1.13.8  Statistical Editing of Corporation Tax Returns (Cont. 1)

Exhibit 1.13.8-21  (01-01-2006)
Form 1120 Entity Information

Introduction

(1) This exhibit provides specific instruction for the editing of the Entity Information items and resolution of the associated tests. Please make use of the prior year browse for this section by pressing [ALT+L] and choosing Prior Year Lookup. This function is not available when the cursor is on the Corporation Name field.

(2) A system message will read out for a merging or final non-giant returns (TA <$250 million) if the accounting period ends before 7/2003. You will not be able to bypass this message and must reject the record. This should not be confused with test E008 that reads out on non-giants (that are not merging or final) ending before 7/2002.

Data Item Form Line Reference
           
Corporation Name   Page 1
Editing Instructions:    
  (1) This is a must enter field.
  (2) Please consult the taxpayer amount from the proper line on the form.
    (a) The following are among several symbols used by corporations and should be edited as shown: slash (/), dash (-), ampersand (&), pound sign (#), percent (%), parenthesis (()), or asterisk (*). Do not use periods or commas. Use periods ONLY when the company is an Internet ".com" company.
    (b) Edit all alpha information in capital letters. Delete the definite article "the" when it is the first word in the name.
    (c) Use the following abbreviations in all cases: CO for Company, CORP for Corporation, INC for Incorporated, ACS for "and consolidated subsidiaries" and "and subs " , AAFIL for "and affiliates" , FSLA for Federal Savings and Loan Association, SLA for Savings and Loan Association (for corporations not specified as federal).
    (d) When the name contains a number, use the following instructions.
1. When the number is to be edited as the first word, write out the number. Some examples are: 1 is one, 120 is one twenty, and 2150 is twenty-one fifty.
2. When the number is edited as other than the first word, edit the number as shown by the corporation, whether it be alpha or numeric.
    (e) If the name, including punctuation, exceeds 50 characters, enter the name using standard abbreviations, such as LTD for Limited, and NAT BK TR CO for National Bank and Trust Company. The names of cities and states should not be abbreviated.
  (3) If the Prior Year File entry violates any of the rules listed above, enter the correct Corporation Name according to the instructions above.
  (4) If the corporation name has any added info (i.e. "a.k.a" , "d.b.a" , "formerly" , etc.), note this information in the comment field.
           
Employer Identification
Number (EIN)
  Page 1, Line B
Editing Instructions:    
  (1) This is a display field only.
  (2) Verify that the nine digit number on the screen matches the number on the return.
  (3) If the EINs do not match, call National Office.
           
Name Change
Code
1120
1120-A
1120-F
1120-REIT
1120-RIC
Page 1, Line E
Page 1, Line E
Page 1, Top Right
Page 1, Line F
Page 1, Line E
Editing Instructions:    
  (1) Allowable entries for this field are "Y" and [ENTER].
  (2) Enter "Y" if the taxpayer has checked this box.
  (3) If the box is not checked but the corporation name has changed, enter a ″Y″ in this field.
     
Test   Description
           
E009   There is a discrepancy between the name change code and the corporation name.
           
Correction Procedure:    
  (1) This test will read out under two different conditions. The firs is if the editor changed the corporation name, but the name change box was not checked. The second is if the name change box was checked, but the editor did not change the corporation name.
  (2) In either case, please verify and make necessary updates to the code or corporation name.
           
Accounting Period Indicator 1120
1120-A
1120-F
1120-REIT
1120-RIC
Page 1, Line E
Page 1, Line E
Page 1, Top Right
Page 1, Line F
Page 1, Line E
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) This item is a one character letter indicating the following type of accounting periods:
    (a) Enter "I" if the taxpayer checked the box indicating initial return.
      1. If this box is checked but the date of incorporation indicates that the corporation has existed in prior years, use the prior year browse mode [ALT+L] to determine whether the return existed in prior years. If the return was in the file previously do not edit as ‘I', even if it was a different return type. If the return has not been in the file, edit based on the information on the return. Do not use the presence of a label as an indicator that the return is not initial.
      2. Returns that are part-year because the corporation has left a consolidated group should also be coded ‘I' (even if Form 1128 is attached). Information regarding the former parent etc. should be noted in the comment field. (See f(2) pg. 21-3 for cases when a corporation becomes a consolidated group.)
      3. If the date of Incorporation indicates the return is initial — i.e., Date of Incorporation of 8-15-2003.
    (b) Enter "F" if the taxpayer checked the box indicating final return and it is liquidating or final for any reason other than a merger. Revenue processing assigns a "F" on the top of the first page to returns of this type. Do not code as final if an attached schedule indicates that the EIN will continue to file as a different return type. If the taxpayer checks both the initial and final box, edit the return as a final return, and put a comment in the comment field.
    (c) Enter "M" if the corporation is merging into another. Enter the new parent’s name into the comment field. Returns that are merging may indicate: "acquisition" or "acquired" on a statement within the return. Returns that state "reorganizing" or "survivor" should be coded as "M" if their EIN changed, otherwise, code as "X."
    (d) Enter "C" if the taxpayer indicates they have changed their accounting period. The following are indicators of a change in accounting period:
      (1) Form 1128 "Change of Accounting Period Form attached."
      (2) "Section 443 or 444 Election Terminated" indicated on form.
      (3) Form 8716 "Election to have a Tax Year other than a Required Tax Year."
      (4) Form 7004 "Application for Automatic Extension of Time to File Corporation Income Tax Return" with change of accounting period checked.
    (e) If revenue processing has assigned computer condition code "Y" (located in the middle top of the income section), use this as an indication to look throughout the return to see if this return has a change in accounting period.
    (f) Enter "X" if the taxpayer did not check any of the above listed boxes.
      1. If the return is a full year with beginning and ending balance sheet amounts and the date of incorporation indicates the return is not initial, code as ‘X’ even if the return was not in the prior year.
      2. If the company became a consolidated group and the EIN has NOT changed, code as ‘X’ even if the taxpayer codes themselves as ‘I’.
    (g) The taxpayer may not check the appropriate box, but may give the information elsewhere. If so, use that information to assign a code as above.
    (h) If the accounting period ends in the last six days of the twelfth month, the return should still be coded as a full year return.
    (i) If the accounting period begins after the 3rd day of the month and the return would otherwise be a full year return, code as a part year return (i.e. accounting period is 01/04/2003 – 12/31/2003).
    (j) If the accounting period is longer than 12 months, please contact national Office.
       
Month Accounting Period Ends   Page 1
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) The accounting period may be shown on Page 1 of the return directly beneath the title, on a label attached to the return, or on the balance sheet or on attached schedules. If the corporation does not indicate its accounting period, assume that the return is for a full calendar year — i.e., ending in December, unless the date of Incorporation indicates the return is for a part-year — i.e., Date of Incorporation of 8-15-2002. Also make sure the Accounting Period Indicator is edited as ‘I’.
  (3) For full-year returns, enter the number of the month that the accounting period ends. For example, for an accounting period ending in January, enter "1" ending in June, enter "6" ; ending in December, enter "12" , etc.
  (4) For a part-year (including final returns), enter the code according to the following instructions:
If the accounting period ends in:
January, enter "31" .
February, enter "32" .
March, enter "33" .
April, enter "34" .
May, enter "35" .
June, enter "36" .
July, enter "37" .
August, enter "38" .
September, enter "39" .
October, enter "40" .
November, enter "41" .
December, enter "42" .
  (5) For both full and part-year returns, if the corporation’s accounting period ends on the first, second, or third day of a month, code for the preceding month. If the accounting period is only a few days long, code for the month in which it begins. If it ends on any other day, code for the month in which it ends.
           
Year Accounting Period Ends   Page 1
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) The accounting period may be shown on Page 1 of the return directly beneath the title, on an attached label, on the balance sheet or on attached schedules. If the corporation does not indicate its accounting period, assume that the return is for a full calendar year — i.e., ending in December 2003, unless the Date Incorporated indicates the return is for a part year — i.e. Date of Incorporation 8-15-2003.
  (3) For a part-year or final return, enter the four-digit calendar year in which the accounting period ends.
  (4) If the return has an invalid accounting period, and the taxpayer indicates the return is merging or final, the following message appears, "Merging or final record with invalid accounting period. Please reject!" Use Reject Code #3, Reason Code #18, " Invalid Accounting Period."
           
Test   Description
           
V004   This is a giant record with an accounting period ending before 7/2003.
           
Correction Procedure:    
  (1) Because this record is a giant, please consult with National Office before rejecting it.
  (2) If National Office agrees, the Accept button may be used.
  (3) Quite often, a return with an invalid accounting period will arrive in the same workgroup as a return with a valid accounting period. After identifying that the EIN is the same, reject the older Return (reason code 18) and edit the Current one. This can be done without calling National Office.
           
E008   This is a non-giant return with an accounting period ending before 7/2002.
           
Correction Procedure:    
  (1) Non-giant returns with invalid accounting periods should be rejected.
  (2) Reject this return using Reason Code #18, "Invalid Accounting Period."
           
V005   Possible invalid accounting period.
           
Correction Procedure:    
  (1) This test will fail when the Year Accounting Period Ends is 2004 and the Month Accounting Period Ends is greater than 6 (for a full-year return) or greater than 36 (for a part-year return).
  (2) Check the return to determine the correct Month Accounting Period Ends and code according to the instructions above.
  (3) If this test cannot be corrected, the Accept button can be used.
           
Month Accounting Period Begins   Page 1
Editing Instructions:    
  (1) This item is edited for part-year returns only. Part-year returns have Month Accounting Period Ends of 31 through 42. Once the cursor lands on this field a value must be entered.
  (2) The beginning accounting period should be shown on Page 1 of the return, directly beneath the title. It will not be on the label attached to the return.
  (3) Enter the code indicating the month in which the corporation's accounting period begins. Use the same number as the number of the month in the year (1 through 12). For example, for an accounting period beginning in July — enter "07" ; beginning in December — enter "12" , etc.
  (4) If the Date Incorporated was used to determine that the return is a part-year return, use the month incorporated to edit the Month Accounting Period Begins.
           
Year Accounting Period Begins   Page 1
Editing Instructions:    
  (1) This item is edited for part-year returns only. Part-year returns have Month Accounting Period Ends of 31 through 42. Once the cursor lands on this field a value must be entered.
  (2) The beginning accounting period should be shown on Page 1 of the return, directly beneath the title. It will not be on the label attached to the return.
  (3) Enter the four digit calendar year in which the accounting period begins.
  (4) Valid entries are 1998 and greater. Non-giant returns with earlier beginning accounting periods should be rejected using Reason Code #18, "Invalid Accounting Period." Notify National Office of any giants with beginning accounting years less than 1998.
           
Test   Description
           
E020   Possible invalid accounting period.
           
Correction Procedure:    
  (1) This test will fail when the beginning and ending accounting period years are more than one year apart. Check the return to determine the correct beginning and ending accounting period years according to the instructions above.
  (2) If this test cannot be corrected, contact the National Office.
           
Date Incorporated 1120
1120-A
1120-F
1120-REIT
1120-RIC
Page 1, Line C
Page 1, Line C
Page 1, Line C
Page 1, Line D
Page 1, Line B
Editing Instructions:    
  (1) Enter the four digit year of the incorporation date.
  (2) Please use the prior year browse date if available, even if taxpayer reports ‘9999’.
  (3) If the corporation only gives a two digit date of incorporation (i.e.’88), assume that the year is 1988.
  (4) If more than one date of incorporation is given for the consolidated return, edit the earliest date given.
  (5) If different dates are given for the parent and subs, edit the date of the parent.
  (6) If the Date Incorporated cannot be determined or is less than 1800, enter 9999.
  (7) If the date of incorporation is greater than the beginning (part-year returns) or ending (full-year returns) accounting period year, a system message will indicate that, "Date incorporated can not be larger than accounting period year." Please check the accounting period and the reported date of incorporation to verify, You may also make use of the prior year browse to correct any discrepancies. Contact National Office if you can not correct this test.
           
Prior Year EIN    
Editing Instructions:    
  (1) This field must be between 010000000 and 999999999.
  (2) If a corporation indicates in its return that its EIN has changed and provides the prior year EIN, enter this number. Otherwise, leave this field blank.
  (3) Do not use revenue processing prior year EIN if it was changed by revenue processing, only use taxpayer provided information.
           
FDIC Code    
Editing Instructions:    
  (1) Allowable entries are ‘Y’ and [RETURN].
  (2) Examine the return for an indication that the corporation has been taken over by the FDIC and is listed as RTC/FDIC or FDIC.
  (3) Please annotate in the comment field if the corporation is bankrupt.

Exhibit 1.13.8-22  (01-01-2006)
Form 1120 Other Information and Schedule N

Introduction

(1) When Other Information questions are incomplete or in question, refer to attachments — otherwise use Other Information data. If through the course of editing, attachments are found, use them to make any necessary changes to entries (including ones already edited) for more accurate data.

(2) When page three is left blank and no consolidated schedules are attached, edit the information for the parent.

(3) For money amount fields on consolidated returns, if the line is blank, edit the total of the parent and subsidiary amounts, unless instructed otherwise in specific field instructions.

(4) Please make use of the prior year browse for this section by pressing [F9] and choosing Prior Year Lookup.

(5) This exhibit provides specific instructions for the editing of the Other Information items and resolution of the associated tests.

(6) If the Schedule N is not filed, but there are Forms 8865 or Forms 5471 found within the return during editing, please go back and edit the number of Forms 8865 or Forms 5471 attached on line 2 of the Schedule N.

(7) If there are multiple Schedule N's filed and none are for the consolidated group, please edit the information from the Schedule N of the parent.

Data Item Form Line Reference
           
Accounting Method Code 1120
1120-A
1120-F
1120-REIT
1120-RIC
Page 3, Line 1
Page 1, Line F
Page 1, Line G
Page 3, Line 1
Page 3, Line 1
Editing Instructions:    
  (1) This item is a one character alpha code indicating the type of accounting method as shown below:
    a. Enter "C" if the taxpayer checked the box indicating cash.
    b. Enter "A" if the taxpayer checked the box indicating accrual.
    c. Enter "O" if the taxpayer checked the box indicating other.
    d. Enter [ENTER] if the taxpayer did not check any of the above listed boxes or checked two or more boxes.
  (2) Please consult the taxpayer amount from the proper line on the form.
           
Business Activity 1120
1120-A
1120-F
Page 3, Line 2(b)
Page 2, Part II, Line 1(B)
Page 1, Line F(1)
Editing Instructions:    
  (1) This is a must enter field.
  (2) Edit as reported by the taxpayer (maximum 30 characters). If no business activity has been provided, enter N/A.
  (3) If the Return is consolidated, edit the Consolidated page as reported by the taxpayer. If the consolidated RETURN leaves this field blank, edit from the sub with the largest total receipts (if available) and annotate the name of the sub in the comment field, otherwise, edit N/A.
           
Product or Service 1120
1120-A
1120-F
Page 3, Line 2(c)
Page 2, Part II Line(c)
Page 1, Line F(2)
Editing Instructions:    
  (1) This is a must enter field.
  (2) Edit as reported by the taxpayer (maximum 30 characters). If no product or service has been provided, enter N/A.
  (3) If the Return is consolidated, edit the Consolidated page as reported by the taxpayer. If the consolidated RETURN leaves this field blank, edit from the sub with the largest total receipts and annotate the name of the sub in the comments field, otherwise, edit N/A.
           
SOI Industry Code 1120
1120-A
1120-F
Page 3, Line 2(a)
Page 2, Part 2, Line 1(a)
Page 1, Line F(2)
Editing Instructions:    
  (1) This is a must enter field.
  (2) This is a double entry field.
  (3) Please consult the taxpayer amount from the proper line on the form.
  (4) When SOI Industry Code is blank or a change in industry code is required, access the INDUSTRY CODE WORKSCREEN by pressing ALT+F8]. Follow instructions in Section 8.5.1 of this manual and IRM 1.13.7.
  (5) A query table is available listing all possible values for this field. See Section 8.5.1 for instructions to access and select values from the table.
  (6) If industry code is not in the following list (522110-522190, 551111, 522220, 522291, 522298, 522210), the System disables the FDIC code on the previous screen and displays the following message, "FDIC code has been deleted (set to null) based on the edited industry code."
  (7) If industry code is in 524142 or 524143 and the return is filed on form 1120-F, please send to Ogden for editing.
  (8) This field is edited on the entity section for the 1120-RIC and 1120-REIT.
           
Test   Description
           
E604   Gross Receipts are unusually large for Holding Company, 551112.
           
Correction Procedure:    
  (1) For industry code 551112 (Other Holding Companies) dividends and/or interest should make up the majority of income. Gross receipts for consolidated returns should make up less than half of Total Receipts and should not make up more than a very small percentage of income for non-consolidated returns.
  (2) Refer to pages 1.13.7-13 – 14 of the industry coding manual for the proper coding of 551112.
  (3) Refer to pages 1.13.7-23 and following of the Industry Coding Manual for the Total Receipts Rule in order to properly code consolidated returns.
  (4) Use all tools at your disposal to properly industry code this return including the PBA description, the Product or Service description, the 851 especially the PBA of the largest Sub, and other resources including Moodys.
  (5) If you still feel that a consolidated return, whose largest income item is gross receipts and has a large amount of cost of goods, should be 551112, please contact Will Jauquet or Bill Rush at National Office.
  (6) If after reviewing the industry code you determine that it is in fact correct, the Accept Test button may be used.
           
L005   The SOI Industry Code is different from the Prior Year File Industry Code.
           
Correction Procedure:    
  (1) This test compares prior year industry code to current year code.
  (2) This test will read out for industries 221110, 522130–522291, 523110, 523120, 523900, 524159, 551112 when total assets are greater than or equal to 250,000,000.
  (3) Check the return to verify the taxpayer’s entry and the edited item for SOI Industry Code.
  (4) Check the edited SOI Industry Code against the INDUSTRY CODE SCREEN by pressing [ALT+F8] and follow instructions in Section 8.5.1 of this manual and IRM 1.13.7, Industry Coding.
  (5) If after researching, the industry code is still different from that in the Prior Year File, it is particularly important that you document the reasons for the change in the Industry Code Comment Field. In this case, use the Accept button to accept the condition.
           
L010   The SOI Industry Code is different from the Prior Year File Industry Code.
           
Correction Procedure:    
  (1) This test compares prior year industry code to current year industry code.
  (2) This test will read out for industries 551111, 522110, 522120, 524142 and 524143 when total assets are greater than or equal to 500,000,000.
  (3) Check the return to verify the taxpayer’s entry and the edited item for SOI Industry Code.
  (4) Check the edited SOI Industry Code against the INDUSTRY CODE SCREEN by pressing [ALT+F8] and follow instructions in Section 8.5.1 of this manual and IRM 1.13.7, Industry Coding.
  (5) If after researching, the industry code is still different from that in the Prior Year File. It is particularly important that you document the reasons for the change in the Industry Code Comment Field. In this case, use the [Accept] button to accept the condition.
           
L015   The SOI Industry Code is different from the Prior Year File Industry Code.
           
Correction Procedure:    
  (1) This test compares prior year industry code to current year industry code.
  (2) This test will read out for all industries (except, 221100, 522110, 522120, 522130–522291, 523110, 523120, 523900, 524159, 551111, 551112) when total assets are greater than or equal to 100,000,000.
  (3) Check the return to verify the taxpayer’s entry and the edited item for SOI Industry Code.
  (4) Check the edited SOI Industry Code against the INDUSTRY CODE WORKSCREEN by pressing [ALT+F8] and follow instructions in Section 8.5.1 of this manual and IRM 1.13.7, Industry Coding.
  (5) If after researching, the industry code is still different from that in the Prior Year File, it is particularly important that you document the reasons for the change in the Industry Code Comment Field. In this case, use the [Accept] button to accept the condition.
           
L016   The assets of this corporation have changed by more than 50% from the prior year.
           
Correction Procedure:    
  (1) This test will read out for industries 221110, 522130–522291, 523110, 523120, 524159, 551112 when total assets are greater than or equal to 250,000,000 and assets have increased or decreased by more than 50%.
  (2) Look for changes in the subsidiaries of consolidated returns that might have changed the make up of the consolidated return’s total receipts.
  (3) Check the return to verify the taxpayer's entry and the edited item for SOI Industry Code.
  (4) Check the edited SOI Industry Code against the INDUSTRY CODE WORKSCREEN by pressing [ALT+F8] and follow instructions in Section 8.5.1 of this manual and IRM 1.13.7, Industry Coding.
  (5) It after researching, the industry code is determined to be different from that in the Prior Year File, it is particularly important that you document the reasons for the change in the Industry Code Comment Field. After you have completed your research, use the [Accept] button to accept the condition.
           
L017   The assets of this corporation have changed by more than 50% from the prior year.
           
Correction Procedure:    
  (1) This test will read out for industries 522110, 522120, 524142, 524143, 551111. When total assets are greater than or equal to 500,000,000 and assets have increased or decreased by more than 50%.
  (2) Follow procedures 2–5 in Test L016 to verify the industry code.
           
L018   The assets of this corporation have changed by more than 50% from the prior year.
           
Correction Procedure:    
  (1) This test will read out for all industries (except 221110, 522110, 522120, 522130–522291, 523110, 523120, 523900, 524159, 525910, 525930, 551111) when total assets are greater than or equal to 100,000,000 and assets have increased or decreased by more than 50%.
  (2) Follow procedures 2–5 in Test L016 to verify the industry code.
           
L019   The SOI Industry Code is different from the Prior Year File though the PBA has remained the same.
           
Correction Procedure:    
  (1) This test compares prior year industry code to current year industry code.
  (2) Follow procedures 1 and 3–5 in Test L015 to verify the industry code.
 
           
Corp. Name of Largest Company
Editing Instructions:    
  (1) This field exist only for consolidated returns. This is a must enter field.
  (2) Edit as reported by the taxpayer using the Total Receipts Rule (TRR) (see section 7.28 beginning on page 1.13.7-24 of the industry coding manual). The corporation name of the largest company can be found on the Form 851 or attached schedules to the 851. If enough information is not provided by the taxpayer to use the TRR (i.e.; form 851 or receipts schedule is missing), then edit parent company as largest and comment accordingly.
  (3) If while using the TRR there are multiple companies with the same PBA code that sum to the largest group of companies, please enter the name of the largest company from that group of companies in this field.
  (4) If an exception to the Total Receipts Rule is used to code the return, the largest company should be edited here and the exception used should be noted in the indy code comments field.
           
Business Activity of Largest Company
Editing Instructions:    
  (1) This field exist only for consolidated returns. This is a must enter field.
  (2) Edit as reported by the taxpayer using the Total Receipts Rule (TRR). The business activity of the largest company can be found on the Form 851 or attached schedules to the 851.
           
PBA Code of Largest Company
Editing Instructions:    
  (1) This field exist only for consolidated returns. This is a must enter field.
  (2) Edit as reported by the taxpayer using the Total Receipts Rule (TRR). The pba code of the largest company can be found on the Form 851 or attached schedules to the 851. (Note: if this pba code is incorrect and should be the basis for coding the return, the correct code should have been entered in the SOI indy code field).
  (3) If an invalid pba code is reported by the largest company, enter a valid pba code that corresponds to the description.
           
Parent EIN 1120
1120-F
1120-REIT
1120-RIC
Page 3, Line 4i
Page 2, Line T (1)
Page 3, Line 3(i)
Page 3, Line 3(i)
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) Do not edit this line if the name and EIN match the name and EIN on page 1.
  (3) If Revenue Processing has inserted 129999999 on this line and there are not attachments provided to show parent EIN, do not edit this field.
           
Parent Name 1120
1120-F
1120-REIT
1120-RIC
Page 3, Line 4ii
Page 2, Line T(2)
Page 3, Line 3(ii)
Page 3, Line 3(ii)
Editing Instructions:    
  (1) If a name is available for the EIN previously entered, the name will be displayed in this field. If the displayed name differs (in a substantive way) from the name on the return, edit the name on the return.
  (2) If no name is displayed on the screen for line 4ii, edit the name on line 4ii following the instructions given for editing Corporation Name on page 1.
  (3) Do not edit this field if only a person's name and SSN are provided.
  (4) If a name of a trust is given, do not edit this field.
           
Test   Description
           
V006   There is no corresponding parent name for the parent EIN.
           
Correction Procedure:    
  (1) If a parent EIN is provided by the taxpayer, a corresponding parent name should be provided.
If parent name is provided, edit as described above.
  (2) If no parent name is provided, this test may be accepted using the Accept button.
           
V007   There is no corresponding parent EIN for the parent name.
           
Correction Procedure:    
  (1) If a parent name is provided by the taxpayer, a corresponding parent EIN should be provided.
If parent EIN is provided, edit as described above.
  (2) If no parent EIN is provided or if ‘129999999’ is pre-loaded and there are not attachments provided to show parent EIN, this test may be accepted using the Accept button.
           
Owner Code 1120
1120-A
1120-REIT
1120-RIC
Page 3, Line 5
Page 2, Part II, Line 2
Page 3, Line 4
Page 3, Line 4
Editing Instructions:    
  (1) Allowable entries for this field are "Y" and [ENTER].
  (2) If the answer to this question is "Y" , the taxpayer should have indicated the percentage owned.
  (3) The percentages for any owners appearing to be related should be totaled.
  (4) If there is any indication (i.e. an attached schedule) that the ownership is made up of several entities, none of which exceeds or equals 50% individually, edit as [ENTER]. The only exception is if the owners appear to be related. You may assume that the parties are related if the figure listed for the percentage is the total of individual amounts on a schedule. Please be aware, however, that some companies may attach a schedule (i.e. Form 851) indicating that their subs are 100% owned by the parent company. This type of schedule should not be used to edit the owner code that relates to the parent company.
           
Owner Percentage 1120
1120-REIT
1120-RIC
Page 3, Line 5(I)
Page 3, Line 4(i)
Page 3, Line 4(i)
Editing Instructions:    
  (1) This field must be positive.
  (2) Enter rounded whole percentages (i.e., 72.6 percent should be entered as "73" ). (1)
  (3) If the answer to question 5 is " Y" , the taxpayer should have indicated the percentage of ownership on this line. Enter the indicated percentage.
  (4) If the figure in this field exceeds or equals 50%, but the taxpayer has not answered ‘Y’ to question 5, change the response to question 5 to a ‘Y’.
  (5) If the figure in this field is less than 50%, see number 4 (Owner Code) above and edit accordingly.
  (6) If the taxpayer reports two different names that are not related on an attached schedule on a non-consolidated return and both percentages equal 50%, please edit as 50%.
  (7) If there are more than one percentage given for the consolidated return, edit the largest figure. If there is no consolidated figure given, edit the figure listed for the parent corporation.
  (8) If the taxpayer distinguishes between direct and indirect ownership, the total amount for each entity should be edited. Note, however, that certain amounts may be listed as the directly owned stock of one part of an entity and the indirectly owned stock of another. These amounts should not be double counted. If the total exceeds 100%, edit as 100%.
  (9) If there is no owner code, but there is an owner percent, the following message appears, "If no owner code exists, there should not be an owner percent." If the taxpayer did indicate an owner percent, edit the owner code as "Y" even if the taxpayer left it blank or marked it "NO" . This must be corrected to continue.
  (10) If schedule K is unclear, check schedule E for additional information.
  (11) If there is more than one percentage shown, and if the names appearing on Schedule E seem related (same last name), add the percentages together.
  (12) Do not use column (c) of the Schedule E to edit the percentage. If Columns (d) and (e) are balnk and there are no other attachments to verify the ownership percentage, edit this field as '999.'
  (13) If the answer to question 5 is " Y" , but the taxpayer does not provide a percentage, enter " 999" in this field (after verifying no attachments contain this information).
  (14) Do not use Form 851 to edit this percentage even if the taxpayer wrote this on the line. The Form 851 relates to their ownership of subsidiary companies and their relationship to one another.
  (15) If an attached schedule breaks the percentage owned into common and preferred stock, refer to the balance sheet to determine the amount of each type of stock. Then, multiply the percentages by the amounts on the balance sheet. Divide that figure by the total amount of stock to determine the overall percentage. See the following example.
Common/Preferred Stock Example
Attached schedule shows the following: Balance Sheet shows the following:
  Entity A 10% preferred stock   Preferred Stock $1,000.00
    60% common stock   Common Stock $1,000,000.00
                Total $1,001,000.00
  Entity B 90% preferred stock            
    10% common stock            
Calculate:
  Entity A: .1 x 1000 = 100     Entity B: .9 x 1000 = 900
    .6 x 1000000 = 600000       .1 x 1000000 = 100000
        $600100           $100900
600100/1001000 = 59.9%   100900/1001000 = 10.1%
                     
Conclusion:  Round 59.9% to 60%
                     
Excess Dividends Paid Code 1120 Page 3, Line 6
        1120-REIT Page 3, Line 9
        1120-RIC Page 3, Line 9
Editing Instructions:    
  (1) Allowable entries are ‘Y’ and return.
           
           
Foreign Owner Code 1120 Page 3, Line 7
  1120-REIT Page 3, Line 5
        1120-RIC Page 3, Line 5(a)
Editing Instructions:    
  (1) Allowable entries for this field are "Y" and [ENTER].
  (2) If the answer to question 7 is " Y" , the taxpayer should have indicated the foreign country of the foreign owner and the percentage owned. If any of this information is not included by the taxpayer, edit the undeterminable percentage as "999 " and/or country code as "OC" .
  (3) It there is any indication (i.e. an attached schedule) that the ownership is made up of several persons, none of which exceeds or equals 25% individually, edit as [ENTER].
  (4) If the 5472 is specifically referenced here by the taxpayer and the name and EIN of the reporting corporation (part I, lines 1a and 1b) match that on page 1 of the Form 1120, refer to Part II of the Form 5472. If line 1a (or 3a for an ultimate indirect foreign shareholder) contains the name of a shareholder, edit this field as ‘Y’. The 5472 does not contain information on the foreign owner percent so if the figure is not on the 1120, edit as ‘999’. If the foreign country code is not indicated on the 1120, it may be edited from line 1d (or 3d) of the 5472.
  (5) NOTE: In contrast to the owner code question, the foreign owner code specifies "foreign person" so the rules regarding family groups do not apply.
Test   Description
           
L020   Company was foreign owned in prior year but is not in current year.
           
Correction Procedure:  
  (1) This test compares current and prior year foreign ownership codes.
  (2) Check the taxpayer’s entries to verify the current-year foreign ownership code.
  (3) Check the prior year record used and the code on the display screen.
  (4) If this test can not be corrected, the Accept button can be used.
           
L022   Company was not foreign owned in prior year but is in current year.
           
Correction Procedure:    
  (1) This test compares current and prior year foreign ownership codes.
  (2) Check the taxpayer’s entries to verify the current-year foreign ownership code.
  (3) Check the prior year record used and the code on the display screen.
  (4) If this test can not be corrected, the Accept button can be used.
Data Item Form Line Reference
     
Foreign Owner Percentage 1120 Page 3, Line 7a
  1120-REIT Page 3, Line 5a
        1120-RIC Page 3, Line 5b(1)
Editing Instructions:    
  (1) If the answer to the Foreign Owner Code question is ‘Y’, the taxpayer should indicate the percentage owned.
  (2) If the taxpayer has answered the Foreign Owner Code question as ‘Y’ and this field is blank, use the prior year browse to determine the percentage. If this is not available, edit as "999" .
  (3) If the answer to the Foreign Owner Question is ‘N’ and the taxpayer has filled in a percent (between 25 and 100, inclusive) for this field, change the answer for Foreign Owner Question to ‘Y’ and edit the percent given for this field.
  (4) This field must be positive.
  (5) Enter rounded whole percentages (i.e., 72.6 percent should be entered as "73" . If the number reported is 72.3 edit as 72.)
  (6) If there are more than one percentage given for the consolidated or non-consolidated return, edit the largest figure. If there is no percentage listed for the consolidated corporation, edit the percentage given for the parent.
  (7) If the taxpayer distinguishes between direct and indirect ownership, the total amount should be edited. If the total exceeds 100%, edit as 100%.
  (8) If an attached schedule breaks the percentage owned into common and preferred stock, refer to the balance sheet to determine the amount of each type of stock. Then, multiply the percentages by the amounts on the balance sheet. Divide that figure by the total amount of stock to determine the overall percentage. See example under Owner Percentage.
           
Foreign Country Code 1120 Page 3, Line 7b
  1120-REIT Page 3, Line 5(b)
        1120-RIC Page 3, Line 5b(2)
Editing Instructions:    
  (1) If the answer to question 7 is " Yes" , the taxpayer should have indicated the countries of the owners. Enter the appropriate alphabetic code according to the following instructions:
    a. There is a query table available to look up the code associated with the country listed. Press the [F9] Key to access the query table or access it using the lookup menu in the banner at the top of the screen. See Section 8.2.4:(5) for instructions to select the country code.
    b. If more than one country is listed, select the country which is listed first.
  (2) If the answer to the Foreign Owner Code question is ‘Y’ and the taxpayer does not provide the country of ownership, use the prior year browse to determine the country code. If this is not available, edit as "OC."
  (3) If the answer to the Foreign Owner Code question is not ‘Y’, but the taxpayer has listed a country response, edit the Foreign Owner Question as ‘Y’ and edit the code for the country listed.
  (4)

Note:

Please be aware of the distinction between the Netherlands Antilles (‘NT’) which are a group of islands in the Caribbean and the Netherlands in Europe, also known as Holland (‘NL’).

  (5) If the taxpayer indicates China or Korea, but is not specific (Mainland or Taiwan for China, North or South for Korea), use the prior year browse for clarification. If there is no prior year browse available, please edit "China" as "Taiwan " and "Korea" as "South Korea."
  (6) If there is an inconsistency between the Foreign Owner Code and the Foreign Country Code, a system message appears. Editing cannot continue until the error is corrected according to instructions (2) and (3) above.
Test Description    
           
L025 Current and prior year foreign country codes don’t match.
           
Correction Procedure:  
  (1) This test compares current and prior year foreign country codes.
  (2) Check the taxpayer’s entries, including any attached schedules, to verify the current-year foreign country code.
  (3) Check the prior year record.
  (4) If this test can not be corrected, the Accept button can be used.
           
Number of Forms 5472 Attached 1120 Page 3, Line 7c
  1120-F Page 1, Line L
        1120-REIT Page 3, Line 5c
        1120-RIC Page 3, Line 5b(3)
Editing Instructions:    
  (1) This field must be positive.
  (2) If Foreign Owner Code is coded as ‘Y’, but number of Forms 5472 is left blank, please check the return for attachments to verify.
  (3) If there is no taxpayer entry, press [ENTER].
Test Description    
           
L014 Form 5472 existed last year, but are not reported here.
           
Correction Procedure:  
  (1) If 5472’s existed for this record in the prior year they are expected to exist this year.
  (2) After verifying that no 5472’s exist, the Accept button] may be used.
  (3) If you do find that FORM 5472’s do exist, but this line was left blank by the taxpayer, insert the correct number of 5472’s attached to the Return.
Tax-Exempt Interest 1120 Page 3, Line 9
  1120-A Page 2, Part II, Line 3
        1120-F Page 2, Line P
        1120-REIT Page 3, Line 8
        1120-RIC Page 3, Line 8
Editing Instructions:    
  (1) This field must be positive.
  (2) This is a double entry field.
  (3) For consolidated returns, if this field is left blank, edit from the parent return. If there is no parent return, add up the amounts reported by all subsidiaries.
           
Number of Shareholders 1120 Page 3, Line 10
Editing Instructions:    
  (1) This field must be positive.
  (2) If the number of shareholders is greater than 75, leave this field blank.
  (3) If the number of shareholders is blank,
    A. First look for any attachment indicating the number of shareholders.
    B. Second, look at Schedule E. If the individual officers percentage of stock owned adds to 100% (column D or E), count the number of people indicated and edit as the number of shareholders. If the individuals’ percentage owned does not add up to 100%, do not use Schedule E to edit.
    C. Third, if both line 10 and Schedule E are blank, and Schedule K line 5 has people listed on an attached schedule each with an ownership percentage (which when combined equal 100%), assume that the number of shareholders equals the number listed on the attached schedule for line 5.
  (4) If the corporation indicates 1 shareholder, check line 4 or 5 (or attachments). If this indicates the company is owned by another corporation (or multiple corporations), leave this field blank.
    A. If there are no attachments available to verify the number, and if line 4 is blank, line 5 is 100%, and line 7 is ‘Y’ and 100%, leave this field blank.
    B. Otherwise, enter ‘1’.
  (5) If Revenue Processing has inserted 129999999 on this line and there are not attachments provided to show parent EIN, do not edit this field.
     
Election to Forego NOLD Carryback 1120 Page 3, Line 11
  1120-F Page 2, Line R
Editing Instructions:    
  (1) Allowable entries for this field are ‘Y’ or [ENTER].
     
NOLD Carryover from Prior Years 1120 Page 3, Line 12
  1120-F Page 2, Line S
  1120-REIT Page 3, Line 9
Editing Instructions:    
  (1) This field is double entry.
  (2) If taxpayer reports a negative number, record as a positive.
  (3) If question 12 refers to an attachment, and the amount on the attachment includes NOLD for the current year, please do not edit the total amount. Edit only the amount of NOLD from prior years.
  (4) If question 12 refers to an attachment, and the attachment breaks down the carryover because of change of ownership, contact National Office.
     
Corporation Total Receipts and Assets Code 1120 Page 3, Line 13
  1120-A Page 2, Part II, Line 7
Editing Instructions:    
  (1) Valid entries are ‘Y’ and [Enter].
  (2) If the answer to this question is ‘Y’, the taxpayer should have indicated an amount for cash distributions and book value of property distributions.
  (3) If the taxpayer answers 'Y' to this question and you have verified that the answer to this qustion shold be 'Y', if no amount is reported by the taxpayer, and no amounts are found on attached schedules, enter a zero in this fields that follow this code and make a comment in the comments field.
     
Total Amount of Cash Distributions 1120 Page 3, Line 13(i)
Editing Instructions:    
  (1) If Line 13, is marked ‘Y’, this field is a must enter field.
  (2) Enter the amount of total cash distributions as reported by the taxpayer.
     
Book value of Property Distributions 1120 Page 3, Line 13(ii)
Editing Instructions:    
  (1) If Line 13, is marked ‘Y’, this field is a must enter field.
  (2) Enter the book value of property distributions as reported by the taxpayer
           
Control Group Code 1120 Sch. J, Line 1
        1120-F Sch. J, Line 1
        1120-REIT Page 3, Sch. J, Line 1
        1120-RIC Page 2, Sch. J, Line 1
Editing Instructions:    
  (1) If the return type = 08, this field will display a ‘Y’.
  (2) a. Enter ‘Y’ if the corporation answers "Yes" to the question on, Schedule J, Line 1.
    b. Enter ‘Y’ if an apportionment schedule is attached which shows the allocations of the tax bracket amounts among its members. The line may also refer to IR Code Section 1561 or 1563.
    c. Enter ‘Y’ if line 12 on Schedule C is present.
    d. Enter ‘Y’ if line 4 on Other Information is edited (line 3 for REIT’s or RIC’s).
  (3) If this field is edited as ‘Y’, follow the specific instructions for controlled groups where provided throughout the section.
  (4) If an 1120-REIT is coded as consolidated (Page 1, Box B1 = ‘C’), the system will code the control group code as ‘Y’.
           
Personal Service Corporation Code 1120 Sch. J, Line 3 or Page 1, Box A(3)
  1120-A Page 1, Box A or Page 2, Part I, Box 1
Editing Instructions:    
  (1) Allowable entries for this field are ‘1’, ‘2’, and [ENTER].
  (2) When Box A(3) is checked on Page One, enter ‘1’.
  (3) When the box is checked on Page three, line 3, enter ‘2’.
  (4) If both boxes are checked, enter ‘2’.
  (5) If neither box is checked and Schedule H is attached, enter 2. The Schedule H is an indication that the corporation is a qualified "Personal Service Corporation."
  (6) Also, verify the industry code. Only service industries (541110–541990 and 621111–713900) shoud have this code.
  (7) If neither box is checked and Schedule H is not present, press [ENTER].
Test Description  
           
E603 Industry code is not valid for a qualified personal service corporation.
           
Correction Procedure:  
  (1) Qualified personal service corporation should only be in the service industries. Look to see if the industry code needs to be corrected or if the return has attached any further information about being a qualified personal service corporation.
  (2) If this test cannot be corrected, use the [Accept] button to accept this test.
Personal Holding Company Tax Code 1120 Sch. J, Line 7 or Page 1, Box A(2)
  1120-REIT Sch. J, Line 6 or Page 1, Box B(2)
        1120-RIC Sch. J, Line 6 or Page 1, Box F
Editing Instructions:    
  (1) Edit as ‘Y’ if there is an amount present for personal holding company tax or the Schedule PH is attached or Box A (2) on page 1, Form 1120 is checked. For consolidated returns, this data must be on the parent return. Do not mark ‘Y’ if the supporting information is found on a subsidiary found within a consolidation.
  (2) Otherwise, edit as [ENTER].
           
           
Number of Forms 8865   Schedule N Line 2
  (1) This field must be positive
  (2) Please check the return for Forms 8865 and edit accordingly.
  (3) If there are no Forms 8865 attached, press [ENTER].
           
CFC Shareholder Code   Schedule N Line 4a
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) Allowable entries are ‘Y’ and [ENTER].
           
Number of Forms 5471 Attached   Schedule N Line 4b
Editing Instructions:    
  (1) This field must be positive.
  (2) If you have entered a number on this line, but did not code as a CFC Shareholder above, a ‘Y’ will be inserted on that line automatically.
  (3) If taxpayer coded themselves as a ‘Y’ for CFC Shareholder above and did not enter the number of Forms 5471, please check the return for 5471 attachments and code accordingly.
  (4) If there is no taxpayer entry, press [ENTER].
           
Test   Description
           
V008   Corporation is a shareholder of a CFC and no 5471’s are attached.
           
Correction Procedure:    
  (1) If a corporation has indicated that it is a shareholder of a Controlled Foreign Corporation, it should have indicated the number of 5471’s that are attached.
  (2) If the taxpayer has not filled in the number of 5471’s attached, the test may be accepted (after verifying attachments).
           
Test   Description
           
L013   Form 5471 existed last year, but are not reported here.
           
Correction Procedure:    
  (1) If 5471’s existed for this record in the prior year they are expected to exist this year.
  (2) After verifying that no 5471’s exist, the Accept button may be used.
  (3) If you do find that FORM 5471’s do exist, but this line was left blank by the taxpayer, insert the correct number of 5471’s attached to the Return
           
           
Foreign Account Code   Schedule N Line 6a
Editing Instructions:    
  (1) Allowable entries are ‘Y’ and [ENTER].
  (2) If this field is left blank or marked as ‘N’ but there is a country name given on this line, please edit the code as ‘Y’.
           
Foreign Account Country Codes   Schedule N Line 6b
Editing Instructions:    
  (1) If the answer to the Foreign Account Code, Schedule N, question 6a, is "Yes" , the taxpayer should have indicated the countries the corporation has an interest in. Enter the appropriate alphabetic code according to the following instructions:
    a. There is a query table available to look up the code associated with the country listed. Press the [F9] Key to access the query table or access it using the lookup menu in the banner at the top of the screen. See Section 8.2.4:(5) for instructions to select the country code.
    b. Edit up to three countries that are listed. If more than three countries are listed, select the first three countries which are listed.
  (2) If the answer to the Foreign Account Code question is ‘Y’ and the taxpayer does not provide the country of ownership, use the prior year browse to determine the country code. If this is not available, edit as "OC."
  (3) If the answer to the Foreign Account Code question is not ‘Y’, but the taxpayer has listed a country response, edit the Foreign Account Code Question as ‘Y’ and edit the code for the country listed.
  (4)

Note:

Please be aware of the distinction between the Netherlands Antilles (‘NT’) which are a group of islands in the Caribbean and the Netherlands in Europe, also known as Holland (‘NL’).

  (5) If the taxpayer indicates China or Korea, but is not specific (Mainland or Taiwan for China, North or South for Korea), use the prior year browse for clarification. If there is no prior year browse available, please edit "China" as "Taiwan " and "Korea" as "South Korea."
  (6) If there is an inconsistency between the Foreign Account Code and the Foreign Account Country Code, a system message appears. Editing cannot continue until the error is corrected according to instructions (2) and (3) above.

Exhibit 1.13.8-23  (01-01-2006)
Country Codes

Name Alpha Code
A    
Abaco Islands   BF
Abu Dhabi   TC
Admiralty Islands   PP
Aegean Islands   GR
Afghanistan   AF
Africa — not allocable   QX
Agalega Islands   MP
Ajman   TC
Aland Islands   Fl
Albania   AL
Alberta   CA
Aldabra   IO
Algeria   AG
American Samoa   AQ
Amirantes Islands (Seychelles)   SE
Andaman   IN
Andorra   AN
Andros Island   BF
Anegada   VI
Angola   AO
Anguilla   AV
Annobon   EK
Antarctica   AY
Anticosti Island   CA
Antigua and Barbuda   AC
Antipodes   NZ
Antrim   UK
Argentina   AR
Armagh   UK
Armenia   AM
Aruba   AA
Ascension Island   SH
Ashmore and Cartier (Ashmore Island)   AT
Asia   UX
Australia   AS
Austria   AU
Azerbaijan   AJ
Azores   PO
B    
Bahamas   BF
Bahia Islands   HO
Bahrain   BA
Baker Island   WX
Balearic Islands   SP
Bali   ID
Bangka   ID
Bangladesh   BG
Barbados   BB
Barbuda and Antigua   AC
Bassas Da India   BS
Basse-terre   GP
Bear Island   NO
Belarus   BO
Belgium   BE
Belitung   ID
Belize   BH
Benin   BN
Bermuda   BD
Bhutan   BT
Billiton (Belitung)   ID
Bismark Archipelago   PP
Bissagos Islands   PU
Bolivia   BL
Bonaire   NT
Bornholm   DA
Bosnia-Herzegovina   BK
Botswana   BC
Bougainville   PP
Bounty   NZ
Bouvet Island   BV
Brazil   BR
British Columbia   CA
British Crown Colony(Hong Kong)   HK
British Indian Ocean Territory   IO
British Pacific Islands   KR
British Virgin Islands   VI
British West Indies   CJ
Brunei   BX
Buka   PP
Bulgaria   BU
Burkina Faso (Upper Volta)   UV
Burma(Aka Myanmar)   BM
Burundi   BY
C    
Cabinda   AO
Caicos Islands   TK
Cambodia   CB
Cameroon, Federal Republic of   CM
Campbell Island   NZ
Campobello Island   CA
Canada   CA
Canary Islands   SQ
Canton and Enderbury Island (Kiribati)   KR
Cape Breton Island   CA
Cape Verde, Republic of   CV
Cargados Carajos Shoals   MP
Caribbean   AX
Caroline Island (Kiribati)   KR
Cartier Islands   AT
Cayman Islands   CJ
Celebes   ID
Central African Republic   CT
Central America — not allocable   CX
Ceram   ID
Ceuta   SQ
Chad   CD
Chafarinas Islands   SQ
Chagos Archipelago   IO
Channel Islands   UK
Chatham   NZ
Chico Island (Elobey)   EK
Chile   CI
China, Republic of (Taiwan)   TW
China, Peoples Republic   CH
Christmas Island (Indian Ocean)   KT
Christmas Island (Pacific Ocean)   KR
Clipperton Islands   IP
Cocos Islands   CK
Colombia   CO
Common Market   GX
Comoros   CN
Congo, Republic of (Also Known as Congo-brazzaville)   CF
Congo(Zaire)(Also Known as Congo-kinshasa)   CG
Cook Islands   CW
Coral Sea Islands Territory   CR
Corsica   FR
Corsico Islands   EK
Costa Rica   CS
Cote D’ivoire (Aka Ivory Coast)   IV
Cozumel Islands   MX
Crete   GR
Croatia   HR
Cuba   CU
Curacao   NT
Cyprus   CY
Cyrenaica   LY
Czech Republic   EZ
D    
D'entrecasteaux Island   PP
Denmark (ExceptGreenland)   DA
Desirade Island   GP
Diego Garcia Island   IO
Djibouti   DJ
Dodecanese   GR
Dominica   DO
Dominican Republic   DR
Down   UK
Dubai   TC
E    
East Timor   IA
Easter Island   CI
Eastern Asia   ZX
Eastern Europe   IX
Ecuador   EC
Egypt   EG
El Salvador   ES
Elba   IT
Eleuthera Island   BF
Elobey Island   EK
Enderbury Islands (Kiribati)   KR
England   UK
Equatorial Guinea   EK
Eritrea   ER
Estonia   EN
Ethiopia   ET
Europa Island   EU
Europe — not allocable   JX
F    
Falkland Islands (Islas Malvinas)   FK
Faroe Islands   FO
Farquhar Islands (Seychelles)   SE
Federal Republic of Germany   GM
Federal Republic of Malaya (Malaysia)   MY
Fermanagh   UK
Fernando De Noronha Island   BR
Fernando Po   EK
Fezzan   LY
Fiji   FJ
Finland   FI
Flores   ID
France   FR
French Antarctic Lands   FS
French Guiana   FG
French Indian Ocean Areas   RE
French Pacific Islands   FP
French Polynesia   FG
French Southern Lands   FS
Friendly Isles   TN
Fujaira   TC
Futuna   WF
G    
Gabon   GB
Galapagos Isles   EC
Gambia   GA
Gambier   FP
Gaza Strip   GZ
Georgia   GG
Germany   GM
Ghana   GH
Gibraltar   GI
Glorioso Islands   GO
Gonave Island   HA
Gotland (Gothland) Isle   SW
Gough Island   SH
Gozo   MT
Grand Bahama Island   BF
Grand Manan Island   CA
Grand Terre   GP
Grande Island (Elobey)   EK
Great Britain   UK
Great Exuma Islands   BF
Great Inagua Islands   BF
Grecian Archipelago   GR
Greece   GR
Greenland   GL
Grenada   GJ
Grenadines and St. Vincent (See St Vincent)   VC
Guadeloupe   GP
Guam   GQ
Guatemala   GT
Guernsey   GK
Guinea   GV
Guinea, Equatorial   EK
Guinea Bissau   PU
Guyana   GY
H    
Haiti   HA
Halmahera   ID
Harbor Island   BF
Heard Islands   HM
Hebrides   UK
Herzegovina   BK
Hokkaido   JA
Holland(Aka Netherlands)   NL
Honduras   HO
Hong Kong   HK
Honshu   JA
Howland Island   WX
Hungary   HU
I    
Iceland   IC
Ifni   MO
Iles Australes   FP
Iles Des Saintes   GP
Inaccessible Island   SH
India   IN
Indonesia   ID
Indonesian Borneo   ID
Inner Mongolia   CH
     
lonian Islands   GR
Iran   IR
Iraq   IZ
Iraq-Saudia Arabia Neutral Zone   IY
Ireland (Eire)   EI
Irian Barat   ID
Isla of Pines (Caribbean)   CU
Islas Malvinas (Falkland Is.)   FK
Isle of Man   IM
Isle of Pines (French Pacific Island)   NC
Isles Do La Petite-terre   GP
Israel   IS
Italy   IT
Ivory Coast(Aka Cote D'ivoire)   IV
J    
Jamaica   JM
Jan Mayen Isle   JN
Japan   JA
Jarvis Island   WX
Java   ID
Jersey   JE
Johnston Atoll   JQ
Jordan   JO
Jost Van Dykes   VI
Juan De Nova Island   JU
Juan Fernandez Island   CI
K    
Kalimantan(indonesian Borneo)   ID
Kamaran Island   YS
Kampuchea (Cambodia)   CB
Katar (Qatar)   QA
Kazakhstan   KZ
Keeling Islands   CK
Kenya   KE
Kermadec   NZ
Khios   GR
Kingman Reef   KQ
Kiribati   KR
Kiritimati   KM
Korea, Democratic Peoples Republic of (North)   KN
Korea, Republic of (South)   KS
Kurile Islands   RS
Kuwait   KU
Kwantung Terr   CH
Kyrgyzstan   KG
Kyushu   JA
L    
Labrador   CA
Laccadive Isles   IN
Lagosta   BK
Lampedusa   IT
Laos   LA
Latin America   EX
Latvia   LG
Lebanon   LE
Leeward Islands   SC
Lesotho   LT
Lesser Sunda Islands   ID
Lesvos   GR
Liaoning Province   CH
Liberia   LI
Libya   LY
Liechtenstein   LS
Limnos   GR
Line Island   KR
Lithuania   LH
Lombok   ID
Londonderry   UK
Long Islands   BF
Lord Howe Island   AS
Louisiade Archipelago   PP
Loyalty Islands   NC
Luxembourg   LU
M    
Macao (Macau)   MC
Macedonia   MK
Macquarie Island   AS
Madagascar   MA
Madeira Islands   PQ
Madura   ID
Magdalen Islands   CA
Malawi   MI
Malaya   MY
Malaysia   MY
Maldives   MV
Mali   ML
Malta   MT
Man, Isle of   IM
Manchuria   CH
Manitoba   CA
Mariana Islands   RM
Marie Galante Island   GP
Marquesas Island   FP
Marshall Islands   RM
Martinique   MB
Mauritania   MR
Mauritius   MP
Mayotte   MF
Mcdonald Islands   HM
Melilla   SQ
Mexico   MX
Micronesia, Federated States of   FM
Middle East   RX
Midway Island   MQ
Miquelon Island   SB
Moldova   MD
Moluccas   ID
Monaco   MN
Mongolia   MG
Montenegro   MW
Montserrat   MH
Morant Cay   JM
Morocco   MO
Mozambique   MZ
Myanmar (Aka Burma)   BM
N    
Namibia   WA
Nansei Islands   JA
Nauru   NR
Navassa   BQ
Nepal   NP
Netherlands (Aka Holland)   NL
Netherlands Antilles   NT
Nevis   SC
New Britain   PP
New Brunswick   CA
New Caledonia   NC
New Ireland   PP
New Providence Island   BF
New Zealand   NZ
Newfoundland   CA
Nicaragua   NU
Nicobar   IN
Niger   NG
Nigeria   NI
Nightingale Island   SH
Niue Islands   NE
Norfolk Island   NF
North Africa — not allocable   KX
North Borneo   MY
North Korea (Communist)   KN
Northern Ireland   UK
Northern Mariana Islands   CQ
Northern Soloman Islands   PP
Northwest Territory   CA
Norway   NO
Nova Scotia   CA
O    
Ocean Island (Banaba)   KR
Oceania   VX
Okinawa   JA
Oland Island   SW
Oman   MU
Ontario   CA
Orkney Island   UK
Other Country not allocable   OC
Other Western Europe — not allocable   HX
Other Western Hemisphere — not allocable   FX
Outer Mongolia   MG
P    
Pakistan   PK
Palau   PS
Palmyra Atoll   LQ
Panama   PM
Pantellerria   IT
Papua New Guinea   PP
Paracel Islands   PF
Paraguay   PA
Pedro Cays   JM
Penon DeAlhucemas   SQ
Penon De Valez De La Gomera   SQ
Perim Island   YS
Peru   PE
Pescadores   TW
Philippines   RP
Phoenix Islands   KR
Pitcairn Island   PC
Poland   PL
Portugal   PO
Prince Edward Island   CA
Principe   TP
Puerto Rico   RQ
Q    
Qatar   QA
Quebec   CA
Queen Charlotte Islands   CA
R    
Ra’s Al Khaymah   TC
Redonda   AB
Reunion Island   RE
Revillagigedo Island   MX
Rhodes Island   GR
Rio Muni   EK
Riow Islands   ID
Rodriquez Island   MP
Romania   RO
Russia   RS
Rwanda   RW
Ryukyu Islands   JA
S    
Saba   NT
Sabah   MY
Saint Bartholomew Island   GP
Saint Christopher-Nevis-Anguilla   SC
Saint Pierre and Miquelon   SB
Saint Thomas Island   TP
Sakhalin Island   RS
Sakishima   JA
SaIa-y-gomez Island   CI
Samoa, American   AQ
Samoa (Western Samoa)   WS
Samos   GR
Samothraki   GR
San Ambrosio Island   CI
San Felix Island   CI
San Marino   SM
Sao Paulo Island   BR
Sao Pedro Island   BR
Sao Tome and Principe   TP
Sarawak   MY
Sardinia   IT
Saskatchewan   CA
Saudia Arabia   SA
Scilly Islands   UK
Scotland   UK
Senegal   SG
Serbia   SR
Seychelles   SE
Sharja   TC
Shetland Isles   UK
Shikoku   JA
Sicily   IT
Sierra Leone   SL
Sikang   CH
Singapore   SN
Sinkiang   CH
Slovakia   LO
Slovenia   SI
Snares Islands   NZ
Society Islands   FP
Socotra Island   YS
Soloman Islands   BP
Somalia (Somali Republic)   SO
Sombrera   SC
South Africa, Republic of   SF
South America — not allocable   DX
South Georgia Island   FA
South Korea, Republic of   KS
South Orkney Islands   FA
South Sandwich Islands   FA
South Shetland Islands   FA
South/South East Asia   SX
Southern Africa   PX
Southern Pacific Islands   KR
Spain   SP
Spanish Africa   SQ
Spitzbergen   NO
Spratly Islands   PG
Sri Lanka   CE
St. Eustache (St. Eustatius)   NT
St. Helena Island   SH
St. Kitts and Nevis   VI
St. Lucia   ST
St. Maarten, South   NT
St. Martin, North   GP
St. Martin, South   NT
St. Vincent and Grenadines   VC
Sudan   SU
Sulawesi (Celebes)   ID
Sumatra   ID
Sumba   ID
Sumbawa   ID
Suriname   NS
Svalbard   SV
Swan Islands   HO
Swaziland   WZ
Sweden   SW
Switzerland   SZ
Syria   SY
T    
Tahiti   FP
Taiwan   TW
Tajikistan   TI
Tangier   MO
Tanzania   TZ
Tasmania   AS
Thailand   TH
Three Kings Island   NZ
Tibet   CH
Timor   ID
Tobago   TD
Togo   TO
Tokelau (Union)   TL
Tonga   TN
Tortola   VI
Tortuga Island   HA
Trinidad and Tobago   TD
Trinidad (In South Atlantic) (Brazil)   BR
Tristan Da Cunha   SH
Tromelin Island   TE
Trust Territory of the Pacific Islands   PS
Tsinghai   CH
Tuamotu   FP
Tunisia   TS
Turkey   TU
Turkmenistan   TX
Turks and Calcos Islands   TK
Tutuila Island   AQ
Tuvalu   TV
Tyrone   UK
U    
U.S. Possessions   WY
Uganda   UG
Ukraine   UP
Urn Al Quaiwan   TC
Union (Tokelau)   TL
Union Island (Windward Islands)   VC
United Arab Emirates   TC
United Kingdom   UK
Uruguay   UY
Uzbekistan   UZ
V    
Vancouver Island   CA
Vanuatu   NH
Vatican City   VT
Venezuela   VE
Vietnam   VM
Virgin Gorda   VI
Virgin Islands of the U.S.   VQ
W    
Wake Island   WQ
Wales   UK
Wallis and Futuna   WF
Walpole Island   NC
West Bank   WE
West Indies   CJ
West Irian   ID
West New Guinea   ID
West/Central Africa — not allocable   NX
Western Sahara   WI
Western Samoa (Samoa)   WS
Wight, Isle of   UK
Windward Islands   VC
Y    
Yemen Arab Rep. (Yemen)   YM
Yukon   CA
Z    
Zaire(Aka Congo)   CG
Zambia   ZA
Zimbabwe   ZI

Exhibit 1.13.8-24  (01-01-2006)
Form 8594, Asset Acquisition Statement

Introduction
         
(1) This section details SOI requirements for the editing/test resolution of Form 8594, Assets Acquisition Statement.
(2) The Form 8594 is available in the form selection screen. If you select it the system will generate a pop-up box before the first sub asking "How many 8594’s are attached ?" , you should edit the number of original Forms 8594 attached and then proceed to edit the five largest forms. To determine which five forms to edit please use the Total Sales Price, Part I, line 3.
(3) The Form 8594 has been revised as of October 2002 and the edit screen has been updated to reflect the revision. Two new asset classes have been added after class II and all subsequent classes have been re-numbered. If the taxpayer files an 1998 version of the form you will need to follow the instruction on paragraph 9 of the introduction.
(4) In general, both the seller and the buyer of a group of assets that makes up a trade or business are required to file Form 8594 to report such a sale. Typically, taxpayers attach Form 8594 to their Federal Income Tax return for the year in which the sale date occurred. However, if the amount allocated to an asset is increased or decreased after a Form 8594 is filed, the seller and/or buyer must complete Parts I and III of a new Form 8594 and attach the form to their Federal tax form for the year in which the increase/decrease occurred. For purposes of the corporate study our main user of the data, the Office of Tax Analysis, requests that only originally filed Forms 8594 be edited. Consider a Form 8594 to be original if it contains information in Parts I and II only (if only Part I is present then consider Form 8594 as original). An original Form 8594 should also have a Date of Sale within the tax year (accounting period) the company is filing for. If the taxpayer has entered information in Parts I and IIIconsider this an amended Form 8594 (reporting increases/decreases in the amount allocated to any assets) and do not edit the form. It the taxpayer has completed Parts I and II of a Form 8594 but the Date of Sale is outside the correct accounting period you should not edit this Form, you should photocopy it and send it to the National Office along with the SCPL and the first page of the return. If the taxpayer has completed Parts I and III or Parts I, II, and III you do not need to send a photocopy to National Office. Since outdated Forms 8594 are not considered original do not count them when answering the Number of Forms 8594 question. For initial returns only: If the taxpayer has filed Form(s) with Date of Sale after the Date of Incorporation but before the beginning accounting period edit and count those forms as originals. If the taxpayer has filed Form(s) with Date of Sale before the Date of Incorporation please contact National Office.
(5) If the taxpayer has attached a schedule of sales and purchases instead of actual Forms 8594, count each sale or purchase as one Form 8594. If a company files as a buyer (seller) an original Form 8594 (Part I, II, completed) and an original Form 8594 with " see attached schedule" that includes three different transactions, then you should edit four different original Forms 8594. If a schedule is attached, please try to edit each Form 8594 as complete as the information given by the taxpayer allows you to, do not omit any information. Try to distinguish between a single transaction with two parts and two different transactions. Each transaction should have different seller (buyer) and/or date of sale and/or sales price. Please, be sure that the number of original Forms 8594 matches the number you have edited in the number of Forms 8594 question.
(6) The taxpayer may attach multiple original Forms 8594 as a buyer and/or multiple Forms 8594 as a seller. To minimize the number of original Forms 8594 edited for a particular tax return, only the five largest Forms 8594 (in terms of total sales price Part I, Line 3) are abstracted.

Note:

If Part I, Line 3 is blank, but there is an amount reported in Part II Line 4, Total, consider Total Sales Price as zero. These two figures are not required to be equal and OTA only wants to see the original reported amounts. If the taxpayer has completed Part I of Form 8594 only, edit the Form 8594 as an original one. It other parts of the Form are completed be sure that you distinguish between original and amended Forms 8594. Count and edit only originally filed Forms 8594. Do not edit a fully completed Form 8594 (Parts I, II completed) instead of a partially completed Form 8594 (Part I only completed) with a higher total sales price.

(7) Multiple Forms 8594 for a single EIN will be captured using a SUB sequence procedure, similar to the calcscreen feature. A SUB number will automatically be assigned and displayed for each Form 8594 of a particular EIN.
(8) As it was previously mentioned, Form 8594 is available on the form selection screen. Although there is a process allowing you to change your entered number of official Forms 8594, pre-editing the return may save valuable time. If you select Form 8594 in the form selection screen the system will not allow you to answer zero in the pop up question "How many 8594’s are attached" . If you do not want to edit any Forms 8594 you have to enter one, to get out of the pop up box, and then go to form selection and deselect the form. Keep in mind that the OTA is only interested in originally filed Forms 8594 having the five largest sales prices.
The question "How many 8594’s are attached " will pop up before you start editing the first sub. The NUM-F8594 question will be available on any sub and any field by pressing [F8]. If you want to exit the editing process you can so by pressing [ESC], as used in the other screens. Following is a set of possible scenarios that you may encounter while editing the Form 8594:
  a. If you pre-edit the return and locate between one and five original Forms 8594, your answer to the number of Forms 8594 question will be between one and five. The system will generate between one and five blank Forms 8594 sub screens for edit, the number of subs edited will equal the number of original Forms 8594 you edited in the pop-up box question (NUM-F8594). For example: if you answered 3 in the number of Forms 8594 question, after you edit the third sub the system will take you to the next selected schedule /form.
  b. If you pre-edit the return and locate more than five original Forms 8594, your answer to the number of Forms 8594 question will be the actual number of original Forms 8594 filed, but the system will only generate five blank Forms 8594 sub screens for edit. You will then edit only the five largest Forms 8594 in terms of sales price. In this case the number of generated and edited sub screens will not match the number you entered on the pop-up box question.
  c. If your response to the question "How many 8594’s are attached" is 2, the system will automatically generate 2 blank Form 8594 subs to be edited. As you begin working the forms, you realize that there are actually 3, not 2 official Forms 8594 attached. In this case, all you need to do is press [F8] and the number of Forms 8594 question will pop up. Then you can change your answer to 3 and the system will allow you to edit 3 subs.
  d. If your response to the question on the "How many 8594’s are attached" is 3, the system will automatically generate 3 blank Form 8594 subs to be edited. As you begin working the forms, you realize that there are only 2, not 3 official Forms 8594 attached. Again in this case you can press [F8] and change your answer to the number of Forms 8594 question to 2. Next the system will give you the following message "You need to remove the subs greater than the number indicated here. Use the [F5] key to remove all the extra subs." After you hit the [ENTER] key or click the [OK] button using the mouse the system takes you to the last sub edited. If you hit [F5] the third sub will be deleted, but if you want to delete one of the other subs, say the first sub, you can do so by pressing the [PAGE UP] key twice and then the [F5] key once.
(9) There are seven asset classes which may be transferred according to Part II of the Form 8594.
    a. Class I — Includes cash, demand deposits, and similar accounts in banks, S & L associations and other depository institutions.
    b. Class II — Includes certificates of deposit, U.S. Government securities, readily marketable stock or securities, foreign currency, etc.
    c. Class III — Includes assets that the taxpayer marks-to-market at least annually for Federal income tax purposes and debt instruments, including accounts receivable.
    d. Class IV — Includes stock in trade of the taxpayer or other property of a kind that would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business.
    e. Class V — Includes all tangible/intangible assets not listed in classes I, II, III, IV, V or VII. Examples include furniture and fixtures, land, buildings, equipment, a covenant not to compete.
    f. Class VI — Includes all amortizable section 197 intangible assets, except goodwill and going concern value.
    g. Class VII — Includes section 197 intangibles in the nature of goodwill and going concern value.
  If the taxpayer files an original 1998 revision year Form 8594, all amounts reported as Class III should be edited as Class V and all amounts reported as Classes IV and V should be edited as Class VI and VII. If the taxpayer files an original 1998 revision year Form 8594 with attachments that provide specific information about the assets transferred use that information to classify the assets according to the guidelines provided above.
(10) The system will place the subs in descending order (in terms of Total sales price Part I, Line 3) after the last sub has been edited. So if the return has five or less subs no pre-editing is necessary. But if the return has more than five subs it is imperative that you pre-edit before you begin working the return. The five largest original Forms 8594 (in terms of Total sales price Part I, Line 3) should be edited.
Important: If Part I, Line 3 Sales Price is zero but there is an amount reported in Part II, Total Price, do not change the amount reported in Part I, Line 3. These two amounts are not required to be equal, and for OTA's purposes, they want to see any reported differences in these two amounts.
(11) This exhibit contains specific instructions for the editing of the Form 8594 items and resolution of the associated tests.
Data Item   Line Reference
           
Page 1, IDENTIFYING INFORMATION
           
Corporation Name   Page 1
Editing Instructions:      
  (1) Press the [ENTER] key if the corporate name on the Form 8594 matches the corporate name on Page 1.
  (2) If the corporate name on the Form 8594 differs from the corporate name on Page 1, edit the corporate name as shown on the Form 8594.
  (3) If no corporate name is reported by the taxpayer on the Form 8594 edit N/A.
  (4) The [F9] key will display a list of all previously edited corporation names. The key will only work if the cursor is on this field.
  (5) See Exhibit 1.13.8-21(1) for general instructions for editing corporate names.
           
Identification Number   Page 1
Editing Instructions:      
  (1) Press the [ENTER] key if the EIN on the Form 8594 matches the corporate EIN on Page 1.
  (2) If the EIN on the Form 8594 differs from the consolidated EIN on Page 1, edit the EIN as shown on the Form 8594.
  (3) It both an EIN and a SSN are reported by the taxpayer, edit the EIN.
  (4) If no EIN is reported by the taxpayer on the Form 8594 press ‘9’ and [ENTER] and the system will edit the default EIN {999999999}.
  (5) It should be a nine-digit number to be valid.
  (6) This is a double-entry field.
  (7) If you have two or more EINs, call National Office.
           
Purchaser/Seller Code   Page 1
Editing Instructions:      
  (1) Enter ‘B’ for purchaser and ‘S’ for seller depending on how the corporation checked the box to identify themselves. If the taxpayer has not checked any box enter ‘N’ and make a note in the comments field. For any other entry, the message "Valid entries are ‘B’, ‘S’ or ‘N’ will be displayed."
  (2) If the taxpayer files two Forms 8594 reporting the same transaction, one for a seller and one for a purchaser, then edit only the purchaserform.
  (3) If both boxes have been checked, call National Office.
  (4) This is a must enter field.
           
PART I, GENERAL INFORMATION
           
Name of Other Party to the Transaction   Page 1, Line 1
Editing Instructions:      
  (1) Enter the name of the other party to the transaction if provided.
  (2) See Exhibit 1.13.8-21(1) for general instructions for editing corporate names.
  (3) If the name is not present or has been left blank by the taxpayer, enter N/A.
  (4) If the taxpayer reports more than one Other Parties to the Transaction edit N/A. Please annotate in the comments field the number of Other Parties reported and edit as many names as possible.
  (5) This is a must enter field.
           
Other Party’s Identification Number   Page 1
Editing Instructions:      
  (1) Enter the nine-digit EIN (if other party is incorporated), enter SSN (if other party is a sole proprietorship or an individual).
  (2) If no EIN is reported by the taxpayer on the Form 8594, or if the EIN reported is not nine digitd, press ‘9’ and [ENTER] and the system will edit the default EIN {999999999}.
  (3) If the taxpayer reports more than one Other Party’s Identification Numbers to the Transaction edit the default EIN {999999999}. Please annotate in the comments field the number of Other Parties EIN’s reported and edit as many EIN’s as possible.
  (4) This field is double-entry.
           
Date of Sale   Page 1, Line 2
Editing Instructions:      
  (1) Enter the date in which the sale of the assets(s) took place.
  (2) Enter month, day, and year of transaction by hitting the {ENTER} key after each entry.
  (3) If the taxpayer has provided only the month that the transaction occurred, without reference to the day, use the last day of the month. For your convenience a Last Day Of The Month Chart has been provided for your use on the following page. Check for attachments before using this method of coding.
  (4) If no date is indicated, or only the year has been given, or the month and the day have been given but no year, check the return for attachments and if none can be found press the [ENTER] key twice.
  (5) If the Date of Sale is outside the tax year accounting period the company is filing for, do not edit the Form unless company is filing an initial return. Outdated Forms 8594 should be photocopied and sent to the National Office. If you have counted the outdated Form 8594 as an original one, when answering the Number of Form 8594 question, you can correct your answer by pressing [F8]. If the company has filed more than five Forms 8594 then go ahead and edit the next largest (in terms of total sales price Part I, Line 3) original Form 8594. If you are not clear of what you should do, please contact National Office. For initial returns only: If the taxpayer has filed Form(s) with Date of Sale after the Date of Incorporation but before the beginning accounting period edit and count those forms as original. If the taxpayer has filed Form(s) with Date of Sale before the Date of Incorporation please contact National Office.
  (6) This field is double-entry.
FORM 8594 ASSET ACQUISITION STATEMENT
LAST DAY OF THE MONTHCHART
     
This chart may be used if the taxpayer has left the day blank when answering the date of sale question.
January   31
February 28 or 29 (during leap year). Leap year occurs every 4 years and can be determined by dividing year by 4, if the result is a whole number it is a leap year, otherwise it is not.
March   31
April   30
May   31
June   30
July   31
August   31
September   30
October   31
November   30
December   31
Data Item       Line Reference
           
Total Sales Price (consideration)   Part I, Line 3
Editing Instructions:      
  (1) Enter the dollar amount for the total sales price of this transaction.
  (2) If the return has more than five subs it is imperative that you pre-edit before you begin working the return. The five largest original Forms 8594 (in terms of Total sales price Part I, Line 3) should be edited.
  (3) If this field is blank and there are five or less original Forms 8594 attached, edit the form as reported (by pressing [ENTER] the system will automatically edit zero). If six or more original Forms 8594 are attached, edit only the five largest, disregarding any forms reporting zero in Sales Price, even if the reported total price (Part II, line 4) is large enough to be considered as one of the top five. If you are not sure of what you should do, please contact National Office.
  (4) If the total sales price is not reported in U.S. dollars ($), contact National Office.
  (5) This field must be positive. If the taxpayer reports a negative amount please contact National Office.
     
Class I Aggregate Fair Market Value   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the aggregate fair market value for Class I assets.
  (2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
           
Class I Allocation of Sales Price   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the allocation of sales price for Class I assets.
  (2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
           
Test   Description
           
E3500   Class I Allocation of Sales Price should be less than or equal to Class I Aggregate Fair Market Value.
           
Correction Procedure:  
  (1) This field should be less than or equal to the Class I Aggregate Fair Market Value.
  (2) Check the return to verify the taxpayer's entries and edited amounts for Class I Aggregate Fair Market Value and Class I Allocation of Sales Price.
  (3) If this test cannot be corrected, the Accept button may be used.
           
Data Item       Line Reference
           
Class II Aggregate Fair Market Value   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the aggregate fair market value for Class II assets.
  (2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
           
Class II Allocation of Sales Price   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the allocation of sales price for Class II assets.
  (2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
           
Test   Description
           
E3505   Class II Allocation of Sales Price should be less than or equal to Class II Aggregate Fair Market Value.
           
Correction Procedure:  
  (1) This field should be less than or equal to the Class II Aggregate Fair Market Value.
  (2) Check the return to verify the taxpayer's entries and edited amounts for Class II Aggregate Fair Market Value and Class II Allocation of Sales Price.
  (3) If this test cannot be corrected, the Accept button may be used.
           
Data Item       Line Reference
           
Class III Aggregate Fair Market (Tax Year 2002 Forms or later only)   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the aggregate fair market value for Class III assets.
  (2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
           
Class III Allocation of Sales (Tax Year 2002 Forms or later only)   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the allocation of sales price for Class III assets.
  (2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
           
Test   Description
           
E3510   Class III Allocation of Sales Price should be less than or equal to Class III Aggregate Fair Market Value.
           
Correction Procedure:  
  (1) This field should be less than or equal to the Class III Aggregate Fair Market Value.
  (2) Check the return to verify the taxpayer’s entries and edited amounts for Class III Aggregate Fair Market Value and Class III Allocation of Sales Price.
  (3) If this test cannot be corrected, the Accept button may be used.
           
Data Item       Line Reference
           
Classes IV Aggregate Fair Market Value (Tax Year 2002 Forms or later only)   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the Aggregate Fair Market Value for Class IV assets.
  (2) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
  (3) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
           
Classes IV Allocation of Sales Price (Tax Year 2002 Forms or later only)   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the allocation of sales price for Class IV assets.
  (2) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
  (3) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
           
Test   Description
           
E3511   Class IV Allocation of Sales Price should be less than or equal to Class IV Aggregate Fair Market Value.
           
Correction Procedure:  
  (1) This field should be less than or equal to the Class IV Aggregate Fair Market Value.
  (2) Check the return to verify the taxpayer's entries and edited amounts for Class IV Aggregate Fair Market Value and Class IV Allocation of Sales Price.
  (3) If this test cannot be corrected, the Accept button may be used.
           
Data Item       Line Reference
           
Class V Aggregate Fair Market Value   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the Aggregate Fair Market Value for Class V assets.
  (2) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
  (3) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
           
Class V Allocation of Sales Price   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the allocation of sales price for Class V assets.
  (2) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
  (3) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
           
Test   Description
           
E3512   Class V Allocation of Sales Price should be less than or equal to Class V Aggregate Fair Market Value.
           
Correction Procedure:    
  (1) This field should be less than or equal to the Class V Aggregate Fair Market Value.
  (2) Check the return to verify the taxpayer's entries and edited amounts for Class V Aggregate Fair Market Value and Class V Allocation of Sales Price.
  (3) If this test cannot be corrected, the Accept button may be used.
           
Data Item       Line Reference
           
Classes VI and VII Aggregate Fair Market Value   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the Aggregate Fair Market Value for Class VI and VII assets.
  (2) If the taxpayer has reported separate amounts for Classes VI and VII please edit the sum of the two amounts reported.
  (3) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
  (4) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
           
Classes VI and VII Allocation of Sales Price   Part II, Line 4
Editing Instructions:      
  (1) In Part II, Assets Transferred, enter the allocation of sales price for Class VI and VII assets.
  (2) If the taxpayer has reported separate amounts for Classes VI and VII please edit the sum of the two amounts reported.
  (3) If the taxpayer has filed an earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
  (4) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
           
Test   Description
           
E3513   Classes VI and VII Allocation of Sales Price should be less than or equal to Classes VI and VII Aggregate Fair Market Value.
           
Correction Procedure:    
  (1) This field should be less than or equal to the Classes VI and VII Aggregate Fair Market Value.
  (2) Check the return to verify the taxpayer's entries and edited amounts for Classes VI and VII Aggregate Fair Market Value and Classes VI and VII Allocation of Sales Price.
  (3) If this test cannot be corrected, the Accept button may be used.
           
Data Item   Line Reference
           
Total Aggregate Fair Market Value   Part II, Line 4
Editing Instructions:    
  (1) In Part II, Assets Transferred, enter the Aggregate Fair Market Value for Total Assets Transferred.
  (2) If the taxpayer has left this field blank but has entries in Classes I–VII, add the Classes together to determine the Total Aggregate Fair Market Value.
  (3) This field must be positive. If the taxpayer reports a negative amount please contact National Office.
           
Test   Description
           
E3514   Sales price fair market value components do not add to total.
           
Correction Procedure:    
  (1) This field should be less than or equal to the Class I, II, III, IV,V, VI, and VII Aggregate of Sales Price Fair Market Value totals.
  (2) Verify the taxpayer's entry and edited amount for Total Aggregate of Sales Price Fair Market Value.
  (3) If the taxpayer has left this field blank but has entries in Classes I–VII, add the Classes together to determine the Total Aggregate Fair Market Value.
  (4) If this test cannot be corrected, the Accept button may be used.
           
Data Item   Line Reference
           
Total Allocation of Sale Price   Part II, Line 4
Editing Instructions:    
  (1) In Part II, Assets Transferred, enter the allocation of sales price for all assets (total) reported by the corporation.
  (2) If the taxpayer has left this field blank but has entries in Class I–VII, add the Classes together to determine the Allocation of Sales Price Total.
  (3) This field must be positive. If the taxpayer reports a negative amount please contact National Office.
           
Test   Description
           
E3515   Sales price components do not add to total.
           
Correction Procedure:    
  (1) This field should be less than or equal to the Class I, II, III, IV, V, VI, and VII Allocation of Sales Price totals.
  (2) Verify the taxpayer's entry and edited amount for Total Allocation of Sales Price.
  (3) If the taxpayer has left this field blank but has entries in Classes I–VII, add the Classes together to determine the Allocation of Sales Price Total.
  (4) If this test cannot be corrected, the Accept button may be used.
           
Data Item   Line Reference
           
Arrangement with Seller Code   Part II, Line 6
Editing Instructions:    
  (1) Allowable entries are ‘Y’ for the yes box and ‘N’ for the no box.
  (2) If unable to determine enter ‘N’.
  (3) This is a must enter field.

Exhibit 1.13.8-25  (01-01-2006)
Form 8824, Like-Kind Exchanges

Introduction

(1) Parts I, II, and III report the exchange of business or property that are of a like kind.

(2) If one party exchanges business or investment property solely for business or investment property of a like kind from another party and no other property or money is exchanged, no gain or loss is recognized under Section 1031. Returns of this type are often identified by Part I and II filled out, the property exchanged is similar (a car for a car, a copier for a copier), and Part III is filled with 0's.
Deselect these 8824's and do not edit. If you have doubt, contact N.O.

(3) Properties are of like kind if they are of the same nature or character regardless of grade or quality.

(4) A multi-asset exchange occurs if the properties exchanged consist of more than one group of like kind properties.

(5) Edit all Forms 8824 filed (except those noted on #2 above). When you finish editing a Form 8824, you will be prompted to edit information from the next Form 8824. If you have completed editing of all of the Forms 8824, you may exit.

(6) Many times if an 8824 falls into the category of a " Multi-Asset" exchange, the taxpayer will not fill out line(s) 15-18. If you are unable to determine these lines via an attached schedule, contact N.O.

(7) This exhibit provides specific instructions for the editing of the Form 8824 items and resolution of the associated tests.

(8) If you select Form 8824 in the form selection screen, the system will not allow you to answer zero for the question "How many 8824's are attached?" If you do not want to edit any Forms 8824, you can enter '1' and then go to form selection and deselect the form. To change the number of 8824s to edit, press [F-8] or [F-12].

(9) If a summary 8824 is included and individual forms are present, only edit the individual forms. If a summary 8824 is included and no individual forms are present, please edit the summary 8824. If a summary form is included, send a copy of the summary and the attached statements to N.O.

Data Item   Line Reference
           
Identifying Number   Page 1
Editing Instructions:    
  (1) Enter [ENTER] if the EIN on the Form 8824 matches the corporate EIN on Page 1.
  (2) If the EIN on the Form 8824 differs from the consolidated EIN on Page 1, edit the EIN as shown on the Form 8824.
  (3) If multiple EIN's are provided, edit the one that matches the consolidated EIN. If no EIN matches the consolidated EIN, call National Office.
  (4) If both an EIN and a SSN are reported by the taxpayer, edit the EIN.
  (5) If no EIN is reported by the taxpayer on the Form 8824 edit the default EIN {999999999}.
  (6) It should be a nine-digit number to be valid.
  (7) This is a double-entry field.
           
PART I, Information on the Like-Kind Exchange  
           
Was the exchange made with a related party? Part 1, Line 7
Editing Instructions:    
  (1) Enter the letter of the taxpayer response — either a, b, or c.
  (2) If no box is checked and Part II is complete, enter a.
  (3) If no box is checked and Part II is incomplete, enter c.
           
PART III, Realized gain or (loss), Recognized Gain and Basis of Like-Kind Property Received
           
Multi-Asset Exchange   Part 3
Editing Instructions:    
  (1) Enter Y if the taxpayer identifies the exchange as being a "multi-asset exchange."
  (2) A multi-asset exchange is defined as "An exchange which consists of more than 1 group of like kind property being exchanged or received."
Example 1: land, vehicle and cash for land and vehicle is a multi-asset exchange.
Example 2: land, vehicle and cash for only land is NOT a multi-asset exchange.
  (3) If line(s) 12–18 are blank, look for an attachment with realized and recognized gains, and code as a Multi-Asset.
  (4) The taxpayer should file the multi-asset exchange on an attached sheet. If this is the case, mark this box ‘Y’ and continue carefully. If you are unsure whether it is a multi-asset exchange and there is a sheet attached, enter ‘Y’.
           
FMV of Other Property Given Up   Part 3, Line 12
Editing Instructions:    
  (1) When using attachments look for the key words
FAIR MARKET VALUE OF OTHER PROPERTY GIVEN UP.
           
Adjusted Basis of Other Property Given Up   Part 3, Line 13
Editing Instructions:    
  (1) When using attachments look for the key words
ADJUSTED BASISBASIS GIVEN UP
           
Gain or (Loss) Recognized on Other Property Given Up Part 3, Line 14
Editing Instructions:    
  (1) This line should equal line 12 less line 13.
           
Test   Description
           
E2097   Line 14 does not equal the expected amount.
           
Correction Procedure:    
  (1) Gain or (loss) recognized on other property given up should equal line 12 less line 13. Check the amounts on these lines.
  (2) If this test cannot be corrected, the Accept button may be used.
 
           
Cash Received, FMV of Other Property Received Part 3, Line 15
Editing Instructions:    
  (1) When using attachments look for the key words
CASH RECEIVED or
FAIR MARKET VALUE OF OTHER PROPERTY GIVEN UP.
           
FMV of Like-Kind Property Received   Part 3, Line 16
Editing Instructions:    
  (1) When using attachments look for the key words
FAIR MARKET VALUE OF LIKE-KIND PROPERTY RECEIVED
           
Add Lines 15 and 16   Part 3, Line 17
Editing Instructions:    
  (1) This should be the sum of lines 15 and 16.
           
Test   Description
           
E2100   Line 17 does not equal expected amount.
           
Correction Procedure:    
  (1) Line 17 should equal the sum of lines 15 and 16. Check the amounts in these fields.
  (2) If this test cannot be corrected, the Accept button may be used.
           
Adjusted Basis of Like-Kind Property   Part 3, Line 18
Editing Instructions:    
  (1) When using attachments look for the key words
ADJUSTED BASIS or
BASIS GIVEN UP
           
Realized Gain or (Loss)   Part 3, Line 19
Editing Instructions:    
  (1) Realized gain or (loss) should equal line 17 less line 18.
           
Test   Description
           
E2105   Line 19 does not equal the expected amount.
           
Correction Procedure:    
  (1) Realized gain or (loss) should equal line 17 less line 18. Check the amounts in these lines and line 19.
  (2) If this test cannot be corrected, the Accept button may be used.
 
           
Enter the smaller of line 15 or line 19, but not less than zero   Part 3, Line 20
Editing Instructions:    
  (1) This line should be the smaller of lines 15 or 19. It should not be less than zero.
           
Test   Description
           
E2110   Line 20 does not equal the expected amount.
           
Correction Procedure:    
  (1) The gains shown in line 20 should equal the smaller of lines 15 and 19, but not less than zero.
  (2) Check the amounts in these lines.
  (3) If this test cannot be corrected, the Accept button may be used.
           
Ordinary Income Under Recapture Rules Part 3, Line 21
Editing Instructions:    
  (1) If there are any questions about the amounts in line 21, check Form 4797, line 16 and identify the amounts from here reported on the Form 4797.
           
Subtract line 21 from line 20   Part 3, Line 22
           
Recognized Gain   Part 3, Line 23
           
Test   Description
           
E2115   Line 23 does not equal the expected amount.
           
Correction Procedure:    
  (1) Line 23 should equal the sum of lines 21 and 22.
  (2) Check the amounts in these lines.
  (3) If this test cannot be corrected, the Accept button may be used.
 
           
Deferred Gain or (Loss)   Part 3, Line 24
           
Test   Description
           
E2120   Line 24 does not equal the expected amount.
           
Correction Procedure:    
  (1) If line 19 is less than zero, a loss, Line 24 should equal line 19. Otherwise, Line 24 should equal line 19 less line 23.
  (2) If this test cannot be corrected, the Accept button may be used.
 
           
Basis of Like-Kind Property Received   Part 3, Line 25
           
Test   Description
           
E2125   Line 25 does not equal the expected amount.
           
Correction Procedure:    
  (1) Line 25 should equal the sum of lines 18 and 23, less line 15.
  (2) If this test cannot be corrected, the Accept button may be used.

Exhibit 1.13.8-26  (01-01-2006)
Form 4626, Alternative Minimum Tax — Corporations

Introduction

(1) All of the tests associated with the Form 4626 are Error Tests and can be test released. In general, we want to correct any obvious taxpayer errors, such as mathematical or transcription mistakes. However, if the form is correctly filed and balances but there is confusion as to what the taxpayer intended, we do not want to make arbitrary changes. An example of this may be a taxpayer writing in an adjustment item not listed on the form and labeling it as "Other" . This difference would cause a test to read out, but since the difference is due to a unique situation referred to by the taxpayer, rather than an error, the test could be accepted. Be careful to edit the correct Form 4626. Forms 1118, 4562, and 4797 may have a Form 4626 attached, however, the only Form 4626 that should be edited is the one that corresponds to Schedule J, Line 4.

(2) If Revenue Processing corrects an obvious taxpayer error, edit in accordance with the changes. If Revenue Processing changes do not seem correct, edit the form as the taxpayer completed it. If Revenue Processing changed line 14, Alternative Minimum Tax (and also changed the corresponding amount on the Schedule J), correct the return and send National Office a copy of the Form 4626 and the first four pages of the return. If Revenue Processing changes line 1 but does not carry the change through the rest of the form, edit the form as the taxpayer completes it, even if it appears to be an obvious taxpayer error. If there is any doubt on what items to edit on a giant return, contact National Office.

(3) Line 5 Total — When the return is not a member of a controlled group, and after combining lines 3 and 4e, the result is zero, or less than zero, enter zero or the negative amount and STOP HERE. Enter zeros on the remaining lines of the Form 4626. This return is not subject to the alternative minimum tax. Members of controlled groups may still be subject to alternative minimum tax based on the way the group reports and our users want us to edit all money amounts reported on lines 6 through 14. The corporation is a member of a controlled group if the control group code is ‘Y’ See Exhibit 1.13.8-22 for instructions for editing "Control Group Code."

(4) Under Section 38(c) taxpayers have been reducing the amount of Alternative Minimum Tax (AMT) reported on the Schedule J. This may also be referred to as an investment tax credit (ITC) adjustment or empowerment zone employment credit (EZE) adjustment in the case that a taxpayer did not refer to the specific lR Code Section. The reduction is usually reported by way of a margin entry on the Form 4626 or the Schedule J. An example of what may be shown on Form 4626 is line 14 (15) has an amount of $18,000 but there is a margin entry showing (Sec 38(c) Adjustment) AMT = $16,000. This $16,000 is carried forward to the Schedule J. The Sec 38(c) adjustment is then $2000 ($18000 - $16000). If the 38(c) adjustment is not shown on Form 4626, then it will be on the Schedule J, line 4 (line 9 for 1999 Forms), dotted line. The Schedule J will usually show the money amount they are reducing their AMT by on the dotted line next to AMT. Example: Sec 38(c) 2000.

(5) Occasionally, taxpayers will provide two worksheets instead of the Form 4626, the Statement of Consolidated Alternative Minimum Tax and the Statement of Adjusted Current Earnings. When there is no Form 4626 and these statements are provided, regardless of whether AMT is present, please use the guides on the last two pages of this exhibit, along with the instructions in this exhibit, to edit the amounts. If after creating the form, the Alternative Minimum Tax amount (line 14) does not correspond with the AMT provided by the taxpayer in Sch J, then please call National Office.

(6) If a taxpayer provides annualized data for the 4626, and line 14 is 0, please edit as the taxpayer has reported. If there is an amount on line 14, then use the amount provided by the taxpayer on line 5 to edit the rest of the form, making changes where necessary. However, if using the amount on line 5 causes a change to line 14, then edit as the taxpayer reported.

(7) If the taxpayer makes reference to a small business exemption or IRC Section 55(e) AND has no amount on line 14(15), please deselect the form.

(8) In general, taxpayer reporting should be used to edit this form.

(9) This exhibit provides specific instructions for the editing of the Form 4626 items and resolution of the associated tests.

(10) The line entry for the Alternative Minimum Tax has been eliminated from the 2002 Form 1120-A, and all subsequent lines have been renumbered. 1120-A returns reporting an amount for AMT have been instructed to use Form 1120. Note: The line entry for AMT will still be present for revision year 2001 filers. Please contact National Office if an 1120-A files a 4626.

Data Item   Line Reference
           
Taxable Income Before Net Operating Loss Deduction   Line 1
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Depreciation of Post-1986 Property   Line 2a
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Amortization of Certified Pollution Control Facilities   Line 2b
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Amortization of Mining Exploration and Development Costs   Line 2c
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Amortization of Circulation Expenditures   Line 2d
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Adjusted Gain or Loss   Line 2e
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Long-Term Contracts   Line 2f
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Merchant Marine Capital Construction Funds   Line 2g
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Section 833(b) Deduction (Blue Cross, etc.)   Line 2h
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Tax Shelter Farm Activities   Line 2i
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Passive Activities   Line 2j
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Loss Limitations   Line 2k
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Depletion   Line 2l
Editing Instructions:    
  (1) If the corporation reports this item as negative, and uses it as a negative, edit this field as a negative number.
           
Tax-Exempt Interest from Private Activity Bonds   Line 2m
Editing Instructions:    
  (1) If the corporation reports this item as negative, and uses it as a negative, edit this field as a negative number.
           
Intangible Drilling Costs   Line 2n
Editing Instructions:    
  (1) If the corporation reports this item as negative, and uses it as a negative, edit this field as a negative number.
  (2) If an amount is present here, please take note that intangible drilling costs should be present in Other Costs from the Schedule A and/or Other Deductions from the Income and Deduction Schedule.
           
Other Adjustments   Line 2o
Editing Instructions:    
  (1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
           
Taxable Income, Total Adjustments and Tax Preference Items   Line 3
Editing Instructions:    
  (1) This field should be equal to the sum of lines 1 through 2o.
           
Test   Description
 
E038   Taxable Income, Total Adjustments and Tax Preferences Items are not equal to the sum of its components.
Correction Procedure:    
  (1) This field should be equal to the sum of lines 1 through 2o.
  (2) Check the return to verify the taxpayer’s entries and edited amounts for Taxable Income Before Net Operating Loss Deduction, and Total Adjustments and Preference items.
  (3) Use the "Difference" amount to help pinpoint possible editing errors.
  (4) If this test cannot be corrected, the Accept Button can be used.
           
Adjusted Current Earnings   Line 4a
Editing Instructions:    
  (1) Lines 4a thru 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
  (2) If the corporation reports this item as a negative and uses it as a negative, edit this field as a negative number.
           
Alternative Minimum Taxable Income Less Adjusted Current Earnings   Line 4b
Editing Instructions:    
    (1) Lines 4a thru 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
    (2) Line 4b should be equal to line 4a minus line 3.
    (3) If the corporation reports this item as a negative and uses it as a negative, edit this field as a negative number.
           
Test   Description
           
E041   Line 4b is not equal to computed amount.
           
Correction Procedure:    
  (1) Line 4b should equal line 4a minus line 3.
  (2) Returns filing forms 1120-REIT and 1120-RIC have been excluded from this test.
  (3) Check the return to verify the taxpayer's entries and edited amounts for Adjusted Current Earnings, and Alternative Minimum Taxable Income.
  (4) Use the "Difference" amount to help pinpoint possible editing errors.
  (5) If this test cannot be corrected, the Accept Button may be used.
           
75% of Adjusted Current Earnings Adjustment   Line 4c
Editing Instructions:    
  (1) This field must be positive.
  (2) Please consult the taxpayer amount from the proper line on the form.
  (3) Lines 4a thru 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
  (4) If this amount is negative, please enter the absolute value of the amount.
           
Test   Description
           
E042   Line 4c is not equal to computed amount.
           
Correction Procedure:    
  (1) Line 4c should be equal to 75% of line 4b.
  (2) Check the return to verify the taxpayer's entry for line 4b.
  (3) Use the "Difference" amount to help pinpoint possible editing errors.
  (4) If this test cannot be corrected, the Accept Button can be used.
 
           
Adjusted Current Earnings Excess   Line 4d
Editing Instructions:    
  (1) Lines 4a through 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
  (2) If any of lines 4a through 4e are present, than this is a must enter field. If line 4d is blank, enter [Enter].
           
Adjusted Current Earnings Adjustment   Line 4e
Editing Instructions:    
  (1) Lines 4a thru 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
  (2) If line 4a thru 4e is a positive, then line 4e should be positive or zero. If line 4b is a negative, then line 4e should be negative or zero.
           
Test   Description
           
E043   Line 4e is not equal to the absolute value of line 4c.
           
Correction Procedure:    
  (1) This field should be equal to the amount on line 4c if you entered a positive number or zero on line 4b. Line 4e should also be positive.
  (2) Check the return to verify the taxpayer's entries for lines 4b, 4c, and 4e.
  (3) If this test cannot be corrected, the Accept Button can be used.
Test   Description
           
E044   The absolute value of line 4e is not equal to the smaller of line 4c or the absolute value of line 4d or if 4e is positive.
           
Correction Procedure:    
  (1) This field should be equal to the smaller of line 4c or line 4d entered as a negative number if you entered a negative amount on line 4b.
  (2) Check the return to verify the taxpayer's entries for lines 4c, 4d, and 4e.
  (3) If this test reads out because 4e is positive, and the sum of lines 3 and 4e equals line 5 and line 5 is greater than 2 million then please contact National Office, else accept this test.
  (4) If this test reads out because 4e is positive, and the sum of lines 3 and 4e does NOT equal line 5, try the equation using 4e as a negative. If the equation balances, change line 4e to a negative.
  (5) If this test reads out because line 4d is negative and the corporation has Alternative Minimum Tax greater than 0, enter a comment in the comment screen, send the Form 4626 and the first four pages of the return to Gabe Schneider at the National Office, and accept the test.
  (6) If this test cannot be corrected, the Accept Button can be used.
           
Line 5 Total   Line 5
Editing Instructions:    
  (1) This field should equal the sum of lines 3 and 4e. Enter the amount on line 5 whether positive or negative.
  (2) If the above result is zero or less than zero, enter the computed amount. STOP HERE if the corporation is not a member of a controlled group (the corporation is not subject to the alternative minimum tax). Continue to edit the form if the return is a member of a controlled group. Go to the next form by pressing the down arrow key to zero fill the remaining lines of the Form 4626.
           
Test   Description
           
E046   Line 5 is not equal to the computed amount.
           
Correction Procedure:    
  (1) This field should equal the sum of lines 3 and 4e.
  (2) Use the "Difference" amount to help pinpoint possible editing errors.
  (3) If test reads out because line 5 is negative, or the taxpayer puts a zero on line 5, enter the computed amount and STOP HERE (by entering zeros on the remaining lines of the Form 4626) if the corporation is not a member of a controlled group. Do not edit any more lines on this form. Proceed to the next form.
  (4) If the taxpayer has provided annualized data see page 26-2(6).
  (5) If this test cannot be corrected, the Accept Button can be used.
 
V027   Company is not a member of a controlled group and Line 5 is Zero or less.
           
Correction Procedure:    
  (1) Please check to make sure the return is a member of a controlled group.
  (2) Check to make sure that taxpayer entry has been keyed in correctly.
  (3) If both of these items are correct STOP HERE and proceed to the next form for editing.
           
Alternative Tax Net Operating Loss Deduction   Line 6
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (3) This field must be positive.
  (4) This field is limited to 90% of line 5.
  (5) If the corporation reports this item as a negative but uses it as a positive, edit the absolute value of the amount.
  (6) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call Gabe Schneider at National Office.
           
Test   Description
           
E055   Alternative Tax Net Operating Loss Deduction exceeds limitation.
           
Correction Procedure:    
  (1) This test will fail when line 5 is greater than zero and line 6 is greater than 90% of line 5.
  (2) Check the return to verify taxpayer's entries and edited amounts for line 5 Total and Alternative Tax Net Operating Loss Deduction.
  (3) Use the "Difference" amount to help pinpoint possible editing errors.
  (4) If this test cannot be corrected, the Accept Button can be used.
 
           
Alternative Minimum Taxable Income   Line 7
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (3) This field must be positive.
  (4) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call Gabe Schneider at National Office.
           
Test   Description
           
E060   Line 7 is out of balance.
           
Correction Procedure:    
  (1) This field should be equal to line 5 minus line 6.
  (2) Check the return to verify the taxpayer's entries and edited amounts for line 5 Total, Alternative Tax Net Operating Loss Deduction, and Alternative Minimum Taxable Income.
  (3) Use the "Difference" amount to help pinpoint possible editing errors.
  (4) If the taxpayer has provided annualized data see page 26-2(6).
  (5) If this test cannot be corrected, the Accept Button can be used.
           
Exemption One   Line8a
Editing Instructions:    
  (1) An amount should be on this line when line 7 is less than $310,000.
  (2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (3) This field should be positive. Do not edit this field if the corporation reports this item as a negative and uses it as a negative and Alternative Minimum Tax is 0 or less. Otherwise, call National Office.
  (4) This field is edited and not generated because members of controlled groups must take into account AMTI line 7 for all members of its controlled group and the decrease of the tentative exemption amount must be divided equally among the members unless the members consent to an unequal allocation. Members must subtract their share of the $150,000 from the members share of the combined AMTI and enter the difference on line 8a.
  (5) If the 4626 is being edited off of a worksheet, this field should be computed by subtracting $150,000 from the amount on line7 if the company is a member of a control group.
           
Exemption Amount   Line 8c
Editing Instructions:    
  (1) This field must be positive and should be zero if line 7 is $310,000 or more.
  (2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (3) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call National Office.
  (4) If the amount is being edited off of a worksheet and no other information is available, line 8b(9b) can be subtracted from $40,000 to generate this field.
           
Test   Description
           
E065   Exemption amount is out of balance.
           
Correction Procedure:    
  (1) This test will fail when line 7 is greater than zero and less than $310,000, and line 8c is not equal to the greater of $40,000 minus line 8b or zero.
  (2) Check the return to verify the taxpayer's entries, edited and generated amounts for line 8c, and (Generated) line 8b.
  (3) Use the "Difference" amount to help pinpoint possible editing errors.
  (4) If this test cannot be corrected, the Accept button can be used.
           
Alternative Minimum Tax Foreign Tax Credit   Line 11
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (3) This field must be positive.
  (4) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call National Office.
           
Tentative Minimum Tax   Line 12
Editing Instructions:    
  (1) This field must be positive.
  (2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (3) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call National Office.
           
Test   Description
           
E070   Tentative Minimum Tax is out of balance.
           
Correction Procedure:    
  (1) This field should be equal to line 10 minus line 11.
  (2) Check the return to verify the taxpayer's entries and edited amounts for (Generated) line 10, Alternative Minimum Tax Foreign Tax Credit and Tentative Minimum Tax.
  (3) Use the "Difference" amount to help pinpoint possible editing errors.
  (4) If line 10 minus line 11 is negative, and Alternative Minimum Tax is 0 or less, make line 12 zero and accept the test.
  (5) If the taxpayer has provided annualized data see page 26-2(6).
  (6) If this test cannot be corrected, the Accept button can be used.
 
           
Income Tax Before Credits Except Foreign Tax Credit and Possessions Tax Credit   Line 13
Editing Instructions:    
  (1) This field must be positive.
  (2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (3) If the corporation reports this item as a negative but uses it as a positive, edit the absolute value of the amount.
  (4) If this line is blank, calculate Income Tax minus the sum of Foreign Tax Credit and Possessions Tax Credit (for the Form 1120, this equation would be line 3 - (line 6a + line 6b), and line 3 - (line 4a + line 4b) for 1999 Forms). If using the Schedule J computation instead of the amount reported on line 13(14) of this form resolves test E077, enter the calculated amount in line 13.
           
Section 38(c) Adjustment   Margin
Editing Instructions:    
  (1) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (2) Under IR Code Section 38(c) taxpayers have been reducing the amount of alternative minimum tax (AMT) reported on the Schedule J. We will edit this amount on this line. We will not be including this amount in the total tax adjustment field. Edit this amount when it is present near the dotted line on line 14 or on the dotted line of Line 4 (line 9 for 1999 Forms) of the Schedule J.
  (3) If the amount on Form 4626 is larger than the amount on line 4 (line 9 for 1999 Forms) of the Schedule J, check to see if the difference is due to IR Code Section 38(c). It may also be referred to as:
  • EZE
  • Investment tax credit adjustment
  • Empowerment zone employment credit adjustment
  • Section 38(c)(2)
  • Section 38(c)(3)
  • Section 38
If it is, edit the difference on this line. Also, check Form 3800, page 2, line 36 and Form 8844, Line 24 (line 23 for 1999 Forms). If either of these items or the sum of these items equals the difference between the Form 4626 line 14 and Line 4 (line 9 for 1999 Forms) of the Schedule J, edit the difference on this line.
  (4) This field must be positive. If this amount is negative and used as a negative such that the Schedule J, line 4 (line 9 for 1999 Forms) AMT is greater than the line 14 AMT, please call National Office. If this amount is negative and used as a positive such that it reduces AMT (Schedule J, line 4 (line 9 for 1999 Forms) AMT is less than line 14 AMT), please enter the amount as a positive value.
           
Alternative Minimum Tax   Line 14
Editing Instructions:    
  (1) Please consult the taxpayer amount from the proper line on the form.
  (2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
  (3) This field must be positive.
  (4) If IR Code Section 38(c) adjustment is present, edit the reduced AMT onto line 14. This amount will be displayed on the Schedule J. An IR Code Section 38(c) adjustment should NEVER lower alternative minimum tax to zero. Call National Office if a 38(c) adjustment minimizes AMT to zero.
  (5) If you have edited this field and Schedule J is not selected, a system message will read out. If the AMT edited is a result of editor calculations rather than taxpayer entries, please re-edit so the form is as the taxpayer filed.
  (6) If the amount edited on this field does not match the amount on Schedule J and the amount was a result of taxpayer calculations rather than taxpayer entries, please re-edit so the form is as the taxpayer filed.
  (7) Schedule J should never be changed to match the 4626. Call National Office if the two forms conflict.
           
Test   Description
           
E077   Alternative minimum tax does not compute correctly.
           
Correction Procedure:    
  (1) This field should be equal to the greater of (line 12 minus line 13 minus the 38(c) adjustment amount) or 0.
  (2) Check the return to verify the taxpayer's entries and edited amounts for: Tentative Minimum Tax, Income Tax Before Credits Except Foreign Tax Credit And Possessions Tax Credit, 38(c) adjustment and Alternative Minimum Tax.
  (3) Compare Income Tax Before Credits Except Foreign Tax Credit And Possessions Tax Credit against the following equation from the Schedule J: Income Tax minus the sum of Foreign Tax Credit and Possessions Tax Credit (for the Form 1120, this equation would be line 3 - (line 6a + line 6b), and 3 - (line 4a + line 4b) for 1999 Forms). If using the Schedule J computation instead of the amount on line 13 resolves the test, enter the calculated amount in line 13.
  (4) Use the "Difference" amount to help pinpoint possible editing errors.
  (5) Remember that this amount will display as Alternative Minimum Tax on the Schedule J/Tax Computation screen. Check the return's Schedule J/Tax Computation to verify the amount the taxpayer carried forward.
  (6) Compare the Section 38(c) adjustment to Form 3800, page 2, line 36 and Form 8844, Line 24 (line 23 for 1999 Forms). If entering the Form 3800 and/or the Form 8844 amount in the Section 38(c) adjustment line resolves this test, enter the amount there. If there is an amount on the Form 3800, line 36 and/or Form 8844, line 24 (line 23 for 1999 Forms) and it does not resolve this test, please call National Office.

Form 4626, Alternative Minimum Tax
AMT Worksheets
Statement of Consolidated Alternative Minimum Tax

Alternative Minimum Taxable Income Schedule
Reference
Combined
Amounts
Consolidated
Adjustments
Consolidated
Amounts
Taxable income or (loss) before NOI deduction       Line 1
Adjustments and Preferences        
Depreciation of post-1986 property       Line 2a
Amortization of certified pollution control facilities       Line 2b
Amortization of mining exploration and development       Line 2c
Amortization of circulation expenses       Line 2d
Adjusted gain or loss       Line 2e
Long-term contracts       Line 2f
Merchant marine capital construction funds       Line 2g
Section 833(b) deduction       Line 2h
Tax shelter farm activities       Line 2i
Passive activities       Line 2j
Loss limitations       Line 2k
Depletion       Line 2l
Tax-exempt interest from private activity bonds       Line 2m
Intangible drilling costs       Line 2n
Other adjustments       Line 2o
Pre-adjustment AMTI       Line 3
Adjusted Current earnings Adjustment       Line 4e
Combined pre-adjustment AMTI and above amount       Line 5
Alternative tax NOI deduction       Line 6
Alternative Minimum Taxable Income       Line 7/8
Environmental Tax        

Complete the rest of the Form 4626 screen, lines 8a(9a) through 14(15), by using the Form 4626 Field Reference guide and following the line instructions on the guide. If the amount on line 14(15) that you compute does not match line 4 (line 9 for 1999 Forms) of the Schedule J within $1000, please give National Office a call.

Statement of Consolidated Adjusted Current Earnings

Adjusted Current Earnings Schedule
Reference
Combined
Amounts
Consolidated
Adjustments
Consolidated
Amounts
Pre-adjustment AMTI        
ACE Depreciation Adjustment        
Depreciation expense recomputed for AMT purposes        
Post-1993 depreciation        
Post-1989, Pre-1994 property ACE depreciation        
Pre-1990 MACRS property ACE depreciation        
Pre-1990 original ACRS property ACE depreciation        
Sec. 168(f)(1) through (4) property ACE depreciation        
Other property ACE depreciation        
Total ACE Depreciation        
ACE Depreciation Adjustment        
Inclusion in ACE of Items Included in E&P        
Tax-exempt interest income        
Death benefits from life insurance contracts        
All other distributions from life insurance contracts        
Inside buildup of undistributed income in life insur.        
Other items        
Total Inclusion of Items        
Disallowance of Items Not Deductible in Computing E&P        
Certain dividends received        
Dividends paid on preferred stock of public utilities        
Dividends paid to an ESOP        
Non-patronage dividends        
Other items        
Total Disallowance of Items        
Certain Other E&P Adjustments        
Intangible drilling costs        
Circulation expenditures        
Organizational expenditures        
LIFO inventory adjustments        
Installment sales        
Total Other E&P Adjustments        
Disallowance of loss on exchange of debt pools        
Acquisition expenses of life insurance companies        
Depletion        
Basis adjustments        
Adjusted Current Earnings       Line 4a
Subtract pre-adjustment AMTI from ACE       Line 4b
Adjusted Current Earnings Adjustment       Line 4c

Exhibit 1.13.8-27  (01-01-2006)
Form 8609, Schedule A — Annual Statement

Introduction

(1) Form 8609, Schedule A, Annual Statement, supports Form 8586, Low-Income Housing Credit. Multiple Forms 8609 may be attached to Form 8586. Edit only the Form 8609 with the largest amount on Line 18 (Taxpayer's Credit for Tax Years after the Election Year).

(2) This exhibit provides specific instructions for the editing of Form 8609.

Data Item   Line Reference
           
Eligible Basis of Building   Line 1
Editing Instructions:    
  (1) This field must be positive.
  (2) Edit the amount reported by the taxpayer for Line 1.
           
Qualified Basis of Low-Income Building   Line 3
Editing Instructions:    
  (1) This field must be positive.
  (2) Edit the amount reported by the taxpayer for Line 3.
           
Test   Description
           
E090   Qualified Basis should be less than Eligible Basis.
           
Correction Procedure:    
  (1) This test will read out if Qualified Basis (Line 3) is more than the Eligible Basis (Line 1).
  (2) Line 3 should equal Line 1 multiplied by Line 2 on the form.
  (3) If this test cannot be corrected, the Accept Button can be used.
 
           
Taxpayer's Credit for Tax Years After Election Years   Line 18
Editing Instructions:    
  (1) This field must be positive.
  (2) The amount edited should equal Line 16 minus Line 17. If there are amounts on these lines but no amount on line 18, compute the amount and enter in this field.
           
Test   Description
           
V010   Taxpayer's Credit for Tax Years After the Election Year should be no more than 20% of the Qualified Basis of Low-Income Building.
           
Correction Procedure:    
  (1) This test will read out when Taxpayers' Credit for Tax Years After the Elections Year (Line 18) is more than 20% of Qualified Basis of Low-Income Building (Line 3).
  (2) Verify the edited amounts for the Eligible Basis (Line 1), Qualified Basis (Line 3) and the Taxpayer's Credit for Tax Years after the Election Year Line 18.
  (3) If the amount is in question, check what has been entered on Form 8586.
  (4) If this test cannot be corrected, the Accept Button can be used.

Exhibit 1.13.8-28  (01-01-2006)
Form 8586, Low-Income Housing Credit

Introduction

(1) The Low-Income Housing Credit is part of the General Business Credit, you should read the General Business Credit instructions in Exhibit 1.13.8-47.

(2) If the corporation claims only the Low-Income Housing Credit and the credit is not from a passive activity, has no carryforward of any credits, the corporation completes the entire Form 8586. If the corporation claims the Low-Income Housing Credit and any other general business credit, or has a carryforward, or a credit from a passive activity, the corporation completes Part I, Lines 1 through 6 on Form 8586. After completing Part I, the current year Low Income Housing Credit amount (Line 6) is transferred to Form 3800, General Business Credit (Line 1f) and combined with other general business credits to total to the current year general business credit. Part II of Form 3800, general Business Credit is used to figure the tax liability limitation.

(3) Members of controlled groups apportion the allowed Low-Income Housing Credit among themselves. One group member completes Part I, Lines 1–6 to figure the group credit. On separate Forms 8586, that member and every other member skips Lines 1–5 and enters its share of the group credit on Line 6. Each member then completes the rest of the form to figure its own credit. When a corporation indicates they are a member of a controlled group, edit only those amounts attributable to that corporation.

(4) This exhibit provides specific instructions for the editing of Form 8586.

Data Item   Line Reference
           
Number of Forms 8609 Attached   Line 1
Editing Instructions:    
  (1) This field must be positive.
  (2) This field requires double entry key verification.
  (3) Enter the number of Forms 8609 reported on this line, but not more than 9999.
           
Eligible Basis of Building(s)   Line 2
Editing Instructions:    
  (1) This field must be positive.
  (2) Enter the amount reported on Line 2.
           
Qualified Basis of Low-Income Building(s)   Line 3a
Editing Instructions:    
  (1) This field must be positive.
  (2) Enter the amount reported on Line 3a.
           
Test   Description
           
E095   Qualified Basis should be less than Eligible Basis.
           
Correction Procedure:    
  (1) This test will read out if Qualified Basis more than Eligible Basis.
  (2) Verify edited amount for Eligible Basis (Line 2) and Qualified Basis (Line 3a).
  (3) If this test cannot be corrected, the Accept Button may be used.