To take the deduction, subtract the CCF deposit from the amount that would normally be entered on line 43 of Form 1040, U.S. Individual Income Tax Return. In the margin to the left of line 43, write “CCF” and the total amount of these deposits. Do not deduct these CCF deposits on Form 1040, Schedule C, Profit or Loss from Business (Sole Proprietorship) (PDF), or Form 1040, Schedule C-EZ, Profit or Loss from Business (PDF).
If you deposit earnings from operations into your CCF account and you must complete other forms such as Form 6251, Alternative Minimum Tax - Individuals (PDF), or Form 1040, Schedule D worksheets (PDF), Form 1040, Schedule D, Capital Gains and Losses (PDF), you will need to make an extra computation. When the other form instructs you to use an amount from line 41 on Form 1040, do not use that amount. Instead, add lines 42 and 43 from Form 1040, and use that amount.
You must use your net profit or loss from your fishing business to figure your self-employment tax. When you compute your self-employment tax, do not reduce your net profit or loss by any earnings from operations you deposited into your CCF account.
Partnerships and S Corporations
The CCF deduction for partnership earnings from operations deposited into a qualified CCF account is separately stated on line 13d, Form 1065, Schedule K, U.S. Partnership Return Income (PDF), and allocated to the partners on line 13 of Form 1065, Schedule K-1, Partner's Shares of Income, Credits, Deductions, etc. (PDF).
The CCF deduction for S corporation earnings that are deposited into a qualified CCF account is separately stated on line 12d of Form 1120S, Schedule K, U.S. Income Tax Return for an S Corporation (PDF), and allocated to the shareholders on Form 1120 S, Schedule K-1, Shareholder's Share of Income, Credits, Deduction, etc. (PDF), line 12 .
You can deduct the interest you pay on a nonqualified withdrawal as a trade or business expense.