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Tax Year 2006 Known e-file Issues and Solutions

Form 851 – Affiliations Schedule (03-14-07)

  • The entire form is required in XML.
  • Part I should list every subsidiary included as part of the return, including any that were deconsolidated during the year.
  • Part II has a schema limitation.  The last column under Stockholdings at the beginning of the year is designed to indicate the affiliated member number from Part I for which the Stockholdings information is being reported in Part II. Currently the IRS schema only allows one corporation number to be entered for this element.
  • If the taxpayer needs to report more than one affiliated member owner for a subsidiary listed in Part II, the following procedure should be used
    • Complete the XML Part II last column “Owned by corporation no.” for each applicable subsidiary by entering the corporation number for the affiliated member with the majority ownership.  If there is no majority owner, use the owner’s number that comes first in Part I.
    • Provide a PDF Form 851 Part II showing the information for all of the owners for each subsidiary. This PDF file should be attached to the consolidated return.  It should be named Form851PartII.PDF and described as Form 851 Part II Full Ownership Information.
  • We are recommending a change to the 2007 schemas to accommodate multiple ownership information.

Form 1120, Schedule K, Line 4

  • If the taxpayer answers Yes to Q. 4 - Is the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group AND the parent is a Foreign Corporation without an EIN, the following guidelines should be used in completing the EIN and Name of the "parent" corporation:
    • EIN - use the EIN of the taxpayer answering the Questions.
    • Name/Name control - - use F- and the "parent's" name/name control (no spaces).  For example, if the Parent's Name is ABC Corp. and the name control is ABCC, change the name for this line to F-ABC Corp which will then have a Name Control of F-AB.
  • This will ensure that the EIN and Name/Name control being used do not cause business rule F1120-109 to fire and the return to reject.
    • Note - The schema will accept "APPKD FOR" and "FOREIGNUS" as valid entries but the above guidance should be followed since the business rule has not been updated.
  • This problem is expected to be corrected in April of 2007.

Form 4652 – Depreciation and Amortization

  • IRS Announcement 2006-29, Part III, APPLICATION OF § 105 OF GO ZONE ACT requires taxpayers to write “Extension under Announcement 2006-29” across the top of its Form 4562, for the placed-in-service year of the property to which they are applying the announcement.
  • Taxpayers e-filing their returns needing to identify property using this announcement should use the GeneralDependencySchema to include the extension statement above.
  • The applicable GeneralDependencySchema should be attached to the Form 4562 to which the extension applies and should be described as Announcement 2006-29 Extension.

Form 5735 - American Samoa Economic Development Credit

The name on the Form 5735 has been changed to American Samoa Economic Development Credit.  This credit is used to determine the allowable amount for several other credits and is to be included on the same line as the Qualified Electric Vehicle Credit and identified by a “write-in” explanation.

  • Taxpayers e-filing their returns needing to include the “write-in” American Samoa Economic Development Credit explanation on the forms listed below will need to use the GeneralDependencySchema and reference it from the line indicated below for that applicable form.  The “write-in” explanation on this schema must be described as Form 8835 Credit Amount the “write-in” explanation should say  - : “American Samoa Economic Development Credit amount included of $XX” where XX is the amount of the credit.
  • Form 1120 – U. S. Corporation Income Tax Return  - Sch J, Line 5b
  • Form 8835 – Renewable Electricity, Refined Coal, and Indian Coal Production Credit –Part II, Line 36c
  • Form 8844  - Empowerment Zone Employment Credit  - Part II, Line 16c
  • Form  8860  - Qualified Zone Academy Bond Credit  - Part II, Line 7c

Form 6765 - Credit for Increasing Research Activities (03-14-07)

The IRS schema has an incorrect format for both lines 27 and 52.  To prevent a return from rejecting that includes this form the following procedures should be followed:

  • Leave line 27 and 52 blank.
  • Include the amount that should have been on line 27 in the total on line 28.
  • Include the amount that should have been on line 52 in the total on line 53.
  • A GeneralDependencySchema should be attached to the Form 6765 detailing the amount(s) that should have been included on line 27 and/or line 52.
  • The GeneralDependencySchema should be described as Form 6765 Line 27 and Line 52 workaround.

Form 8903 - Domestic Production Activities Deduction (03-14-07)

  • This form was erroneously removed as being accepted in XML as part of a Form 1120-S e-filed tax return.  This will be corrected, but until it is, taxpayers e-filing Form 1120-S, U.S. Income Tax Return for an S Corporation, who need to file Form 8903, should include the Form 8903 as a PDF attachment.  The PDF attachment should be named Form8903.PDF and described as Form 8903.

Form 8907 - Nonconventional Source Fuel Credit

  • Part I, Line 4a and 4c must be ZERO.
  • Exclusion of 25% of Capital Gain for Certain Sales of Mineral and Oil Leases for Conservation Purposes
    The Act provides a 25% exclusion from gross income of long-term capital gain from the conservation sale of a qualifying mineral or geothermal interest. 
    The exclusion amount must be separately stated on the Schedule D, Part II and described as TRHC - 403(c).
Page Last Reviewed or Updated: 05-Nov-2014