3.11.16  Corporate Income Tax Returns (Cont. 1)

3.11.16.6 
Tax Period

3.11.16.6.6  (01-01-2014)
Short Period Returns – Editing Form 1128 With No Indication of Approval or Disapproval

  1. When a Form 1128 with no indication of approval or disapproval is attached and no proof of entitlement is present, research IDRS using Command Code BMFOLE for approval or disapproval and proceed as follows:

    If... Then...
    BMFOLE shows a Transaction Code 053 or 054,
    (This is an indication that Form 1128 has been approved.)
    Edit CCC "Y" .
    BMFOLE shows a Transaction Code 059,
    (This is an indication that Form 1128 has not been approved.)
    The return is unprocessable.
    See Short Period Returns – Editing a Disapproved Application (Form 1128), IRM 3.11.16.6.5.
    BMFOLE does not show Transaction Code 053, 054, or 059, Take the actions in (2) below.


  2. A Form 1128 with neither approval or disapproval, discontinue processing Form 1120. Route Form 1120 and Form 1128 to Entity as directed in the paragraphs below.

    1. If Form 1128 is attached to a numbered return, enter Action Code "320" for Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. Edit CCC "U" for all other returns. Attach Form 4227 and check the box for Entity Control box. Edit the Form 1120 received date on Form 1128. (Do not detach Form 1128.) Leave the return in the batch and continue processing. See Figure 3.11.16-6.

    2. If Form 1128 is attached to an unnumbered return, edit the Form 1120 received date on Form 1128, attach Form 4227 and route the return to Entity Control. (Do not detach Form 1128.)

    3. Entity will process the Form 1128 and route the return back to C&E with a Form 4227 attached. The Form 4227 will indicate if the Form 1128 is approved, denied or returned and the words "Process Return" or "Let Unpost" .

    Figure 3.11.16-6

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Example of editing for a short period return when the Form 1128 is attached with no indication of approval or disapproval.

3.11.16.6.7  (01-01-2009)
Short Period Returns – Editing Returning Correspondence

  1. If the taxpayer provides acceptable proof, follow instructions in Short Period – Editing Proof of Entitlement, IRM 3.11.16.6.3.

  2. If the taxpayer fails to reply, or does not provide tax period approval, enter CCC "Y" and "3" .

3.11.16.6.8  (01-01-2014)
Short Period Returns – With Prepaid Credits

  1. Route to Accounting for possible adjustment action any return meeting both conditions below.

    1. A prepaid credit is claimed.

      Form Type Line Numbers
      Form 1120 Page 3, Schedule J, Line 12, 13 or 16* (2010 and prior revisions Page 1 Line 32a, 32b, or 32e)
      Form 1120-C Line 29a, 29b, or 29e
      Form 1120-F Line 5a, 5b, or 5e
      Form 1120-FSC Line 2a, 2b, or 2e
      Form 1120-H Line 23a, 23b, 23d
      Form 1120-L Line 29a, 29b, 29c, or 29g
      Form 1120-ND Line 14a, 14b, or 14e
      Form 1120-PC Line 14a, 14b, 14c, or 14g
      Form 1120-REIT Line 24a, 24b, 24e
      Form 1120-RIC Line 28a, 28b, or 28e
      Form 1120-SF Line 16a, 16b, or 26e

    2. The return is a short period (an initial return, a final return or one with a change of accounting period).

  2. Take the following action when routing these returns to Accounting. See Figure 3.11.16-7.

    1. Enter Action Code "342" on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. Edit CCC "U" on all other returns. Attach Form 4227, check the "Accounting" box and notate "Short period return with ES Credits" .

    2. Continue normal processing.

    3. If the return shows a refund, see Refund Returns – 45 Day Jeopardy / Million Dollar Refunds, IRM 3.11.16.3.

    Figure 3.11.16-7

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Example of how to route the form to accounting when both a prepaid credit is claimed and it is a short period return.

3.11.16.7  (01-01-2014)
♦ Received Date ♦

  1. The date a document is received in the Campus or IRS Office is the date stamped as the "IRS Received Date" .

  2. A received date is required on all Form 1120 series returns.

    If... And... Then...
    The return is received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the legal or the extended due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,
    See Due Date Chart, Exhibit 3.11.16-2.
      The return is considered timely.
    The due date falls on a weekend or legal holiday,   The return is timely if postmarked by the first business day following the weekend or legal holiday.
    The IRS received date stamp ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the legal or extended due date The postmark or shipment date is on or before the legal or extended due date, Edit the received date to agree with the postmark or shipment date.

    Note:

    For certified mail only - If a postmark is not present, look for a "USPS.com Track & Confirm" record that has been attached to the return (should be before the envelope). Use the "Acceptance" date on the record to determine timeliness and follow normal editing procedures. See Exhibit 3.11.16-21.
    If the "USPS.com Track & Confirm" record is not attached, no action is required.


  3. When a Form 1120 or Form 1120-F return is delinquent and the taxpayer explains the return is late due to the rejection of a timely filed electronic return, edit as follows:

    Note:

    Taxpayers are instructed to notate in red in the top margin of the return "REJECTED ELECTRONIC RETURN" to indicate the timely filed return cannot be filed electronically. Taxpayers should also attach a copy of the rejection notification to the return.

    If... And... Then...
    The postmark date is less than 11 calendar days of the notification from the service that the electronic return has been rejected or cannot be accepted for processing A copy of the rejection notification is attached, Edit CCC "R" .
    A copy of the rejection notification is not attached, No action is required.
    The postmark date is more than 10 calendar days of notification from the service that the electronic return has been rejected or cannot be accepted for processing,   No action is required.


  4. The received date may or may not be stamped on the face of the return.

  5. A valid received date Stamp consists of the following:

    • The word "Received"

    • Month (alpha or numeric)

    • Day (for example "1" or "01" )

    • Year - four digits

    • "Area Office" , Campus, "Field Office" , "Taxpayer Assistance Center (TAC)" plus the City location or functional area within one of these sites (e.g., CSCO, Exam, ICT, CIS, AM, etc.)

    Exception:

    Not all IRS offices are designated places for filing, and not all IRS employees are authorized to accept a tax return for processing. If a return contains a received date stamp from an office that is not a proper place for filing, that date stamp is not the "IRS Received Date" , and you must circle out the invalid received date and edit the correct received date according to instructions below. For example, returns received by the Taxpayer Advocate Service (TAS) or the IRS Office of Chief Counsel are not properly filed and a received date by that office is not the "IRS Received Date" .

  6. If the received date stamp is not present or the date is illegible or invalid, edit the received date in "MMDDYY" format in the middle of Page 1 of the tax return. Edit the received date according to the following priority:

    1. The earliest legible Postmark Date (U.S. Postal Service, Foreign Postmark, or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service Postmark (USPS) or Foreign Postmark date are as follows:

      If... Then...
      An envelope is not attached to the tax return, Use the postmark date stamped on the face of the return.
      The postmark is missing and the envelope is certified, Look for the "USPS.com Track & Confirm" record that has been attached to the return (should be before the envelope). Use the "Acceptance" date on the record to determine timeliness and follow normal editing procedures. See Exhibit 3.11.16-21.
      If the "USPS.com Track & Confirm" record is not attached, no action is required.
      An envelope has a USPS and private metered postmarks, Always use the USPS postmark.
      An envelope has a foreign and private metered postmarks, Always use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private metered postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.

      Note:

      A private metered postmark is to be considered timely if received within ≡ ≡ ≡ ≡ ≡ ≡ the legal due date.

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's Signature date.

    4. Signature date. (Only if within current year.)

    5. Julian control date minus 10 days.

    6. Current date minus 10 days.


  7. Edit the received date as follows.

    1. If... And... Then...
      A timely received date is the only received date stamped on the return,   No editing is required.
      Two or more dates are stamped on the return,  
      1. Use the earliest IRS received date stamp.

      2. Circle all other dates (handwritten or stamped) not needed for transcription.

        Note:

        Received dates that have been circled out by another function should be treated as if they are not present.

      A Federal return is addressed to the IRS Delivered to a State agency, Use the Postmark Date as the received date.
      A Federal return is addressed to a State agency,   Use the IRS date stamp as the received date.
      The only received date on the return is a Taxpayer Advocate Service (TAS) received date,   Edit the received date according to (6) instructions above.

      Reminder:

      If an envelope is attached to the return, check the envelope for a remittance. If found, hand carry the remittance to the manager.


3.11.16.8  (01-01-2009)
Special Processing Codes

  1. This section addresses special processing codes.

3.11.16.8.1  (01-01-2009)
♦ Computer Condition Codes ♦

  1. Computer Condition Codes (CCC) are used to identify a special condition or computation for the computer. Computer Condition Codes post to the Master File.

  2. Computer Condition Codes are edited in the center of Lines 1 and 2 of the tax return.

3.11.16.8.1.1  (01-01-2009)
CCC "A" –
Form 2220

  1. No editing is required.

3.11.16.8.1.2  (01-01-2014)
♦ CCC "B" – Schedule M-3 ♦

  1. Edit CCC "B" when the corporation checks the Schedule M-3 box on:

    1. Form 1120, Page 1, Box A, 4.

    2. Form 1120-C, Page 1, Box A, 2.

    3. Form 1120-F, Page 1, Schedule M-3 Box

    4. Form 1120-L, Page 1, Box A, 3.

    5. Form 1120-PC, Page 1, Box A, 3.

  2. Edit CCC "B" if Schedule M-3 is attached to Form 1120, 1120-C, 1120-L, Form 1120-F or 1120-PC.

    Note:

    For Form 1120, edit Audit Code "8" if Schedule M-3 is attached and it has an entry of greater than $1 on any line. See Audit Codes, IRM 3.11.16.9.1.

3.11.16.8.1.3  (01-01-2014)
CCC "C" –
Invalid Form 8834, 8910, or 8936

  1. CCC "C" is an invalid code which will force the return to error correction.

  2. Edit CCC "C" if Form 8834, 8910, or 8936 include an invalid vehicle year or an invalid in service date. For invalid vehicle year and invalid in service date see IRM 3.11.16.10.13.11, Qualified Plug-In Electric Vehicle Credit - Form 8834, IRM 3.11.16.10.13.29, Alternative Motor Vehicle Credit - Form 8910 and IRM 3.11.16.10.13.35, Qualified Plug-In Electric Drive Vehicle Credit - Form 8936 .

3.11.16.8.1.4  (01-01-2014)
♦ CCC "D" –
Reasonable
Cause for
Failing to
Pay Timely ♦

  1. Do not edit CCC "D" if the taxpayer requests abatement for "Failing to Pay Timely" when the return is submitted. Send Letter 1382C to inform the taxpayer of the proper procedure to follow to request penalty abatement, if, and when a penalty is assessed.

  2. Edit CCC "D" when the return is stamped: "DO NOT ASSESS FAILURE TO PAY PENALTY" .

  3. Edit CCC "D" on a "Final" , Balance Due return if the received date is after the short period due date but on or before the regular full tax period due date≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  4. CCC "D" should be edited when a return has the special due date for "Co-Op" 1120 returns. See CCC "R" – Reasonable Cause for Failing to Timely File Return, IRM 3.11.16.8.1.14.

  5. Edit CCC "D" if a corporation attaches a statement indicating the corporation qualifies for an automatic 3 month extension under IRC 1.6081-5 or indicates one of the following:

    • The foreign corporation maintains an office or place of business in the United States.

    • The domestic corporation transacts its business and keeps its books and records of account outside the United States and Puerto Rico, or

    • The domestic corporation's principal income is from sources within the possessions of the United States.

    Exception:

    Do not edit CCC "D" if the balance due is paid after the 15th day of the 6th month following the tax period ending date.

  6. Do not edit CCC "D" when pre-computed penalty is shown on the return.

3.11.16.8.1.5  (01-01-2014)
♦ CCC "F" – Final Return ♦

  1. Edit CCC "F" when the "Final Return" box is checked or there is another indication the corporation is not liable for filing future returns. Notations may include (but are not limited to):

    • Final

    • Deceased

    • Out-of Business

    • Liquidation

    • Exempt under IRC 501(c)(3)

    • Dissolved

      Note:

      The presence of Form 966 is an indication of a possible dissolution. If Form 966 is attached, compare tax periods in Box 7A to the Form 1120 being edited. If the same and the Entity Section of Form 966 is for the parent corporation, edit CCC "F" .

    • Cites IRC 708(b)(1)(B)

    • Notates "Filed in accordance with Rev. Proc. 2003-84"

  2. If a prepaid credit* is claimed on a short period "Final" return, enter Action Code "342" or CCC "U" on the return. See Short Period Returns – With Prepaid Credits, IRM 3.11.16.6.8.
    *(Form 1120, Page 3, Schedule J, Line 12, 13 or 16 (2010 and prior revision Form 1120, Page 1, Line 32a, 32b, or 32e) or applicable line on other Form 1120 series.)

3.11.16.8.1.6  (01-01-2009)
♦ CCC "G" –
Amended Return ♦

  1. See Amended Returns, IRM 3.11.16.2.9.

3.11.16.8.1.7  (01-01-2010)
CCC "I" –
Form 6781,
Tax Straddles
and Future
Contracts

  1. CCC "I" is valid for Form 1120, Form 1120-C, Form 1120-F, Form 1120-L, and Form 1120-PC.

  2. Edit CCC "I" when Form 6781 is present.

    Note:

    CCC "I" should be edited as a capital in block style to distinguish if from CCC "1" .

3.11.16.8.1.8  (01-01-2012)
CCC "K" –
Form 8697

  1. Edit CCC "K" when Form 8697 is attached and shows a balance due in Part I, Line 10 and/or Part II, Line 11. The tax will be claimed on Form 1120, Schedule J, Line 9c*. If Form 8697 is missing, correspond for the missing form.
    *(Form 1120, Schedule J, Line 9 for 2006 - 2010 and Form 1120, Schedule J, Line 10 for 2005–2001.)

3.11.16.8.1.9  (01-01-2014)
CCC "L" –
Treaty Based
Positions

  1. Edit CCC "L" when Form 8833, Treaty-Based Return Position Disclosure Under IRC 6114 or 7701(b) is attached.

    Note:

    Edit Audit Code "2" if Form 8833 is attached to Form 1120, Form 1120-PC, Form 1120-REIT, or Form 1120-RIC. See Audit Codes, IRM 3.11.16.9.1.

3.11.16.8.1.10  (01-01-2014)
CCC "N" –
Joint
Committee
Case

  1. Edit CCC "N" , Joint Committee Case, when an unusual credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is claimed on Form 1120, Page 3, Schedule J, Lines 12 through 19* (*2010 and prior Form 1120, Page 1, Lines 32a through 32g) or equivalent lines on Form 1120-L, Form 1120-PC, Form 1120-FSC and Form 1120-SF.

  2. Unusual credits are defined as follows:

    • Form 1120-PC, Line 14h states: By reciprocal for tax paid by Attorney in Fact under Section 835(d).

    • A credit claimed under IRC 1341 or a "Claim of Right" for refund of excessive prior year taxes.

    • Credits claimed by minority shareholder corporations under IRC 337(d).

    • Credits claimed under IRC 1383 in a subsequent year for a refund of excessive prior year taxes.

    • Randomly entered credits in Line 32 area notated as "Claim of Right" , "Reg 1.1341" , or "Reg 1.337" .

  3. Usual credits are defined as follows:

    • A refundable credit normally found on Form 1120, Page 3, Schedule J, Lines 12 through 19* (*2010 and prior Form 1120, Page 1, Lines 32a through 32g).

    • Form 7004 payment.

    • Estimated tax payments.

    • Credit from Regulated Investment Company.

    • Fuel Tax Credit present on Schedule J, Line 19b (Line 32f(2) for 2005 through 2010 and Line 32g for 2004 and prior).

    • A refundable credit claimed with or without Form 8288 or 8288-A attached.

      Note:

      Form 8288-A credit must be verified by OSPC Foreign Team.

3.11.16.8.1.11  (01-01-2012)
CCC "O" –
Module
Freeze

  1. CCC "O" is entered when a Pre-Settlement Manual Refund will be made and a Form 3753, Form 5792, or Form 12857 is attached. Verify that the name control, EIN, and tax period on the return are the same as the data on the form.

    1. Research to determine if "TC 840" (Manual Refund Transaction) has posted:

      If... Then...
      "TC 840" has posted, Edit CCC "O" and continue processing.
      "TC 840" has not posted,
      1. Enter Action Code "341" for Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, or Form 1120-RIC to issue Manual Refund.

      2. All other returns edit CCC "U" and attach Form 4227. Check the "Accounting" box on Form 4227.


  2. Edit CCC "O" if there is an entry on:

    1. Form 1120, Schedule J, Part II, Line 14 (Page 1, Line 32c for 2010 and prior revisions).

    2. Form 1120-C, Line 29c.

    3. Form 1120-F, Line 5c.

    4. Form 1120-FSC, Line 2c.

    5. Form 1120-L, Line 29e.

    6. Form 1120-ND, Line 14c.

    7. Form 1120-PC, Line 14e (Line 16e for 1999–1998).

    8. Form 1120-REIT, Line 24c.

    9. Form 1120-RIC, Line 28c.

    10. Form 1120-SF, Line 16c.

3.11.16.8.1.12  (09-29-2010)
CCC "P"

  1. No editing required.

3.11.16.8.1.13  (03-08-2010)
♦ CCC "Q" ♦

  1. No editing required.

3.11.16.8.1.14  (01-01-2014)
♦ CCC "R" –
Reasonable
Cause for
Failing to File a
Timely Return ♦

  1. CCC "R" is no longer edited when a reason is given for the delay in filing a return. Issue Letter 1382C and continue editing the return.

  2. Special Rules for Form 1120 Cooperatives: Certain non-farm Cooperative ("Co-Op" ) returns are filed on Form 1120 instead of the usual Cooperative Form 1120-C or 990-C. These filers are entitled to a return due date of 8 1/2 months following the end of the tax year. Both CCC "R" and CCC "D" should be edited to returns identified as 1120 Cooperatives. Indication of this status is made by the taxpayer and may include the word "Cooperative" in the name, along with notations such as:

    • IRC 6072 (d) (2),

    • References to "Subchapter T" of the Internal Revenue Code ("IRC" ),

    • IRC 1381-1388 referenced,

    • IRS Regulations Section 6102-2(a) referenced.

      Note:

      If the word "Cooperative" is the only indicator, do not edit CCC "R" . It should be used in addition to one or more of the other indicators named above.

  3. Edit CCC "R" if a corporation attaches a statement indicating the corporation qualifies for an automatic 3-month extension under IRS Regulations Section 1.6081-5 or indicates one of the following:

    • The foreign corporation maintains an office or place of business in the United States.

    • The domestic corporation transacts its business and keeps its books and records of account outside the United States and Puerto Rico, or

    • The domestic corporation's principal income is from sources within the possessions of the United States.

    Exception:

    Do not edit CCC "R" if the return is filed after the 15th day of the 6th month following the tax period ending date.

  4. Edit CCC "R" on a "Final" return if the received date is after the short period due date but on or before the regular full tax period due date≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  5. Edit CCC "R" if there is an indication such as "DO NOT ASSESS FAILURE TO FILE PENALTY" on a secured return noted with "599" .

  6. Edit CCC "R" if the taxpayer indicates their return is delinquent due to the rejection of a timely filed electronic return, a copy of the rejection notification is attached, and the postmark is less than 11 calendar days from the rejection notification. See IRM 3.11.16.7

3.11.16.8.1.15  (01-01-2014)
CCC "S" - Form 8883, Asset Allocation Statement

  1. Edit CCC "S" when Form 8883 is attached to Form 1120, Form 1120-C, Form 1120-F, Form 1120-FSC, Form 1120-L, Form 1120-PC, Form 1120-REIT, or Form 1120-RIC.

    Reminder:

    Audit Code 3 will also apply when a Form 8883 is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . See IRM 3.11.16.9.1

3.11.16.8.1.16  (01-01-2013)
CCC "T" –
Form 8886, Reportable Transaction Disclosure Statement

  1. Edit CCC "T" when Form 8886 is attached to Form 1120, Form 1120-C, Form 1120-F, Form 1120-FSC, Form 1120-H, Form 1120-L, Form 1120-ND, Form 1120-PC, Form 1120-REIT, Form 1120-RIC, or Form 1120-SF.

3.11.16.8.1.17  (01-01-2014)
CCC "U" –
Unprocessable
Document

  1. Edit CCC "U" on any Form 1120-FSC, Form 1120-ND, or Form 1120-SF that has an unprocessable condition.

    Note:

    Action Codes are used for unprocessable conditions on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

3.11.16.8.1.18  (01-01-2012)
CCC "V" –
Qualifying Therapeutic Discovery Project Credit

  1. CCC "V" is valid for Form 1120 and Form 1120-F for tax year 2010 (including 2010 fiscal year filers ending in 2011).

  2. Edit CCC "V" if Form 3800, Line 1a has a significant entry and Form 3468, Line 8* contains an entry.
    *(Only applicable for 2010 tax years (including 2010 fiscal year filers ending in 2011.))

3.11.16.8.1.19  (01-01-2009)
♦ CCC "W" –
Return Cleared by
Statutes ♦

  1. CCC "W" is used when the return has been cleared by Statute control. See Statute Returns, IRM 3.11.16.2.7.

3.11.16.8.1.20  (01-01-2010)
CCC "X" –
Refund/Settlement
Freeze

  1. Edit CCC "X" when the taxpayer indicates on the tax return a request that any balance left over after paying tax and/or penalties to be applied to another account. Take the following action to route the request to Accounts Management.

    1. Prepare Form 3465 and indicate in the "Routing" box "Adjustments" .

    2. Notate the requested action in the "Remarks" box.

    3. Attach a photocopy of Page 1 of the tax return to Form 3465.

    Reminder:

    Subtract the tax, penalties and interest amounts from the remittance amount if available.

3.11.16.8.1.21  (01-01-2012)
CCC "Y" –
Short Period
Return for
Change of
Accounting
Period

  1. CCC "Y" is edited for Change of Accounting Period. Enter only for short period returns due to change of accounting period (not due to initial or final filing). See Short Period – Editing Proof of Entitlement, IRM 3.11.16.6.3 through IRM 3.11.16.6.8 .

  2. If a prepaid credit* is claimed on a short period return, enter Action Code "342" or CCC "U" on the return. See Short Period Returns – With Prepaid Credits, IRM 3.11.16.6.8.
    *(Form 1120, Page 3, Schedule J, Line 12, 13 or 16 (2010 and prior revision Form 1120, Page 1, Line 32a, 32b, or 32e) or applicable line on other Form 1120 series.)

3.11.16.8.1.22  (01-01-2011)
CCC "Z" –
Schedule UTP (Form 1120)

  1. Schedule UTP (Form 1120), Uncertain Tax Position Statement, is a high priority form.

  2. Edit CCC "Z" if Schedule UTP is attached to a Form 1120, Form 1120-F, Form 1120-L, or Form 1120-PC.

3.11.16.8.1.23  (01-01-2010)
CCC "1" –
Like-Kind
Exchange

  1. Edit CCC "1" if Form 8824 is attached.

3.11.16.8.1.24  (01-01-2014)
Reserved

  1. Reserved

3.11.16.8.1.25  (01-01-2010)
♦ CCC "3" –
"No Reply" to
Correspondence ♦

  1. Edit CCC "3" when the tax return is unprocessable.

3.11.16.8.1.26  (01-01-2014)
♦ CCC "4" –
IRC 6020(b)
Return ♦

  1. CCC "4" is not valid for Form 1120 series at this time.

3.11.16.8.1.27  (01-01-2014)
CCC "5" –
Bank Holding
Company
Tax Act

  1. Edit CCC "5" when there is a statement electing to make installment payments for a portion of the total tax attributable to the Bank Holding Company Tax Act. See Figure 3.11.16-8.

    Figure 3.11.16-8
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Example of CCC 5 edited to the return because of the note on page 3 indicating installment payments to the Bank Holding Company.

3.11.16.8.1.28  (01-01-2014)
CCC "8" –
Waiver of
Estimated
Tax Penalty

  1. Edit CCC "8" when any of the following is present:

    1. Form 2220 is attached and Part II, Box 6 or Box 7 is checked. See Figure 3.11.16-9.

    2. Form 2220 is attached and any column on Form 2220, Schedule A, page 4, Line 38* has entries.
      *(Line 40 for 2006 and prior.)

    3. Form 1120, 1120-L, or 1120-PC indicates a "Section 847 Deduction" . Form 8816, also, indicates a "Section 847 Deduction" . See IRC 847 Deduction, IRM 3.11.16.2.10.

    4. Form 1120 includes a notation stating "Form 8816" with a corresponding entry for the amount of the deduction in the margin near Line 32b, Form 1120.

    5. Form 1120-L includes an entry on Line 29b and/or 29d.

    6. Form 1120-PC includes an entry on Line 14b and/or 14d.

    7. When the taxpayer's 1999 Form 2220 for Form 1120-REIT states across the top margin "Penalty Relief Under Notice 2000-5" .

    Figure 3.11.16-9
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Example of a CCC 8 edited because the Form 2220 is attached with Line 7 checked.

3.11.16.8.1.29  (01-01-2012)
CCC "9" –
Low-Income
Housing Form

  1. Edit CCC "9" when any of the following conditions exist:

    1. Schedule J, Line 9b* has a significant entry,
      *(Line 9 for 2006 - 2010, Line 10 for 2005–2000, Line 8 for 1999–1995.)

    2. Form 8611 or Form 8693 is attached,

    3. Taxpayer notates "Form 8693" ,

    4. Form 8609 is attached (years 200412 and prior),

    5. Form 8609-A* is attached. *(Form 8609, Schedule A for 2003 and prior.)

    6. Form 8586 with entries on Line 1 or 3 (Lines 1–4 for 2004 and prior).

3.11.16.8.2  (01-01-2013)
ABLM Code and Schedule M-3 Checkbox

  1. ABLM is not an acronym. The letters are a carry over from when Form 1120 was generic. The ABLM Code identifies a specific type of tax return. The ABLM letters are defined as follows:

    • A - Consolidated Tax Return

    • B - Personal Service Corporation

    • L - Life Insurance Tax Return

    • M - Mutual Fund Tax Return

  2. ABLM Codes are valid for Form 1120, Form 1120-REIT, and Form 1120-RIC.

  3. Edit an ABLM code in the margin by boxes A - 1, A - 2, and A - 3 to the left of the name line as instructed in paragraphs (4) through (7) below.

  4. There is no need to edit the ABLM Code on Form 1120-C, Form 1120-L or Form 1120-PC because it is computer-generated.

    Note:

    For Form 1120-REIT, and Form 1120-RIC, if no code applies, leave the area blank.

  5. If ABLM Code "010" is entered on Form 1120, the return must be batched as a "Consolidated Return" . If not reject for proper batching. Enter Action Code "610" if the return is numbered.

  6. Only one ABLM Code should be entered; edit in the following priority:

    • 400 - Box A - 3

    • 010 - Box A - 1a or A - 1b (Box A -1 for 2006 and prior)

    • 001 - Box A - 2

    Note:

    If ABLM Code "400" is edited on a Consolidated Return, Form 851 processing procedures must also be followed. See Form 851 – Affiliations Schedule, IRM 3.11.16.21.3.

  7. Code "010" when any of the following apply (Form 1120 only):

    1. Box A - 1a or Box A - 1b (Box A -1 for 2006 and prior) is checked. See Figure 3.11.16-10a.

    2. Subsidiaries are listed on Form 851 or Form 1122 is attached.

    3. Subsidiaries are listed on Form 7004 (2003 and prior revisions).

  8. Code "001" when any of the following apply:

    1. Box A - 2, Page 1, Form 1120 is checked. See Figure 3.11.16-10b.

    2. Box B - 2, Page 1, Form 1120-REIT is checked.

    3. Box F, Page 1, Form 1120-RIC is checked.

    4. Schedule PH (Form 1120) is attached to Form 1120, 1120-REIT, or 1120-RIC.

    5. Form 1120, Page 3, Schedule J, Line 8* contains an entry.
      *(Line 9 for 2005–2000, Line 7 for 1999 an prior.)

    6. Form 1120-REIT, Page 3, Schedule J, Line 5* contains an entry.
      *(Line 6 for 2005 and prior.)

    7. Form 1120-RIC, Page 2, Schedule J, Line 5* contains an entry.
      *(Line 6 for 2005 and prior.)

    Note:

    If Form 1120, Schedule J, Line 8* has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , edit MSC "30" or correspond for Schedule PH if not attached. See Schedule J, Line 8 – Personal Holding Company Tax, IRM 3.11.16.10.15.
    *(Form 1120-REIT or Form 1120-RIC, Schedule J, Line 5.)

  9. Code "400" when any of the following apply:

    1. Box A - 3, Page 1, Form 1120 is checked.

    2. The box on Form 1120, Page 3, Schedule J, Line 2* is checked.
      *(Line 3 for 2005 and prior.)

    3. Box A, Page 1, Form 1120-A is checked.

    4. The box on Form 1120-A, Page 2, Part I is checked.

    Note:

    Also edit Personal Service Corporation Code "2" if the box on Form 1120, Page 3, Schedule J, Line 2* is checked.
    *(Line 3 for 2005 and prior.)

3.11.16.8.2.1  (01-01-2014)
Schedule M-3 Checkbox

  1. Edit Computer Condition Code "B" when the Box for Schedule M-3 is marked. See Figure 3.11.16-10c.

    1. Form 1120, Page 1, Box A, 4.

    2. Form 1120-C, Page 1, Box A, 2.

    3. Form 1120-F, Page 1, Schedule M-3 Box

    4. Form 1120-L, Page 1, Box A, 3.

    5. Form 1120-PC, Page 1, Box A, 3 (Box A, 2 for 2006).

  2. Edit Computer Condition Code "B" when Schedule M-3 is attached to Form 1120, Form 1120-C, Form 1120-F, Form 1120-L, or Form 1120-PC.

    Note:

    Audit Code "2" , "7" and "8" may also be required for Form 1120. Audit Code "2" may be required for Form 1120-PC. See Audit Codes, IRM 3.11.16.9.1.

    Figure 3.11.16-10
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Examples of editing the ABLM codes 010, 001 and 400.

3.11.16.8.3  (01-01-2014)
♦ Initial Return Code ♦

  1. Initial Return Code is valid for Form 1120, Form 1120-REIT, and Form 1120-RIC.

  2. Edit an Initial Return Code "2" in the margin to the right of the Date Incorporated if any of the following conditions are met:

    1. The "Initial return" box under the entity area is checked.

    2. Page 1, Box B (1120-RIC), Box C (1120), Box D (1120-REIT) has a date incorporated which is within 12 months from the tax period ending date. See Figure 3.11.16-11 a.

    3. There is a taxpayer notation of initial filing, such as, "First Return" , "New Corporation" , etc.

    4. The incorporation date is within 24 months from the tax period ending date (or is not shown) and the taxpayer's Balance Sheet, "Beginning of tax year" is blank or zeroes. See Figure 3.11.16-11 b.

      Note:

      Do not edit Initial Return Code "2" if the balance sheet is missing or the balance sheet has been dummied.

    Figure 3.11.16-11
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Example of editing an initial Return Code of 2.

3.11.16.9  (01-01-2014)
Additional Return Perfection

  1. Elements will be edited in the left margin near Line 12 (Line 2 for Form 1120-F, Form 1120-FSC and Line 5 for Form 1120-ND) preceded by the applicable number as follows:

    Element... Edit...
    1 - Form 8844 Indicator "1 - 1" .
    See Form 8844 – Empowerment Zone and Renewal Community Employment Credit IRM 3.11.16.10.13.13.
    2 - Audit Code "2 -" followed by the appropriate Audit Code (e.g., "2 – 1" ).
    See Audit Codes, IRM 3.11.16.9.1.
    3 - Missing Schedule Code "3 -" followed by the appropriate MSC (e.g., "3 - 32" ).
    See Missing Schedule Code, IRM 3.11.16.9.2.
    4 - Penalty and Interest Code "4 - 1" .
    See Penalty and Interest Code, IRM 3.11.16.9.3.
    5 - Reserve Code "5 - 4" .
    See Reserve Code, IRM 3.11.16.9.4.
    6 - Installment Sales Indicator "6 -" followed by the appropriate Installment Sale Indicator (e.g., "6 - 3" ).
    See Installment Sale Indicator, IRM 3.11.16.9.5.
    7 - Form 1120-F Indicator "7 - 1" if Form 1120-F contains both Non-Effectively (Section I) and Effectively (Section II) Connected Income.

    Note:

    Check for proper blocking of returns and re-block as required. See Form 1120-F Indicator, IRM 3.11.16.26.12.7.

3.11.16.9.1  (01-01-2014)
Audit Codes

  1. Up to 9 Audit Codes can be used. Do not use an Audit Code more than once.

    Note:

    Audit Codes do not need to be edited in a specific order.

  2. Edit a "2 -" followed by the appropriate Audit Code(s) in the left margin near Line 12* (e.g., "2 - 1" ).
    *(Line 2 for Form 1120- F, Form 1120-FSC and Line 5 for Form 1120-ND)

  3. Audit Code "1" - Disclosure Statement or Inconsistent Treatment. Edit Audit Code "1" if any of the following conditions are present:

    1. Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request is attached.

    2. Form 8275, Disclosure Statement, or Form 8275-R, Regulated Disclosure Statement, is attached, or a statement referring specifically to IRC 6662 (Disclosure).

    3. Form 8886, Reportable Transaction Disclosure Statement, is attached.

  4. Audit Code "2" - International. Edit Audit Code "2" when any of the following conditions are present:

    1. An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ appears on Page 2, Schedule C, for any of the following Lines: 3, 6, 7, 8, 12, 13, 14, 15, and/or 16. (Form 1120-PC, Page 4, Schedule C, Lines 3, 6, 7, 8, 10, 11, and 12).

    2. Form 926, Return by a U.S. Transferrer of Property to a Foreign Corporation is attached.

    3. Form 1116, Foreign Tax Credit (Individual, Fiduciary or Nonresident Alien Individual) is attached and reflects ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ foreign tax credit (Part IV, Line 29).

    4. Form 1118, Foreign Tax Credit - Corporations is attached and reflects ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ foreign tax credit on Form 1120, Schedule J, Line 5a (or applicable line on Form 1120-PC, Form 1120-REIT, or Form 1120-RIC).

    5. Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More is attached and any of the following are present:
      – Any entry on Part II, Column (c), Lines 2 through 5 or 10 is a negative amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or
      – Any entry on Part III, Column (c), Lines 5 through 7 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or
      – The sum of Part III, Columns (b) plus (c) of any of Lines 9 or 23 – 25 (Lines 8, 23, 24 or 25 for Form 1120-PC) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    6. Schedule N (Form 1120), Foreign Operations of U.S. Corporations is attached and any box other than Question 6a (foreign bank account) is checked "Yes" .

    7. Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts is attached.

    8. Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner (under IRC 6048(b)) is attached.

    9. Form 5471, Information Return of U.S. Persons with Respect to a Foreign Corporation is attached, or Schedule N (Form 1120), Foreign Operations of a U.S. Corporations, Line 4a is marked "Yes" .

    10. Form 5472, Information Return of a Foreign Owned Corporation is attached.

    11. Form 5713, International Boycott Report is attached and both questions in 7(f) are answered "Yes" .

    12. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualifying Electing Fund is attached and any line in Part V, Lines 15a though 16f* has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . *(Part IV, Lines 10a - 11f for 2011 and prior)

    13. Form 8832, Entity Classification Election is attached and either Box* 6(d), (e), or (f) is checked. *(Box 2(d), (e) or (f) for January 2006 and prior revisions.)

    14. Form 8833, Treaty-Based Return Position Disclosure Under IRC 6114 or 7701(b) is attached.

    15. Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities is attached or Schedule N (Form 1120), Foreign Operations of U.S. Corporations, Question 1a is marked "Yes" .

    16. Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships is attached.

    17. Form 8902, Alternative Tax on Qualifying Shipping Activities is attached.

  5. Audit Code "3" - Non-Cash Charitable Contributions and Asset Transfers. Edit Audit Code "3" when any of the following conditions are present:

    1. Form 8283, Noncash Charitable Contributions, is attached and Page 2, Part I, Question 4, Art (Contribution of $20,000 or more), is checked.

    2. Form 8283, Noncash Charitable Contributions, is attached and Page 2, Part I, Question 5, Column (c) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    3. Form 8883, Asset Allocation statement under section 338, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    4. Form 8594, Asset Acquisition Statement, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

      Note:

      It is not necessary to compute the total if more than one Form 8594 is present. If any ONE of the Form 8594 has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , edit Audit Code "3" .

  6. Audit Code "4" - Invalid S Election. Edit Audit Code "4" when a Form 1120S without a valid election is processed as Form 1120.

    Caution:

    If you receive a Form 1120 converted from Form 1120S and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.16.2.8.1, Form 3893 - Re-Entry Documents Control for additional information.

  7. Audit Code"6" - Form 3115 (Form 1120 only). Edit Audit Code "6" when Form 3115, Application for Change in Accounting Method is attached.

  8. Audit Code"7" - International (Form 1120 only). Edit Audit Code "7" when any of the following conditions are present:

    1. An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Form 1120, Page 2, Schedule C for any of the following lines: 3, 6, 7, 8, 12, 13, 14, 15, or 16.

    2. Form 1116, Foreign Tax Credit (Individual, Fiduciary or Nonresident Alien Individual) is attached and reflects ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ foreign tax credit on Part IV, Line 33.

    3. Form 1118, Foreign Tax Credit - Corporations is attached and reflects ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ foreign tax credit on Form 1120, Schedule J, Line 5a.

    4. Form 1120, Schedule M-3, Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More is attached and any of the following apply:
      – Any entry on Part II, Column (c), Lines 2 through 5 or Line 10 is a negative amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or
      – Any entry on Part III, Column (c), Lines 5 through 7 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or
      – The sum of Part III, Columns (b) plus (c) of any of Lines 9, 23, 24, or 25 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    5. Form 5713, International Boycott Report is attached and both questions in 7(f) are not answered "Yes" .

    6. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualifying Electing Fund, is attached and Part V, Lines 15a through 16f has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ *(Part IV, Lines 10a - 11f for 2011 and prior.).

  9. Audit Code"8" - Schedule M-3 (Form 1120 only). Edit Audit Code "8" when Schedule M-3 is attached and it has an entry of greater than $1 on any line.

3.11.16.9.2  (01-01-2014)
Missing Schedule Code (MSC)

  1. Conditions for Missing Schedule Codes (MSCs) are described within this section.

  2. Edit a MSC if the entry requiring support is:

    1. Any significant entry on the Schedule D line for the Form 1120 series.

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. Only one MSC is valid per return.

    If... Then...
    More than one MSC applies or there is a need to correspond for other types of information (other than for MSCs), Correspond with the taxpayer.
    Indicate all missing or incomplete information, forms and schedules required.


  4. Edit a "3 -" followed by the appropriate MSC in the left margin near Line 12* *(Line 2 for Form 1120- F, Form 1120-FSC and Line 5 for Form 1120-ND) (e.g., "3 - 29" ).

  5. Code "29" if Form 1120, Schedule J, Line 5a* contains an entry but Form 1118 or similar schedule is not attached.
    *(Line 6a for 2005-2000, Line 4a for 1999-1995.)

  6. Code "30" if Schedule PH (Form 1120) is not attached but Schedule J, Line 8* contains an entry.
    *(Line 9 for 2005-2000, Line 7 for 1999-1995.)

  7. Code "31" if Form 3800, Part III, Line 1a* or 4a* or Form 1120, Schedule J, Line 5c** contains an entry for Form 3468, Investment Credit, but Form 3468 is not attached. *(Part I, Line 1a, Line 29a for 2010 – 2008.) **(Line 6d for 2005 to 2000.)

  8. Code "32" if Form 1120, Page 1, Line 8 contains any significant entry but Schedule D or similar schedule is not attached.

  9. Code "33" if Form 1120, Schedule J, Line 9a* contains an entry, but Form 4255 or similar schedule is not attached.
    *(Line 9 with the box for Form 4255 is checked for periods 2010-2006, Line 10 for periods 2005–2000, Line 8 for periods 1999–1995.)

  10. Code "34" if Form 1120, Schedule J, Line 3* contains a significant entry and Form 4626 is not attached.
    *(Line 4 for 2005–2000, Line 9 for 1999–1996.)

  11. Code "35" if Form 1120, Page 1, Line 9 contains an entry but Form 4797 or similar schedule is not attached.

  12. Code "37" if Form 1120, Schedule J, Line 5b* contains an entry and Form 5735, American Samoa Economic Development Credit, is indicated, but Form 5735 is not attached.
    *(Line 5b write-in for 2008 and subsequent years, Line 5b write-in for 2006, Line 6b for 2005–2000, Line 4b for 1999–1995.)

  13. Code "38" if Form 3800, Line 4b* contains an entry for Form 5884, Work Opportunity Credit, but Form 5884 is not attached.
    *(Form 3800, Line 29b for 2010-2007, Line 1b for 2006 and prior.)

  14. Code "39" if Form 3800, Line 4c* has an entry or Form 1120, Schedule J, Line 5c** contains an entry and Form 6478, Biofuel Producer Credit (Alcohol and Cellulosic Biofuel Fuels Credit for 2007 - 2012), is indicated, but Form 6478 is not attached.
    *(Form 3800, Line 29c for 2010-2008, Line 1o for 2007.) **(Line 6d for 2005–2000, Line 4d for 1999–1995.)

  15. Code "40" if Form 3800, Line 1c* contains an entry for Form 6765, Credit for Increasing Research Activities, but Form 6765 is not attached.
    *(Form 3800, Line 1d for 2006-2005, Line 1e for 2004 and prior.)

  16. Code "42" if Form 3800, Line 1h* contains an entry for Form 8820, Credit for Orphan Drug, but Form 8820 is not attached.
    *(Form 3800, Line 1k for 2006-2005, Line 1l for 2004 and prior.)

  17. Code "44" if Form 3800, Line 1d* or 4d **contains an entry for Form 8586, Low Income Housing Credit, but Form 8586 is not attached.
    *(Form 3800, Line 1e for 2006-2005, Line 1f for 2004 and prior.) **(Form 3800, Line 29d for 2010 and prior.)

  18. Code "45" if Form 1120, Schedule J, Line 9b*, Recapture of Low-Income Housing Credit, contains an entry of and Form 8611 is not attached.

  19. Code "46" if Form 1120, Schedule J, Line 5d* contains an entry and Form 8827 is not attached.
    *(Line 6e for 2005–2000, Line 4e for 1999–1995.)

  20. Code "47" if Form 3800, Line 1e* contains an entry for Form 8826, Disabled Access Credit, but Form 8826 is not attached.
    *(Form 3800, Line 1g for 2006-2005, Line 1h for 2004 and prior.)

  21. Code "49" if Form 1120, Schedule J, Line 5b* contains an entry and Form 8834, Qualified Electric and Plug-in Electric Vehicle Credit, is indicated, but Form 8834 is not attached.
    *(Line 6c for 2005–2000, Line 4c for 1999–1995.)

  22. Code "50" if Form 3800, Line 1f* or Line 4e** has an entry or Form 1120, Schedule J, Line 5c*** contains an entry and Form 8835, Section B, Renewable Electricity, Refined Coal, and Indian Coal Production Credit, is indicated, but Form 8835 is not attached.
    *(Form 3800, Line 1h for 2006-2005, Line 1i for 2004 and prior) **(Form 3800, Line 29e for 2010-2008.) ***(Line 6d for 2005–2000, Line 4d for 1999–1995.)

  23. Code "51" if Form 3800, Line 1g* contains an entry for Form 8845, Indian Employment Credit, but Form 8845 is not attached.
    *(Form 3800, Line 1i for 2006-2005, Line 1j for 2004 and prior.)

  24. Code "52" if Form 3800, Line 4f* contains an entry for Form 8846, Credit for Employer Paid Social Security, but Form 8846 is not attached.
    *(Form 3800, Line 29f for 2010-2007, Line 1j for 2006-2005, Line 1k for 2004 and prior.)

  25. Code "53" if Form 3800, Line 1y* (2008 revision) contains an entry for Form 8847, Credit for Contributions to Certain Community Development Corporations, but Form 8847 is not attached.
    *(Form 3800, Line 1w for 2007, Line 1x for 2006, Line 1w for 2005, Line 1r for 2004, Line 1p for 2003-2002, Line 1n for 2001, Line 1m for 2000.)

  26. Code "54" if Form 3800, Line 3* has an entry or Form 1120, Schedule J, Line 5c** contains an entry and Form 8844, Empowerment Zone and Renewal Community Employment Credit is indicated, but Form 8844 is not attached.
    *(Form 3800, Line 24 for 2010 and prior.) **(Line 6d for 2005–2000, Line 4d for 1999–1995.)

  27. Code "55" if Form 3800, Line 1b* (2008 revision) contains an entry for Form 8861, Welfare to Work Credit, but Form 8861 is not attached.
    *(Form 3800, Line 1b for 2007, Line 1c for 2006 and prior.)

  28. Code "56" if Form 1120, Schedule J, Line 5e* contains an entry and the box for Form 8860 is checked (2007 and prior tax return), but the Form 8860 is not attached.
    *(Line 6f for 2005–2000, Line 11 for 1999–1998.)

  29. Code "57" if Form 3800, Line 1i* contains an entry for Form 8874, New Markets Tax Credit, but Form 8874 is not attached.
    *(Form 3800, Line 1x for 2006, Line 1w for 2005, Line 1r for 2004, Line 1p for 2003-2002, Line 1n for 2001, Line 1m for 2000.)

  30. Code "58" if Form 3800, Line 1j* contains an entry for Form 8881, Credit for Small Employer Pension Plan Start-up Costs, but Form 8881 is not attached.
    *(Form 3800, Line 1j for 2008-2007, Line 1m for 2006-2005, Line 1n for 2004-2002.)

  31. Code "59" if Form 3800, Line 1k* contains an entry for Form 8882, Credit for Employer Provided Child Care Facilities and Services, but Form 8882 is not attached.
    *(Form 3800, Line 1n for 2006-2005, Line 1o for 2004-2002.)

  32. Code "61" if Form 3800, Line 1l* contains an entry for Form 8864, Biodiesel Fuels Credit, but Form 8864 is not attached.
    *(Form 3800, Line 1m for 2007, Line 1p for 2006-2002.)

  33. Code "62" if Form 3800, Line 1m* contains an entry for Form 8896, Low Sulfur Diesel Fuel Production Credit, but Form 8896 is not attached.
    *(Form 3800, Line 1n for 2007, Line 1q for 2006-2004.)

  34. Code "63" if Form 3800, Line 4g* contains an entry for Form 8900, Qualified Railroad Track Maintenance Credit, but Form 8900 is not attached.
    *(Form 3800, Line 29g for 2010-2008, Line 1l for 2007, Line 1o for 2006-2003.)

  35. Code "65" if Form 3800, Line 1n* contains an entry for Form 8906, Distilled Spirits Credit, but Form 8906 is not attached.
    *(Form 3800, Line 1o for 2007, Line 1r for 2006-2005.)

  36. Code "66" if Form 3800, Line 1o* contains an entry for Form 8907, Nonconventional Source Fuel Credit, but Form 8907 is not attached,
    *(Form 3800, Line 1p for 2007, Line 1s for 2006-2005.)

  37. Code "67" if Form 3800, Line 1p* contains an entry for Form 8908, Energy Efficient Home Credit, but Form 8908 is not attached.
    *(Form 3800, Line 1q for 2007, Line 1t for 2006-2005.)

  38. Code "68" if Form 3800, Line 1r* or Form 1120, Schedule J, Line 5c** indicates a Form 8910, Alternative Motor Vehicle Credit, but Form 8910 is not attached.
    *(Line 1s for 2007, Line 1v for 2006, Line 1u for 2005.) **(Line 6d for 2005.)

  39. Code "69" if Form 3800, Line 1s* contains an entry for Form 8911, Alternative Fuel Vehicle Refueling Property Credit, but Form 8911 is not attached.
    *(Form 3800, Line 1t for 2007, Line 1w for 2006, Line 1v for 2005.)

  40. Code "70" if Form 3800, Line 1t* (2009-2008) contains an entry for Form 5884-A, Credits for Affected Midwestern Disaster Area Employers, but Form 5884-A is not attached.

  41. Code "71" if Form 3800, Line 1q* contains an entry for Form 8909, Energy Efficient Appliance Credit, but Form 8909 is not attached.
    *(Form 3800, Line 1r for 2007, Line 1t for 2006.)

  42. Code "72" if Form 1120, Schedule J, Line 5e contains an entry and Form 8912, Credit to Holders of Tax Credit Bonds (2007 and prior Credit for Clean Renewable Energy and Gulf Tax Credit Bonds is indicated, but Form 8912 is not attached.
    (Valid for periods after December 31, 2005 and subsequent.)

  43. Code "73" if Form 3800, Part III, Line 1v* or Form 1120, Schedule J, Line 5c** contains an entry for Form 8931, but the Form 8931 is not attached.
    *(Part I, Line 1v for 2010 and prior.) **(Line 6d for 2005 to 2000.)

  44. Code "74" if Form 3800, Part III, Line 1w* or Form 1120, Schedule J, Line 5c** for Form 8932 contains an entry for Form 8932, but the Form 8932 is not attached.
    *(Part I, Line 1w for 2010–2008, Line 1v for 2007, Line 1y for 2006.) **(Line 6d for 2005 to 2000.)

  45. Code "75" if Form 3800, Part III, Line 1aa* contains an entry for Form 5884-B, New Hire Retention Credit, but Form 5884-B is not attached.
    *(Part I, Line 1aa for 2010 and prior)

3.11.16.9.3  (01-01-2013)
Penalty and Interest Code

  1. Edit "4 – 1" in the left margin near Line 12* when precomputed delinquency penalty and/or interest is shown on a return with a received date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .
    *(Line 2 for Form 1120- F, Form 1120-FSC and Line 5 for Form 1120-ND)

  2. This code is valid only within the unextended ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ some other situation, such as an underestimated tax penalty, do not Code "4 – 1" and do not edit Condition Code "R" . If only interest is shown, edit CCC "R" .

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.11.16.9.4  (01-01-2013)
Reserve Code

  1. The Reserve Code is "4" .

  2. Edit "5 – 4" in the left margin near Line 12* if Form 2220 is attached and Part II, Box 8** is checked for Large Corporation.
    *(Line 2 for Forms 1120-F, and 1120-FSC.) **(Part I, Box 3 for 2004 and prior.)

3.11.16.9.5  (01-01-2013)
♦ Installment Sale Indicator ♦

  1. Form 6252, Installment Sale Income is used to report the sale of property on the installment plan.

  2. Codes are based solely on taxpayer response to Form 6252, Question 3.

  3. Edit "6 –" followed by the appropriate Installment Sale Indicator code in the left margin near Line 12* when Form 6252, Computation of Installment Sale Income, is present (e.g., "6 – 1" ).
    *(Line 2 for Forms 1120-F and 1120-FSC.)

  4. Valid Installment Sale Indicator codes are as follows:

    Code One Form 6252 More Than One Form 6252
    1 "YES" response to Question 3 At least one form has a "YES" response.
    2 "NO" response to Question 3 All "NO" responses, or a combination of "NO" and/or blank responses.
    3 "YES" and "NO" are checked or Question 3 is blank Question 3 is blank on all forms.

3.11.16.9.6  (01-01-2012)
Form 1120-F Indicator

  1. Edit "7 – 1" in the left margin near Line 2 if Form 1120-F contains both Non-Effectively (Section I) and Effectively (Section II) Connected Income.

  2. Check for proper blocking of returns and re-block as required. See Form 1120-F Indicator, IRM 3.11.16.26.12.7.

3.11.16.10  (01-01-2013)
Return Processing - Form 1120

  1. This section addresses the editing of specific areas on Form 1120.

  2. A Form 1120 series with a notation such as "Pro Forma" , "Pro Forma Form 1120" , "Pro Forma Form 1120 for New York State" , or similar statement, the "Pro Forma" return should not be processed.

    If... Then...
    A "Pro Forma" return is attached to a Form 1120 series, Do not detach. Move the "Pro Forma" return to the back of the document.
    A "Pro Forma" return is not attached to a Form 1120 series,
    1. Attach Form 6800.

    2. Include the following in the open paragraph;
      "The attached form appears to have been sent to us in error. Please keep it for your tax records."


  3. To convert prior year tax returns, see Form 1120 — Prior Year Conversion Chart, Exhibit 3.11.16-3.

3.11.16.10.1  (01-01-2014)
Sequence - Form 1120

  1. Document Perfection is responsible for arranging Form 1120 in the following order when transcription line entries are present:

    • Pages 1, 2, 3, 4, 5

    • Schedule N (Form 1120)

    • Schedule D (Form 1120)

    • Schedule O (Form 1120)

    • Form 4626

    • Form 8050

    • Form 1125-A

    • Form 4136

    • Form 8913

    • Form 8941

    • Form 5884-B

    • Form 3800

    Note:

    It is not necessary to sequence Form 8050 if blank or Schedule D, Schedule N, Schedule O, Form 4626, Form 1125-A, Form 4136, Form 8913, Form 8941, Form 5884-B, or Form 3800 if there are no transcription line entries.

3.11.16.10.2  (01-01-2012)
Negative Figures

  1. On Page 1 of the Form 1120:

    1. Do not bracket or "X" the amount on Line 1d if negative.

    2. If editing a negative entry on Lines 1b, 2, 9, 10, 11, 15, 26, and 27, bracket the negative amount.

  2. Line 8 will NEVER be bracketed. "X" any negative entry on Line 8. See Line 8 – Capital Gain, IRM 3.11.16.10.4.7.

  3. Do not bracket Lines 29a and 29b.

  4. "X" any negative transcription entries on Pages 2 and 3 of the Form 1120.

  5. Page 5*, "Schedule L, Balance Sheet" . See Schedule L, Balance Sheet, IRM 3.11.16.10.24.
    *(Page 4 for 2007 and prior.)

  6. Form 4626, "Alternative Minimum Tax" . See Form 4626 - Alternative Minimum Tax, IRM 3.11.16.13.

  7. Form 4136, "Credit for Federal Tax Paid on Fuels" – "X" any negative entries. See Form 4136 - Credit for Federal Tax Paid on Fuels, IRM 3.11.16.16.

3.11.16.10.3  (01-01-2014)
Total Assets - Box D

  1. Total Assets is shown in Box D of Form 1120.

  2. If Total Assets, Box D is blank:

    1. Check the Balance Sheet and edit Total Assets Ending from Schedule L, Line 15, Column (d) to Total Assets, Box D, Page 1. Bracket if negative. See Figure 3.11.16-12.

    2. If "1" is edited on Schedule L, Line 15, Column (d) and Box D is blank, zero, dash, none, or N/A, edit "1" in Box D.

    Figure 3.11.16-12
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Example of editing Schedule L, Line 15, Column (d) to Total Assets, Box D, Page 1.

3.11.16.10.4  (01-01-2009)
Form 1120, Total Income - Lines 1 through 11

  1. The following section provides editing instructions for Form 1120, Lines 1 through 11. Edit Lines 1 through 11 in dollars only.

  2. If Line 11 is the only entry in the income section or the income section is blank and there is an indication the income items are included on an attachment (e.g., a notation such as "See attached" , "See Schedule F" , "Statement attached" , etc.), examine the return for more detailed schedules.

    If... And... Then...
    Additional income is found The income is not reflected elsewhere on the return, Edit the income to the appropriate transcription line(s).
    For Schedule F transfer lines, see Schedule F - Transfer Lines, Exhibit 3.11.16-19.


3.11.16.10.4.1  (01-01-2014)
Line 1 – Gross Receipts or Sales

  1. Line 1a is Gross Receipts or Sales, and Line 1b is Returns and allowances (Do not bracket or "X" amount on Line 1b if negative.)

  2. If Line 1a is blank and:

    1. If Lines 1b and 1c are both blank, but the taxpayer indicates "Gross Profit" on Line 3, add Line 2 and Line 3 and enter on Line 1a. Bracket if negative.

      Exception:

      If Line 2 is blank, edit from the Form 1125-A, Line 8 (Schedule A, Line 8 for 2010 and prior) amount before computing Line 1a. If Form 1125-A, Line 8 (Cost of goods sold) is zero or blank on Form 1125-A, enter the Line 3 amount in Line 1a.

  3. If Line 1a is blank, and an amount is present on Lines 1b and 1c, add Line 1b and Line 1c and enter the total amount on Line 1a. Bracket if negative.

  4. If Line 1b is blank, check attachments.

    1. If found, enter the amount to Line 1b.

    2. If not found and Line 1a is greater than Line 1c, compute and enter Line 1b (Line 1a minus 1c).

3.11.16.10.4.2  (01-01-2012)
Line 2 – Cost of Goods Sold

  1. If Line 2 is blank, edit from Form 1125-A (2010 prior revisions - Schedule A, Line 8), Line 8. Bracket if negative.

    If... Then...
    Form 1125-A (2010 and prior revisions - Schedule A, Line 8), Line 8 is blank and Line 6 contains an entry, Edit the amount from Line 6, minus any amount on Line 7.
    Form 1125-A (2010 and prior revisions - Schedule A, Line 6), Line 6 is blank and there are entries on Lines 1 through 5, Edit the total of Lines 1 through 5 minus any amount on Line 7.


3.11.16.10.4.3  (01-01-2009)
Line 4 – Dividends

  1. Accept taxpayer's entry.

3.11.16.10.4.4  (01-01-2009)
Line 5 – Interest

  1. Accept taxpayer's entry.

3.11.16.10.4.5  (01-01-2009)
Line 6 – Gross Rents

  1. Accept taxpayer's entry.

3.11.16.10.4.6  (01-01-2009)
Line 7 – Gross Royalties

  1. Accept taxpayer's entry.

3.11.16.10.4.7  (01-01-2014)
Line 8 – Capital Gain

  1. If there is a significant entry on Line 8, and Schedule D (Form 1120) is not attached, edit MSC "32" .

  2. When Schedule D is attached, compare Form 1120, Line 8 to Schedule D, Line 18, (Line 14 for 2000 through 2011, Line 13 for 1999 and prior):

    If... And... Then...
    The comparison shows the entries are the same Both entries are positive, Continue processing.
    The comparison shows the entries are different Both entries are positive, Edit the Schedule D, Line 18 amount to Form 1120, Page 1, Line 8.


  3. If the comparison shows a negative entry:

    1. "X" the Line 8 amount.

    2. Math verify and perfect Schedule D to ensure the negative figure is correct and intended.

    3. If the negative amount is due to a loss under IRC 582 for worthlessness of bonds, move the amount to Bad Debts (Form 1120, Page 1, Line 15) as a positive figure. Adjust Total Income and Total Deductions as required.

    4. If the negative amount is due to a loss under IRC 582 for the sale or exchange of securities by a bank, etc., move the amount to Other Deductions (Form 1120, Page 1, Line 26) as a positive figure. Adjust Total Income and Total Deductions as required.

      Note:

      All other losses on Schedule D will not be allowed.

3.11.16.10.4.8  (01-01-2014)
Line 9 – Net Gain or Loss from Form 4797

  1. Edit Line 9 as follows:

    If... Then...
    Line 9, Page 1 contains an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 4797 is not attached and the taxpayer has not attached Form 4684, Edit MSC "35" .
    Form 4797 is attached, compare Form 1120, Line 9 or Form 1120-H, Line 6 with Form 4797, Line 17*,
    *(Line 18 for 2003 and prior.)
    If different, edit Form 4797 amount to Form 1120, Line 9 for Form 1120-H, Line 6. Bracket if negative.
    Form 4797, Line 17* is blank (has not been computed by the taxpayer) and there are entries in Parts II or III of Form 4797,
    *(Line 18 for 2003 and prior.)
    Correspond for completed Form 4797.


  2. Check for taxpayer errors in the transfer of entries from Form 4797 to Page 1, Form 1120. Also check the transfer of data from Line 9, Form 4797 to Line 7, Schedule D.

    If... And... Then...
    Form 1120, Page 1, Line 8 is blank There is a positive entry on Form 1120, Page 1, Line 9 and Form 4797, Line 9 has a significant positive entry, Arrow Form 1120, Line 9 entry to Line 8 and edit MSC "32" . See Figure 3.11.16-13.
    There is a notation on Form 1120, Page 1, Line 9 that Form 4684 is attached,   Do not correspond. Compare Form 1120, Page 1, Line 9 with Form 4684, Lines 32* plus 38a*. If different, edit Form 4684 amount to Line 9, Form 1120.
    *(Lines 35 plus 41a for 2010, Lines 35 plus 42a for 2009, Lines 37 plus 44a for 2008, Lines 31 plus 38a for 2007, Lines 34 plus 41a for 2006–2005, Lines 31 plus 38a for 2004.)

    Figure 3.11.16-13

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Example of editing Line 9 to Line 8 with an arrow and editing MSC "32" .



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