Part I is used to report tax positions taken by the corporation on its 2012 tax return.
Check the box at the top of Part I if the corporation was unable to obtain sufficient information from one or more related parties and was therefore unable to determine whether a tax position taken on its current year’s tax return is required to be reported in Part I of this schedule.
Enter a number in column (a) for each tax position reported. The UTP numbers on Part I, column (a), include a preprinted “C” prefix to indicate that they are positions for the current tax year. A corresponding UTP number with the letter “C” prefix will be used on Part III for reporting the concise description of the tax position. Begin with the number 1, do not skip any whole numbers, do not enter extraneous characters, and do not duplicate any numbers (e.g., C1, C2, C3, where the letters “C” are preprinted on the Schedule and the numbers are entered).
Provide the primary IRC sections (up to three) relating to the tax position. Enter one primary IRC Section in each box (e.g., “61”,“108”,“263A”, etc.). Do not include descriptive references or any other text such as “IRC”, “Section”, or “IRC Sec”. Beneath each Primary IRC Section, you may enter the applicable IRC Subsections (e.g., (f)(2)(A)(ii)), using the preprinted parentheses. If there are more than four subsection components, list only the first four.
Check “T” for temporary differences,“P” for permanent differences, or check both “T” and “P” for a tax position that creates both a temporary and permanent difference. Categorization as a temporary difference, permanent difference, or both must be consistent with the accounting standards used to prepare the audited financial statements.
If the tax position taken by the corporation relates to a tax position of a pass-through entity, enter the EIN of the pass-through entity to which the tax position relates. For example, if the corporation is a partner in a partnership and the tax position involves the partner’s distributive share of an item of income, gain, loss, deduction, or credit of the partnership, enter the EIN of the partnership. A pass-through entity is any entity listed in section 1(h)(10). If the tax position is not related to a tax position of a pass-through entity, leave this blank. Enter “F” if the pass-through entity is a foreign entity that does not have an EIN.
Check this box if the relative size of the tax position is greater than or equal to 0.10 (10%). The relative size of a tax position is the amount computed by dividing the size of that position by the sum of all of the sizes for all of the tax positions listed on Parts I and II. Disregard expectation to litigate positions for column (e) purposes. Round amounts using rules similar to the rules in the Instructions for Form 1120 for rounding dollar amounts.
Enter a letter and a ranking number for each tax position. Use the letter T for transfer pricing positions and the letter G for all other tax positions.
Rank all tax positions in Parts I and II together, regardless of type. Starting with the largest size, assign the number 1 to the largest, the number 2 to the next largest, and so on, in order. This number is the ranking number for the tax position. Expectation to litigate positions may be assigned any ranking number.
For example, the corporation has 1 transfer pricing tax position and 2 other tax positions. The transfer pricing position is the largest and one of the other tax positions is the expectation to litigate position. The expectation to litigate position is assigned a rank of 2. Enter T1 for the transfer pricing position, G2 for the expectation to litigate position, and G3 for the second other tax position.
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