form 1099, Electronic Form 1099 Free tax services, How To Get Tax Help H Help (see Tax help) I Indian employment credit, Indian Employment Credit Extended Indian reservations, depreciation rules, Depreciation of Property Used on Indian Reservations IRAs, Deemed IRAs L Leasehold improvement property, defined, Qualified leasehold improvement property. Free file form 4868 Liberty Zone leasehold improvement property: Defined, Qualified New York Liberty Zone leasehold improvement property. Free file form 4868 Depreciated as 5-year property, Liberty Zone Leasehold Improvement Property Returns filed before June 1, 2002, Returns Filed Before June 1, 2002 Liberty Zone property: Increased section 179 dollar limit, Increased Dollar Limit Reduced section 179 dollar limit, Reduced Dollar Limit M Marginal production, Depletion More information (see Tax help) N Net operating losses, New 5-Year Carryback Rule for Net Operating Losses (NOLs), New 5-Year Carryback Rule for Net Operating Losses (NOLs) New York Liberty Zone: Area defined, New York Liberty Zone Benefits Leasehold improvement property, Liberty Zone Leasehold Improvement Property Section 179 deduction, Increased Section 179 Deduction Special depreciation, Special Liberty Zone Depreciation Allowance Tax incentives, Tax Incentives for New York Liberty Zone Work opportunity credit, Work Opportunity Credit Expanded in New York Liberty Zone NOLs, New 5-Year Carryback Rule for Net Operating Losses (NOLs), New 5-Year Carryback Rule for Net Operating Losses (NOLs) Nonaccrual-experience method, Nonaccrual-Experience Method Nonresidential real property, Nonresidential real property and residential rental property. Free file form 4868 P Passenger automobile, limit on, Passenger Automobiles Pension plan startup costs, Credit For Pension Plan Startup Costs Placed in service date, Placed in service date test. Free file form 4868 , Placed in service date test. Free file form 4868 Plans, tax-sheltered annuities, 403(b) plans, 403(b) Plans Publications (see Tax help) Q Qualified leasehold improvement property, defined, Qualified leasehold improvement property. Free file form 4868 Qualified Liberty Zone leasehold improvement property, Qualified New York Liberty Zone leasehold improvement property. Free file form 4868 Qualified property: Increased section 179 deduction, Qualified property. Free file form 4868 Special depreciation allowance, Qualified Property Special Liberty Zone depreciation allowance, Qualified Liberty Zone Property Qualified zone academy bonds, Issuance of Qualified Zone Academy Bonds R Recapture, section 179 deduction, Recapture Rules Renewable electricity, Renewable Electricity Production Credit Residential rental property, Nonresidential real property and residential rental property. Free file form 4868 Rollovers, 403(b) plans, Rollovers to and from 403(b) plans. Free file form 4868 S Section 1256 contracts, Wash Sale Rules Do Not Apply to Section 1256 Contracts Section 179 deduction: Increased dollar limit for Liberty Zone property, Increased Dollar Limit Reduced dollar limit for Liberty Zone property, Reduced Dollar Limit Returns filed before June 1, 2002, Returns Filed Before June 1, 2002 Simplified employee pensions (SEPs), Simplified Employee Pensions (SEPs) Special depreciation allowance: Election not to claim, Election Not To Claim the Allowance Excepted property, Excepted Property Qualified property, Qualified Property Requirements for claiming, Qualified Property Returns filed before June 1, 2002, Rules for Returns Filed Before June 1, 2002 Tests for qualification, Tests To Be Met Special Liberty Zone depreciation allowance: Election not to claim, Election Not To Claim the Liberty Zone Allowance Excepted property, Excepted property. Free file form 4868 Qualified property, Qualified Liberty Zone Property Requirements for claiming, Qualified Liberty Zone Property Returns filed before June 1, 2002, Returns filed before June 1, 2002. Free file form 4868 Tests for qualification, Tests to be met. Free file form 4868 Substantial use, special Liberty Zone depreciation allowance, Substantial use test. Free file form 4868 Suggestions, Comments and suggestions. Free file form 4868 T Tax help, How To Get Tax Help Tax-sheltered annuity plans, 403(b) plans, 403(b) Plans Taxpayer Advocate, Contacting your Taxpayer Advocate. Free file form 4868 Teachers, classroom materials, Deduction for Educator Expenses Tests for qualification, Tests To Be Met, Tests to be met. Free file form 4868 TTY/TDD information, How To Get Tax Help W Wash sale rules, Wash Sale Rules Do Not Apply to Section 1256 Contracts Welfare-to-work credit, Welfare-to-Work Credit Extended Withholding, Adjusting your withholding or estimated tax payments for 2002. Free file form 4868 Work opportunity credit, Work Opportunity Credit Expanded in New York Liberty Zone , Work Opportunity Credit Extended Y Years of service, church employees and ministers, Years of service for church employees and ministers. Free file form 4868 Prev  Up     Home   More Online Publications
Español

National Bipartisan Commission on the Future of Medicare

The National Bipartisan Commission on the Future of Medicare was active from 1997-1999. The final recommendation of the commission failed to receive the support of 2/3 of the commissioners. The recommendation itself is still available at the website.

The Free File Form 4868

Free file form 4868 Publication 542 - Main Content Table of Contents Businesses Taxed as CorporationsPersonal services. Free file form 4868 Employee-owners. Free file form 4868 Other rules. Free file form 4868 Other rules. Free file form 4868 Property Exchanged for StockNonqualified preferred stock. Free file form 4868 Liabilities. Free file form 4868 Election to reduce basis. Free file form 4868 Capital Contributions Filing and Paying Income TaxesIncome Tax Return Penalties Estimated Tax U. Free file form 4868 S. Free file form 4868 Real Property Interest Accounting MethodsSection 481(a) adjustment. Free file form 4868 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. Free file form 4868 Business formed before 1997. Free file form 4868   A business formed before 1997 and taxed as a corporation under the old rules will generally continue to be taxed as a corporation. Free file form 4868 Business formed after 1996. Free file form 4868   The following businesses formed after 1996 are taxed as corporations. Free file form 4868 A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic. Free file form 4868 A business formed under a state law that refers to it as a joint-stock company or joint-stock association. Free file form 4868 An insurance company. Free file form 4868 Certain banks. Free file form 4868 A business wholly owned by a state or local government. Free file form 4868 A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). Free file form 4868 Certain foreign businesses. Free file form 4868 Any other business that elects to be taxed as a corporation. Free file form 4868 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. Free file form 4868 For more information about LLCs, see Publication 3402, Taxation of Limited Liability Companies. Free file form 4868 S corporations. Free file form 4868   Some corporations may meet the qualifications for electing to be S corporations. Free file form 4868 For information on S corporations, see the instructions for Form 1120S, U. Free file form 4868 S. Free file form 4868 Income Tax Return for an S Corporation. Free file form 4868 Personal service corporations. Free file form 4868   A corporation is a personal service corporation if it meets all of the following requirements. Free file form 4868 Its principal activity during the “testing period” is performing personal services (defined later). Free file form 4868 Generally, the testing period for any tax year is the prior tax year. Free file form 4868 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. Free file form 4868 Its employee-owners substantially perform the services in (1), above. Free file form 4868 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. Free file form 4868 Its employee-owners own more than 10% of the fair market value of its outstanding stock on the last day of the testing period. Free file form 4868 Personal services. Free file form 4868   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. Free file form 4868 Employee-owners. Free file form 4868   A person is an employee-owner of a personal service corporation if both of the following apply. Free file form 4868 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. Free file form 4868 He or she owns any stock in the corporation at any time during the testing period. Free file form 4868 Other rules. Free file form 4868   For other rules that apply to personal service corporations see Accounting Periods, later. Free file form 4868 Closely held corporations. Free file form 4868   A corporation is closely held if all of the following apply. Free file form 4868 It is not a personal service corporation. Free file form 4868 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. Free file form 4868 “Individual” includes certain trusts and private foundations. Free file form 4868 Other rules. Free file form 4868   For the at-risk rules that apply to closely held corporations, seeAt-Risk Limits, later. Free file form 4868 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. Free file form 4868 This rule applies both to individuals and to groups who transfer property to a corporation. Free file form 4868 It also applies whether the corporation is being formed or is already operating. Free file form 4868 It does not apply in the following situations. Free file form 4868 The corporation is an investment company. Free file form 4868 You transfer the property in a bankruptcy or similar proceeding in exchange for stock used to pay creditors. Free file form 4868 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. Free file form 4868 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. Free file form 4868 For more information, see section 1. Free file form 4868 351-3 of the Regulations. Free file form 4868 Control of a corporation. Free file form 4868   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. Free file form 4868 Example 1. Free file form 4868 You and Bill Jones buy property for $100,000. Free file form 4868 You both organize a corporation when the property has a fair market value of $300,000. Free file form 4868 You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. Free file form 4868 No gain is recognized by you, Bill, or the corporation. Free file form 4868 Example 2. Free file form 4868 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. Free file form 4868 This represents only 75% of each class of stock of the corporation. Free file form 4868 The other 25% was already issued to someone else. Free file form 4868 You and Bill recognize a taxable gain of $200,000 on the transaction. Free file form 4868 Services rendered. Free file form 4868   The term property does not include services rendered or to be rendered to the issuing corporation. Free file form 4868 The value of stock received for services is income to the recipient. Free file form 4868 Example. Free file form 4868 You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. Free file form 4868 Right after the exchange, you own 85% of the outstanding stock. Free file form 4868 No gain is recognized on the exchange of property. Free file form 4868 However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation. Free file form 4868 Property of relatively small value. Free file form 4868   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. Free file form 4868   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. Free file form 4868 Stock received in disproportion to property transferred. Free file form 4868   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. Free file form 4868 If a disproportionate transfer takes place, it will be treated for tax purposes in accordance with its true nature. Free file form 4868 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. Free file form 4868 Money or other property received. Free file form 4868   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. Free file form 4868 You must recognize gain only up to the amount of money plus the fair market value of the other property you receive. Free file form 4868 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. Free file form 4868 If the property you give up includes depreciable property, the recognized gain may have to be reported as ordinary income from depreciation. Free file form 4868 See chapter 3 of Publication 544. Free file form 4868 No loss is recognized. Free file form 4868 Nonqualified preferred stock. Free file form 4868   Nonqualified preferred stock is treated as property other than stock. Free file form 4868 Generally, it is preferred stock with any of the following features. Free file form 4868 The holder has the right to require the issuer or a related person to redeem or buy the stock. Free file form 4868 The issuer or a related person is required to redeem or buy the stock. Free file form 4868 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. Free file form 4868 The dividend rate on the stock varies with reference to interest rates, commodity prices, or similar indices. Free file form 4868 For a detailed definition of nonqualified preferred stock, see section 351(g)(2) of the Internal Revenue Code. Free file form 4868 Liabilities. Free file form 4868   If the corporation assumes your liabilities, the exchange generally is not treated as if you received money or other property. Free file form 4868 There are two exceptions to this treatment. Free file form 4868 If the liabilities the corporation assumes are more than your adjusted basis in the property you transfer, gain is recognized up to the difference. Free file form 4868 However, if the liabilities assumed give rise to a deduction when paid, such as a trade account payable or interest, no gain is recognized. Free file form 4868 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. Free file form 4868 For more information on the assumption of liabilities, see section 357(d) of the Internal Revenue Code. Free file form 4868 Example. Free file form 4868 You transfer property to a corporation for stock. Free file form 4868 Immediately after the transfer, you control the corporation. Free file form 4868 You also receive $10,000 in the exchange. Free file form 4868 Your adjusted basis in the transferred property is $20,000. Free file form 4868 The stock you receive has a fair market value (FMV) of $16,000. Free file form 4868 The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. Free file form 4868 Gain is realized as follows. Free file form 4868 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. Free file form 4868 The recognized gain is limited to $10,000, the cash received. Free file form 4868 Loss on exchange. Free file form 4868   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. Free file form 4868 For more information, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Free file form 4868 Basis of stock or other property received. Free file form 4868   The basis of the stock you receive is generally the adjusted basis of the property you transfer. Free file form 4868 Increase this amount by any amount treated as a dividend, plus any gain recognized on the exchange. Free file form 4868 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. Free file form 4868 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. Free file form 4868    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. Free file form 4868 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. Free file form 4868 The basis of any other property you receive is its fair market value on the date of the trade. Free file form 4868 Basis of property transferred. Free file form 4868   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. Free file form 4868 However, the increase for the gain recognized may be limited. Free file form 4868 For more information, see section 362 of the Internal Revenue Code. Free file form 4868 Election to reduce basis. Free file form 4868   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. Free file form 4868 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. Free file form 4868 However, if the transferor makes the election by including the certification provided in Notice 2005-70, 2005-41, I. Free file form 4868 R. Free file form 4868 B. Free file form 4868 694, on or with its tax return filed by the due date (including extensions), then no election need be made by the transferee. Free file form 4868    For more information on making this election, see section 362(e)(2)(C) of the Internal Revenue Code, and Notice 2005-70. Free file form 4868 Capital Contributions This section explains the tax treatment of contributions from shareholders and nonshareholders. Free file form 4868 Paid-in capital. Free file form 4868   Contributions to the capital of a corporation, whether or not by shareholders, are paid-in capital. Free file form 4868 These contributions are not taxable to the corporation. Free file form 4868 Basis. Free file form 4868   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. Free file form 4868 However, the increase for the gain recognized may be limited. Free file form 4868 For more information, see Basis of property transferred, above, and section 362 of the Internal Revenue Code. Free file form 4868   The basis of property contributed to capital by a person other than a shareholder is zero. Free file form 4868   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. Free file form 4868 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. Free file form 4868 Depreciable property. Free file form 4868 Amortizable property. Free file form 4868 Property subject to cost depletion but not to percentage depletion. Free file form 4868 All other remaining properties. Free file form 4868   Reduce the basis of property in each category to zero before going on to the next category. Free file form 4868   There may be more than one piece of property in each category. Free file form 4868 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. Free file form 4868 The corporation files a request for approval with its income tax return for the tax year in which it receives the contribution. Free file form 4868 Filing and Paying Income Taxes The federal income tax is a pay-as-you-go tax. Free file form 4868 A corporation generally must make estimated tax payments as it earns or receives income during its tax year. Free file form 4868 After the end of the year, the corporation must file an income tax return. Free file form 4868 This section will help you determine when and how to pay and file corporate income taxes. Free file form 4868 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. Free file form 4868 The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. Free file form 4868 For more information, visit www. Free file form 4868 irs. Free file form 4868 gov/newsroom/article/0,,id=108362. Free file form 4868 00. Free file form 4868 Income Tax Return This section will help you determine when and how to report a corporation's income tax. Free file form 4868 Who must file. Free file form 4868   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. Free file form 4868 Which form to file. Free file form 4868   A corporation generally must file Form 1120, U. Free file form 4868 S. Free file form 4868 Corporation Income Tax Return, to report its income, gains, losses, deductions, credits, and to figure its income tax liability. Free file form 4868 Certain organizations and entities must file special returns. Free file form 4868 For more information, see Special Returns for Certain Organizations, in the Instructions for Form 1120. Free file form 4868 Electronic filing. Free file form 4868   Corporations can generally electronically file (e-file) Form 1120 and certain related forms, schedules, and attachments. Free file form 4868 Certain corporations with total assets of $10 million or more, that file at least 250 returns a year must e-file Form 1120. Free file form 4868 However, in certain instances, these corporations can request a waiver. Free file form 4868 For more information regarding electronic filing, visit www. Free file form 4868 irs. Free file form 4868 gov/efile. Free file form 4868 When to file. Free file form 4868   Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. Free file form 4868 A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. Free file form 4868 A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved. Free file form 4868 Example 1. Free file form 4868 A corporation's tax year ends December 31. Free file form 4868 It must file its income tax return by March 15th. Free file form 4868 Example 2. Free file form 4868 A corporation's tax year ends June 30. Free file form 4868 It must file its income tax return by September 15th. Free file form 4868   If the due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day. Free file form 4868 Extension of time to file. Free file form 4868   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. Free file form 4868 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. Free file form 4868   Form 7004 does not extend the time for paying the tax due on the return. Free file form 4868 Interest, and possibly penalties, will be charged on any part of the final tax due not shown as a balance due on Form 7004. Free file form 4868 The interest is figured from the original due date of the return to the date of payment. Free file form 4868   For more information, see the instructions for Form 7004. Free file form 4868 How to pay your taxes. Free file form 4868   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. Free file form 4868 Electronic Federal Tax Payment System (EFTPS). Free file form 4868   Corporations generally must use EFTPS to make deposits of all tax liabilities (including social security, Medicare, withheld income, excise, and corporate income taxes). Free file form 4868 For more information on EFTPS and enrollment, visit www. Free file form 4868 eftps. Free file form 4868 gov or call 1-800-555-4477. Free file form 4868 Also see Publication 966, The Secure Way to Pay Your Federal Taxes. Free file form 4868 Note. Free file form 4868 Forms 8109 and 8109-B, Federal Tax Deposit Coupon, can no longer be used to make federal tax deposits. Free file form 4868 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. Free file form 4868 Do not attach an explanation when the corporation's return is filed. Free file form 4868 See the instructions for your income tax return. Free file form 4868 Late filing of return. Free file form 4868    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. Free file form 4868 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. Free file form 4868 The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $100. Free file form 4868 The penalty will not be imposed if the corporation can show the failure to file on time was due to a reasonable cause. Free file form 4868 Late payment of tax. Free file form 4868    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. Free file form 4868 The penalty will not be imposed if the corporation can show that the failure to pay on time was due to a reasonable cause. Free file form 4868 Trust fund recovery penalty. Free file form 4868   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. Free file form 4868 The penalty is the full amount of the unpaid trust fund tax. Free file form 4868 This penalty may apply to you if these unpaid taxes cannot be immediately collected from the business. Free file form 4868   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. Free file form 4868   A responsible person can be an officer or employee of a corporation, an accountant, or a volunteer director/trustee. Free file form 4868 A responsible person also may include one who signs checks for the corporation or otherwise has authority to cause the spending of business funds. Free file form 4868   Willfully means voluntarily, consciously, and intentionally. Free file form 4868 A responsible person acts willfully if the person knows the required actions are not taking place. Free file form 4868   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. Free file form 4868 Other penalties. Free file form 4868   Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. Free file form 4868 See sections 6662, 6662A, and 6663 of the Internal Revenue Code. Free file form 4868 Estimated Tax Generally, a corporation must make installment payments if it expects its estimated tax for the year to be $500 or more. Free file form 4868 If the corporation does not pay the installments when they are due, it could be subject to an underpayment penalty. Free file form 4868 This section will explain how to avoid this penalty. Free file form 4868 When to pay estimated tax. Free file form 4868   Installment payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. Free file form 4868 Example 1. Free file form 4868 Your corporation's tax year ends December 31. Free file form 4868 Installment payments are due on April 15, June 15, September 15, and December 15. Free file form 4868 Example 2. Free file form 4868 Your corporation's tax year ends June 30. Free file form 4868 Installment payments are due on October 15, December 15, March 15, and June 15. Free file form 4868   If any due date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next business day. Free file form 4868 How to figure each required installment. Free file form 4868   Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to figure each required installment of estimated tax. Free file form 4868 You will generally use one of the following two methods to figure each required installment. Free file form 4868 You should use the method that yields the smallest installment payments. Free file form 4868 Note. Free file form 4868 In these discussions, “return” generally refers to the corporation's original return. Free file form 4868 However, an amended return is considered the original return if it is filed by the due date (including extensions) of the original return. Free file form 4868 Method 1. Free file form 4868   Each required installment is 25% of the income tax the corporation will show on its return for the current year. Free file form 4868 Method 2. Free file form 4868   Each required installment is 25% of the income tax shown on the corporation's return for the previous year. Free file form 4868   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). Free file form 4868 Also, if the corporation is a large corporation, it can use Method 2 to figure the first installment only. Free file form 4868   See the Instructions for Form 1120-W, for the definition of a large corporation and other special rules for large corporations. Free file form 4868 Other methods. Free file form 4868   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. Free file form 4868 The annualized income installment method. Free file form 4868 The adjusted seasonal installment method. Free file form 4868 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. Free file form 4868 Refiguring required installments. Free file form 4868   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. Free file form 4868 An immediate catchup payment should be made to reduce any penalty resulting from the underpayment of any earlier installments. Free file form 4868 Underpayment penalty. Free file form 4868   If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty. Free file form 4868 The penalty is figured separately for each installment due date. Free file form 4868 The corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment. Free file form 4868 This is true even if the corporation is due a refund when its return is filed. Free file form 4868 Form 2220. Free file form 4868   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. Free file form 4868   If the corporation is charged a penalty, the amount of the penalty depends on the following three factors. Free file form 4868 The amount of the underpayment. Free file form 4868 The period during which the underpayment was due and unpaid. Free file form 4868 The interest rate for underpayments published quarterly by the IRS in the Internal Revenue Bulletin. Free file form 4868   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. Free file form 4868 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. Free file form 4868 The annualized income installment method was used to figure any required installment. Free file form 4868 The adjusted seasonal installment method was used to figure any required installment. Free file form 4868 The corporation is a large corporation figuring its first required installment based on the prior year's tax. Free file form 4868 How to pay estimated tax. Free file form 4868   A corporation is generally required to use EFTPS to pay its taxes. Free file form 4868 See Electronic Federal Tax Payment System (EFTPS), earlier. Free file form 4868 Also see the Instructions for Form 1120-W. Free file form 4868 Quick refund of overpayments. Free file form 4868   A corporation that has overpaid its estimated tax for the tax year may be able to apply for a quick refund. Free file form 4868 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. Free file form 4868 A corporation can apply for a quick refund if the overpayment is: At least 10% of its expected tax liability, and At least $500. Free file form 4868 Use Form 4466 to figure the corporation's expected tax liability and the overpayment of estimated tax. Free file form 4868 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. Free file form 4868 Do not file Form 4466 before the end of the corporation's tax year. Free file form 4868 An extension of time to file the corporation's income tax return will not extend the time for filing Form 4466. Free file form 4868 The IRS will act on the form within 45 days from the date you file it. Free file form 4868 U. Free file form 4868 S. Free file form 4868 Real Property Interest If a domestic corporation acquires a U. Free file form 4868 S. Free file form 4868 real property interest from a foreign person or firm, the corporation may have to withhold tax on the amount it pays for the property. Free file form 4868 The amount paid includes cash, the fair market value of other property, and any assumed liability. Free file form 4868 If a domestic corporation distributes a U. Free file form 4868 S. Free file form 4868 real property interest to a foreign person or firm, it may have to withhold tax on the fair market value of the property. Free file form 4868 A corporation that fails to withhold may be liable for the tax, and any penalties and interest that apply. Free file form 4868 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. Free file form 4868 S. Free file form 4868 Withholding Tax Return for Dispositions by Foreign Persons of U. Free file form 4868 S. Free file form 4868 Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Free file form 4868 S. Free file form 4868 Real Property Interests. Free file form 4868 Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Free file form 4868 Taxable income should be determined using the method of accounting regularly used in keeping the corporation's books and records. Free file form 4868 In all cases, the method used must clearly show taxable income. Free file form 4868 Generally, permissible methods include: Cash, Accrual, or Any other method authorized by the Internal Revenue Code. Free file form 4868 Accrual method. Free file form 4868   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. Free file form 4868 A corporation engaged in farming operations also must use the accrual method. Free file form 4868   If inventories are required, the accrual method generally must be used for sales and purchases of merchandise. Free file form 4868 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. Free file form 4868   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. Free file form 4868   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. Free file form 4868   There are exceptions to the economic performance rule for certain items, including recurring expenses. Free file form 4868 See section 461(h) of the Internal Revenue Code and the related regulations for the rules for determining when economic performance takes place. Free file form 4868 Nonaccrual experience method. Free file form 4868   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. Free file form 4868   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. Free file form 4868 Percentage of completion method. Free file form 4868   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. Free file form 4868 Mark-to-market accounting method. Free file form 4868   Generally, dealers in securities must use the mark-to-market accounting method described in section 475 of the Internal Revenue Code. Free file form 4868 Under this method any security held by a dealer as inventory must be included in inventory at its FMV. Free file form 4868 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. Free file form 4868 Any gain or loss must be taken into account in determining gross income. Free file form 4868 The gain or loss taken into account is treated as ordinary gain or loss. Free file form 4868   Dealers in commodities and traders in securities and commodities can elect to use the mark-to-market accounting method. Free file form 4868 Change in accounting method. Free file form 4868   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). Free file form 4868 The corporation must file Form 3115, Application for Change in Accounting Method. Free file form 4868 For more information, see Form 3115 and Publication 538. Free file form 4868 Section 481(a) adjustment. Free file form 4868   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. Free file form 4868 The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years for a net positive adjustment. Free file form 4868 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. Free file form 4868 The corporation must complete the appropriate lines of Form 3115 to make the election. Free file form 4868 See the Instructions for Form 3115. Free file form 4868 Accounting Periods A corporation must figure its taxable income on the basis of a tax year. Free file form 4868 A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. Free file form 4868 Generally, corporations can use either a calendar year or a fiscal year as its tax year. Free file form 4868 Unless special rules apply, a corporation generally adopts a tax year by filing its first federal income tax return using that tax year. Free file form 4868 For more information, see Publication 538. Free file form 4868 Personal service corporation. Free file form 4868   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. Free file form 4868 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. Free file form 4868 Use Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, to make the election. Free file form 4868   If a personal service corporation makes a section 444 election, its deduction for certain amounts paid to employee-owners may be limited. Free file form 4868 See Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC), to figure the maximum deduction. Free file form 4868 Change of tax year. Free file form 4868   Generally, a corporation must get the consent of the IRS before changing its tax year by filing Form 1128. Free file form 4868 However, under certain conditions, a corporation can change its tax year without getting the consent. Free file form 4868 For more information, see Form 1128 and Publication 538. Free file form 4868 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. Free file form 4868 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. Free file form 4868 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. Free file form 4868 The corporation should keep copies of all filed returns. Free file form 4868 They help in preparing future and amended returns and in the calculation of earnings and profits. Free file form 4868 Income, Deductions, and Special Provisions Rules on income and deductions that apply to individuals also apply, for the most part, to corporations. Free file form 4868 However, the following special provisions apply only to corporations. Free file form 4868 Costs of Going Into Business When you go into business, treat all costs you incur to get your business started as capital expenses. Free file form 4868 However, a corporation can elect to deduct a limited amount of start-up or organizational costs. Free file form 4868 Any costs not deducted can be amortized. Free file form 4868 Start-up costs are costs for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Free file form 4868 Organizational costs are the direct costs of creating the corporation. Free file form 4868 For more information on deducting or amortizing start-up and organizational costs, see the instructions for your income tax return. Free file form 4868 Also see, Publication 535, chapter 7, Costs You Can Deduct or Capitalize, and chapter 8, Amortization. Free file form 4868 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. Free file form 4868 Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Free file form 4868 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. Free file form 4868 These rules also deny the deduction of losses on the sale or exchange of property between related persons. Free file form 4868 Related persons. Free file form 4868   For purposes of this rule, the following persons are related to a corporation. Free file form 4868 Another corporation, that is a member of the same controlled group (as defined in section 267(f) of the Internal Revenue Code). Free file form 4868 An individual who owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. Free file form 4868 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. Free file form 4868 An S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Free file form 4868 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. Free file form 4868 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. Free file form 4868 Ownership of stock. Free file form 4868   To determine whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following apply. Free file form 4868 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. Free file form 4868 An individual is treated as owning the stock owned, directly or indirectly, by or for the individual's family. Free file form 4868 Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants. Free file form 4868 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. Free file form 4868 To apply (1), (2), or (3), above, stock constructively owned by a person under (1) is treated as actually owned by that person. Free file form 4868 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. Free file form 4868 Reallocation of income and deductions. Free file form 4868   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. Free file form 4868 Complete liquidations. Free file form 4868   The disallowance of losses from the sale or exchange of property between related persons does not apply to liquidating distributions. Free file form 4868 More information. Free file form 4868   For more information about the related person rules, see Publication 544. Free file form 4868 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. Free file form 4868 If a corporation makes this election it may exclude income from qualifying shipping activities from gross income. Free file form 4868 Also if the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. Free file form 4868 A corporation making this election may also elect to defer gain on the disposition of a qualifying vessel. Free file form 4868 A corporation uses Form 8902, Alternative Tax on Qualifying Shipping Activities, to make the election and figure the alternative tax. Free file form 4868 For more information regarding the election, see Form 8902. Free file form 4868 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. Free file form 4868 The deduction is allowed for the year in which the property is placed in service. Free file form 4868 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. Free file form 4868 For more information, see section 179C of the Internal Revenue Code and the related Regulations. Free file form 4868 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). Free file form 4868 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. Free file form 4868 For more information, see sections 45H and 179B of the Internal Revenue Code and the related Regulations. Free file form 4868 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. Free file form 4868 In order to qualify for the deduction: The costs must be associated with depreciable or amortizable property in a Standard 90. Free file form 4868 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. Free file form 4868 The deduction is limited to $1. Free file form 4868 80 per square foot of the building less the total amount of deductions taken for this property in prior tax years. Free file form 4868 Other rules and limitations apply. Free file form 4868 The corporation must reduce the basis of any property by any deduction taken. Free file form 4868 The deduction is subject to recapture if the corporation fails to fully implement an energy savings plan. Free file form 4868 For more information, see section 179D of the Internal Revenue Code. Free file form 4868 Also see Notice 2006-52, 2006-26 I. Free file form 4868 R. Free file form 4868 B. Free file form 4868 1175, clarified and amplified by Notice 2008-40, 2008-14 I. Free file form 4868 R. Free file form 4868 B. Free file form 4868 725, and any successor. Free file form 4868 Corporate Preference Items A corporation must make special adjustments to certain items before it takes them into account in determining its taxable income. Free file form 4868 These items are known as corporate preference items and they include the following. Free file form 4868 Gain on the disposition of section 1250 property. Free file form 4868 For more information, see section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Free file form 4868 Percentage depletion for iron ore and coal (including lignite). Free file form 4868 For more information, see Mines and Geothermal Deposits under Mineral Property in chapter 9 of Publication 535. Free file form 4868 Amortization of pollution control facilities. Free file form 4868 For more information, see Pollution Control Facilities in chapter 8 of Publication 535 and section 291(a)(5) of the Internal Revenue Code. Free file form 4868 Mineral exploration and development costs. Free file form 4868 For more information, see Exploration Costs and Development Costs in chapter 7 of Publication 535. Free file form 4868 For more information on corporate preference items, see section 291 of the Internal Revenue Code. Free file form 4868 Dividends-Received Deduction A corporation can deduct a percentage of certain dividends received during its tax year. Free file form 4868 This section discusses the general rules that apply. Free file form 4868 The deduction is figured on Form 1120, Schedule C, or the applicable schedule of your income tax return. Free file form 4868 For more information, see the Instructions for Form 1120, or the instructions for your applicable income tax return. Free file form 4868 Dividends from domestic corporations. Free file form 4868   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. Free file form 4868 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. Free file form 4868 Ownership. Free file form 4868   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. Free file form 4868 Small business investment companies. Free file form 4868   Small business investment companies can deduct 100% of the dividends received from taxable domestic corporations. Free file form 4868 Dividends from regulated investment companies. Free file form 4868   Regulated investment company dividends received are subject to certain limits. Free file form 4868 Capital gain dividends received from a regulated investment company do not qualify for the deduction. Free file form 4868 For more information, see section 854 of the Internal Revenue Code. Free file form 4868 No deduction allowed for certain dividends. Free file form 4868   Corporations cannot take a deduction for dividends received from the following entities. Free file form 4868 A real estate investment trust (REIT). Free file form 4868 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. Free file form 4868 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. Free file form 4868 Ex-dividend means the holder has no rights to the dividend. Free file form 4868 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. Free file form 4868 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. Free file form 4868 Dividends on deposits. Free file form 4868   Dividends on deposits or withdrawable accounts in domestic building and loan associations, mutual savings banks, cooperative banks, and similar organizations are interest, not dividends. Free file form 4868 They do not qualify for this deduction. Free file form 4868 Limit on deduction for dividends. Free file form 4868   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). Free file form 4868 Figuring the limit. Free file form 4868   In figuring the limit, determine taxable income without the following items. Free file form 4868 The net operating loss deduction. Free file form 4868 The domestic production activities deduction. Free file form 4868 The deduction for dividends received. Free file form 4868 Any adjustment due to the nontaxable part of an extraordinary dividend (see Extraordinary Dividends, below). Free file form 4868 Any capital loss carryback to the tax year. Free file form 4868 Effect of net operating loss. Free file form 4868   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. Free file form 4868 To determine whether a corporation has an NOL, figure the dividends-received deduction without the 80% (or 70%) of taxable income limit. Free file form 4868 Example 1. Free file form 4868 A corporation loses $25,000 from operations. Free file form 4868 It receives $100,000 in dividends from a 20%-owned corporation. Free file form 4868 Its taxable income is $75,000 ($100,000 – $25,000) before the deduction for dividends received. Free file form 4868 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). Free file form 4868 Therefore, the 80% of taxable income limit does not apply. Free file form 4868 The corporation can deduct the full $80,000. Free file form 4868 Example 2. Free file form 4868 Assume the same facts as in Example 1, except that the corporation only loses $15,000 from operations. Free file form 4868 Its taxable income is $85,000 before the deduction for dividends received. Free file form 4868 After claiming the dividends-received deduction of $80,000 ($100,000 × 80%), its taxable income is $5,000. Free file form 4868 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%). Free file form 4868 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. Free file form 4868 The nontaxed part is any dividends-received deduction allowable for the dividends. Free file form 4868 Extraordinary dividend. Free file form 4868   An extraordinary dividend is any dividend on stock that equals or exceeds a certain percentage of the corporation's adjusted basis in the stock. Free file form 4868 The percentages are: 5% for stock preferred as to dividends, or 10% for other stock. Free file form 4868 Treat all dividends received that have ex-dividend dates within an 85-consecutive-day period as one dividend. Free file form 4868 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. Free file form 4868 Disqualified preferred stock. Free file form 4868   Any dividend on disqualified preferred stock is treated as an extraordinary dividend regardless of the period of time the corporation held the stock. Free file form 4868   Disqualified preferred stock is any stock preferred as to dividends if any of the following apply. Free file form 4868 The stock when issued has a dividend rate that declines (or can reasonably be expected to decline) in the future. Free file form 4868 The issue price of the stock exceeds its liquidation rights or stated redemption price. Free file form 4868 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. Free file form 4868   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. Free file form 4868 More information. Free file form 4868   For more information on extraordinary dividends, see section 1059 of the Internal Revenue Code. Free file form 4868 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. Free file form 4868 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. Free file form 4868 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. Free file form 4868 Treat the additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Free file form 4868 Foregone interest. Free file form 4868   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. Free file form 4868 See Below-market loans, in chapter 4 of Publication 535 for more information. Free file form 4868 Charitable Contributions A corporation can claim a limited deduction for charitable contributions made in cash or other property. Free file form 4868 The contribution is deductible if made to, or for the use of, a qualified organization. Free file form 4868 For more information on qualified organizations, see Publication 526, Charitable Contributions. Free file form 4868 Also see, Exempt Organizations Select Check (EO Select Check) at www. Free file form 4868 irs. Free file form 4868 gov/charities, the on-line search tool for finding information on organizations eligible to receive tax-deductible contributions. Free file form 4868 Note. Free file form 4868 You cannot take a deduction if any of the net earnings of an organization receiving contributions benefit any private shareholder or individual. Free file form 4868 Cash method corporation. Free file form 4868   A corporation using the cash method of accounting deducts contributions in the tax year paid. Free file form 4868 Accrual method corporation. Free file form 4868   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. Free file form 4868 Make the choice by reporting the contribution on the corporation's return for the tax year. Free file form 4868 A declaration stating that the board of directors adopted the resolution during the tax year must accompany the return. Free file form 4868 The declaration must include the date the resolution was adopted. Free file form 4868 Limitations on deduction. Free file form 4868   A corporation cannot deduct charitable contributions that exceed 10% of its taxable income for the tax year. Free file form 4868 Figure taxable income for this purpose without the following. Free file form 4868 The deduction for charitable contributions. Free file form 4868 The dividends-received deduction. Free file form 4868 The deduction allowed under section 249 of the Internal Revenue Code. Free file form 4868 The domestic production activities deduction. Free file form 4868 Any net operating loss carryback to the tax year. Free file form 4868 Any capital loss carryback to the tax year. Free file form 4868 Farmers and ranchers. Free file form 4868    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. Free file form 4868 Carryover of excess contributions. Free file form 4868   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. Free file form 4868 You lose any excess not used within that period. Free file form 4868 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. Free file form 4868 Any excess not used in 2015 is lost. Free file form 4868 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). Free file form 4868 You cannot deduct a carryover of excess contributions to the extent it increases a net operating loss carryover. Free file form 4868 Cash contributions. Free file form 4868   A corporation must maintain a record of any contribution of cash, check, or other monetary contribution, regardless of the amount. Free file form 4868 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. Free file form 4868 Keep the record of the contribution with the other corporate records. Free file form 4868 Do not attach the records to the corporation's return. Free file form 4868 For more information on cash contributions, see Publication 526. Free file form 4868 Gifts of $250 or more. Free file form 4868   Generally, no deduction is allowed for any contribution of $250 or more unless the corporation gets a written acknowledgement from the donee organization. Free file form 4868 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. Free file form 4868 The acknowledgement should be received by the due date (including extensions) of the return, or, if earlier, the date the return was filed. Free file form 4868 Keep the acknowledgement with other corporate records. Free file form 4868 Do not attach the acknowledgement to the return. Free file form 4868 Contributions of property other than cash. Free file form 4868   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. Free file form 4868 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. Free file form 4868   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. Free file form 4868 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. Free file form 4868   A corporation must obtain a qualified appraisal for all deductions of property claimed in excess of $5,000. Free file form 4868 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. Free file form 4868 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. Free file form 4868   See Form 8283 for more information. Free file form 4868 Qualified conservation contributions. Free file form 4868   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. Free file form 4868 For more information, see section 170(h) of the Internal Revenue Code. Free file form 4868 Contributions of used vehicles. Free file form 4868   A corporation is allowed a deduction for the contribution of used motor vehicles, boats, and airplanes. Free file form 4868 The deduction is limited, and other special rules apply. Free file form 4868 For more information, see Publication 526. Free file form 4868 Reduction for contributions of certain property. Free file form 4868   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. Free file form 4868   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. Free file form 4868 Larger deduction. Free file form 4868   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. Free file form 4868 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. Free file form 4868 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. Free file form 4868 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. Free file form 4868 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. Free file form 4868 Contributions to organizations conducting lobbying activities. Free file form 4868   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. Free file form 4868 More information. Free file form 4868   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. Free file form 4868 Capital Losses A corporation can deduct capital losses only up to the amount of its capital gains. Free file form 4868 In other words, if a corporation has an excess capital loss, it cannot deduct the loss in the current tax year. Free file form 4868 Instead, it carries the loss to other tax years and deducts it from any net capital gains that occur in those years. Free file form 4868 A capital loss is carried to other years in the following order. Free file form 4868 3 years prior to the loss year. Free file form 4868 2 years prior to the loss year. Free file form 4868 1 year prior to the loss year. Free file form 4868 Any loss remaining is carried forward for 5 years. Free file form 4868 When you carry a net capital loss to another tax year, treat it as a short-term loss. Free file form 4868 It does not retain its original identity as long term or short term. Free file form 4868 Example. Free file form 4868 A calendar year corporation has a net short-term capital gain of $3,000 and a net long-term capital loss of $9,000. Free file form 4868 The short-term gain offsets some of the long-term loss, leaving a net capital loss of $6,000. Free file form 4868 The corporation treats this $6,000 as a short-term loss when carried back or forward. Free file form 4868 The corporation carries the $6,000 short-term loss back 3 years. Free file form 4868 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. Free file form 4868 It subtracts the $6,000 short-term loss first from the net short-term gain. Free file form 4868 This results in a net capital gain for year 1 of $7,000. Free file form 4868 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. Free file form 4868 S corporation status. Free file form 4868   A corporation may not carry a capital loss from, or to, a year for which it is an S corporation. Free file form 4868 Rules for carryover and carryback. Free file form 4868   When carrying a capital loss from one year to another, the following rules apply. Free file form 4868 When figuring the current year's net capital loss, you cannot combine it with a capital loss carried from another year. Free file form 4868 In other words, you can carry capital losses only to years that would otherwise have a total net capital gain. Free file form 4868 If you carry capital losses from 2 or more years to the same year, deduct the loss from the earliest year first. Free file form 4868 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. Free file form 4868 Refunds. Free file form 4868   When you carry back a capital loss to an earlier tax year, refigure your tax for that year. Free file form 4868 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. Free file form 4868 S. Free file form 4868 Corporation Income Tax Return, to apply for a refund. Free file form 4868 Form 1139. Free file form 4868    A corporation can get a refund faster by using Form 1139. Free file form 4868 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. Free file form 4868 Form 1120X. Free file form 4868   If the corporation does not file Form 1139, it must file Form 1120X to apply for a refund. Free file form 4868 The corporation must file the Form 1120X within 3 years of the due date, includin