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Tax Year 2006 Directions for Corporations Required to e-file (rev. 03-20-07)

 

Introduction

Corporations required to file electronically may use the following approved guidelines to prepare their income tax returns for tax years ending on or after December 31, 2006 without the need for a waiver. These directions are not all inclusive. This is a living document and it will be updated as needed. Updated sections will be identified by the date they were updated.

Corporations should carefully review the permanent directions for electronic filing contained in Publications 4163, 4164 and/or " IRS e-file for Large Taxpayers filing Their Own Income Tax Return" and be prepared to use them for future years.

Corporations required to e-file may elect to use any or all of the following directions.

Corporations that are e-filing may not send paper versions of any forms to be included as part of their return. Additionally, PDFs may not be used for any form not listed in these directions that is required to be submitted in XML. Any deviation from these temporary directions will require a formal waiver approved by IRS. ( Guidance on Waivers for Corporations Unable to Meet e-file Requirements)

Documents accessed from this page that are in pdf format contain "(pdf)" at the end of the file name. To view PDF documents, download the most recent free version of Adobe Acrobat Reader.

Major Changes for 2006

  • Fewer documents will be allowed in PDF
    • Form 851 - All parts will be required to be in XML
  • Compensation of Officers – More detail will be required
  • All International forms will be required in XML - there will be NO PDF and NO PAPER options
  • Form 1120 Schedule O: Tax Year 2006 Filing Requirement

 


Table of Contents

Please read Sections 1 through 4 carefully as all have undergone significant change.

Section 1 - Forms Allowed as PDF (02-26-2007)
Section 2 - Mixed Returns (Consolidated Form 1120 with one or more Form 1120-L or Form 1120-PC subsidiary returns) (02-26-2007)
Section 3 - Information Available on Request
Section 4 - International Forms - PDF or Paper Option (All Options Deleted)
Section 5 - Forms Not Required to be Filed with the Income Tax Return
Attachment - 2006 Summary Chart of Filing Directions, Listed by Form Number


Section 1 -- Forms Allowed as PDF (02-26-2007)

These Optional Directions Are Available Only to Corporations Required to e-file.

Note: If a new form is created late in the year as a result of legislative changes, and the software industry does not have time to enable the form in XML, then that particular form can be attached to an 1120 or 1120S electronically filed return in PDF format. See Publication 4163 in Current User Guide & Publications for a list of these forms.

Forms Allowed as PDF
The forms listed below may be attached to the XML portion of the electronic return as a PDF file.

  • Form 1128 – Application to Adopt, Change, or Retain a Tax Year
  • Form 2439 – Notice to Shareholder of Undistributed Long-Term Capital Gains
  • Form 3115 – Change in Accounting Method
  • Form 4466 – Corporation Application for Quick Refund of Overpayment of Estimated Tax
  • Form 5735 – American Samoa Economic Development Credit
  • Form 6198 – At-Risk Limitations
  • Form 8271 – Investor Reporting of Tax Shelter Registration Number
  • Form 8283 – Noncash Charitable Contributions (PDF only if you are filing more than 10 or 3rd party signature is required)
  • Form 8621 – Return by a Shareholder of a Passive Foreign Investment Co. or Qualified Electing Fund
  • Form 8716 – Election to Have a Tax Year Other Than a Required Tax Year
  • Form 8832 – Entity Classification Election
  • Form 8838 – Consent to Extend the Time to Assess Tax Under Sec. 367 - Gain Recognition Agreement
  • Form 8886 – Reportable Transaction Disclosure Statement
  • Form 8923 – Mine Rescue Team Training Tax Credit
  • Attachment to Form 3468 - Investment Credit for Certified Historic Structures Prior Year Credits Claimed

 



Section 2 – MIXED RETURNS (Form 1120 Parent with one or more Form 1120-L or Form 1120-PC subsidiaries)

A Mixed Return, for purposes of e-filing only, is an 1120 consolidated tax return (that means the parent return is an 1120) that includes at least one subsidiary that is either a Life Insurance company (Form 1120-L) or a Property and Casualty insurance company (Form 1120-PC).

Only 1120 parent Mixed Returns that meet the asset (> $10 million) and return filing requirements (250 returns) are required to be filed electronically. Form 1120-PC and/or Form 1120-L returns filed as stand alone returns or as the parent of a consolidated return must be filed in paper.

For Mixed Returns with tax years ending 12/31/2006 and later, the Form 1120-L and the Form 1120-PC subsidiary returns will now be required in XML.  The e-filing format mirrors the M-3 requirements and includes subgroups and sub-consolidation returns, when applicable.

In addition to the top consolidated M-3 (Parts I and II), each entity (parent, subsidiary) or return subgroup (sub-consolidation or eliminations) in the Mixed Return will require its own M-3 (Parts II and III) to be attached in XML.  Additionally, a Form 8916 will be required for all Mixed Returns.

To ensure that Mixed Returns with lines 1-29 blank do not reject because of the IRS' business rules, there should be no forms or statements directly supporting lines 1-29 attached at the consolidated level (e.g. Form 1120 Schedule D, Form 4562, Form 4797, etc.).  Instead the applicable forms should be filed at each sub-consolidation level.  These instructions do not apply to information forms, disclosures, elections, and other statements that apply to the consolidated return.  These items (e.g. Forms 5471, 5472, 5713, 8858, 8865, various elections, disclosures, etc.) should still be attached at the top consolidated level.  Any forms or statements that are required to be attached to support any other line items (not lines 1-29) on the consolidated return should be attached at the top consolidated level.

Your software should allow you to select whether you are creating a specific subsidiary return, sub-consolidation return, or eliminations return. The sub-consolidation return and the eliminations return will not require an EIN.  All of the other entities (subsidiaries or parent) will require either an EIN or Applied For in the Employer Identification Number field.  A subsidiary may not be included in two subgroups. Based on tests in the regulations, a subsidiary is an 1120-L or 1120-PC, or, if neither, an 1120.

Additional detail to be used in conjunction with the M-3 instructions for each particular form.

 


Section 3 - Information Available on Request

These Optional Directions Are Available Only to Corporations Required to e-file.

Transactional Data

Transactional data for the following forms may be submitted on a summary form in XML format as defined below. Corporations that use these optional procedures are agreeing that transactional data details will be made available on request.

  • Form T – Forest Activities Schedule
  • Form 4562 – Depreciation and Amortization
  • Form 4797 – Sale of Business Property
  • Form 8824 – Like Kind Exchange
  • Form 8873 – Extraterritorial Income Exclusion
  • Schedule D (1120 and 1120S) – Capital Gains and Losses

Summary format can be used when the underlying transactional data contains more than 100 lines for that particular data type. The summary totals must be reported by data type, classification, or other grouping as required on the form. If there are less than 100 instances of transactions by data type, classification, or other grouping the transactions are required to be itemized.

Transactional Data Summary Formats

A Transactional Data Summary format can only be used when the underlying transactional data includes more than 100 lines for that particular data type by form part (i.e. Schedule D short-term or long-term, Form 4797, Part 1 or Part 2, etc.). Data type can be aggregated across the entity to determine if the 100 lines is met for a particular form. This does not mean that only one summary form will be required, but that once a summary form can be used for a particular data type and form, all of the entities within that return can use that reporting format. For example, if a parent corporation has 50 ST items and the subsidiary has 75 ST items, in aggregate they have 125 ST items and can use the summary reporting format on the Sch D, Part 1 at the subsidiary, the parent and the consolidated level.

Select the applicable form for a summary format example (the summary format examples are on 2005 forms.  Apply the same level of detail for 2006):

  • Form T, (pdf)
  • Form 4562, (pdf)
  • Form 4797, (pdf)
  • Schedule D, (pdf)
  • Form 8824, (pdf)
  • Form 8873
    • If 5.c.(1)(a) - Aggregate of Form 8873 is selected as the basis for reporting, complete all of the applicable Forms 8873 in XML
    • Otherwise, a separate summary Form 8873 should be filed for each of the three Extraterritorial Income Exclusion pricing methods described in section 941(a)(1)(A) through (C), if applicable, completing only line 54 for the total amount of the Extraterritorial Income Exclusion and details will be available on request.

Summary format can not be used to net gain and loss transactions. If a corporation chooses to use the summary format to report transactional data, gains and losses must be summarized and reported separately within each form part.

For example, if a corporation had 500 short term gain transactional items and 2000 short term loss transactional items, use of the Summary Format would require the corporation to report 2 separate totals on Part 1 of the Schedule D or Form 4797 under Short Term Gains and Losses, one for the total of the short term gain items and one for the total of the short term loss items.

Compensation of Officers

The detail information for each officer is required to be completed on Form 1120, Schedule E for columns C-F.  Column A, “Name of officer” and Column B, “Social security number” are optional.

 


Section 4 - International Forms - PDF or Paper Options (All Options Deleted)

All of the international forms (5471, 5472, 5713, 8858, 8865, and their associated schedules) are required to be submitted in XML and they are required to be attached at the top consolidated return level.

 


Section 5 -- Forms not required to be filed with the income tax return

IRS form instructions do not require corporations to attach the following forms to their income tax return and should not include these forms as part of the electronic return. This list is only provided as a reminder and applies to all corporate filers.

  • Form 966 - Corporate Dissolution or Liquidation
  • Form 7004 - Application for Automatic Extension of Time to File Corporation Income Tax Return
  • Form 8023 - Election Under Section 338(g) for Corporate Qualified Stock Purchases
  • Form 8693 - Low Income Housing Credit Disposition Bond

Return to:    e-file for Large and Mid-Size Corporations

Page Last Reviewed or Updated: 05-Feb-2014