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Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 16. Corporate Income Tax Returns (Cont. 3)

3.11.16  Corporate Income Tax Returns (Cont. 3)

3.11.16.10 
Return Processing — Form 1120

3.11.16.10.13 
Schedule J, Line 5c — General Business Credits
(Line 6d for 2005 - 2000)
(Line 4d for 1999 - 1996)

3.11.16.10.13.17  (01-01-2012)
Welfare-to-Work Credit — Form 8861

  1. Form 8861, Welfare-to-Work Credit, is required to be filed with Corporate tax returns when claiming Form 8861 credit.

  2. When an amount is present on Form 3800, Line 1b* (2009–2007) or Form 1120, Schedule J, Line 5c** for Form 8861, take the following actions:
    *(Line 1c for 2006 and prior.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8861 is not attached, Edit MSC "55" (or correspond if 2 or more MSCs apply).

3.11.16.10.13.18  (01-01-2012)
Biodiesel and Renewable Diesel Fuels Credit — Form 8864

  1. Form 8864, Biodiesel and Renewable Diesel Fuels Credit, is required to be filed with Corporate tax returns when claiming Form 8864 credit.

  2. When an amount is present on Form 3800, Part III, Line 1l* or Form 1120, Schedule J, Line 5c** for Form 8864, take the following actions:
    *(Part I, Line 1l for 2008 - 2010, Line 1m for 2007, Line 1p for 2006-2004.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8864 is not attached, Edit MSC "61" (or correspond if 2 or more MSCs apply).

3.11.16.10.13.19  (01-01-2012)
New Markets Credit — Form 8874

  1. Form 8874, New Markets Credit, is required to be filed with Corporate tax returns when claiming Form 8874 credit.

  2. When an amount is present on Form 3800, Part III, Line 1i* or Form 1120, Schedule J, Line 5c** for Form 8874, take the following actions:
    *(Part I, Line 1i for 2007-2010, Line 1l for 2006-2005, Line 1m for 2004-2000.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8874 is not attached, Edit MSC "57" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.20  (01-01-2012)
Credit for Small Employer Pension Plan Startup Costs — Form 8881

  1. Form 8881, Credit for Small Employer Pension Plan Startup Costs, is required to be filed with Corporate tax returns when claiming Form 8881 credit.

  2. When an amount is present on Form 3800, Part III, Line 1j* or Form 1120, Schedule J, Line 5c** for Form 8881, take the following actions:
    *(Part I, Line 1j for 2007-2010, Line 1m for 2006-2005, Line 1n for 2004-2002.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8881 is not attached, Edit MSC "58" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.21  (01-01-2012)
Credit for Employer-Provided Childcare Facilities and Services — Form 8882

  1. Form 8882, Credit for Employer Provided Child Care Facilities and Services, is required to be filed with Corporate tax returns when claiming Form 8882 credit.

  2. When an amount is present on Form 3800, Part III, Line 1k* or Form 1120, Schedule J, Line 5c** for Form 8882, take the following actions:
    *(Part I, Line 1k for 2007-2010, Line 1n for 2006-2005, Line 1o for 2004-2002.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8882 is not attached, Edit MSC "59" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.22  (01-01-2009)
New York Liberty Zone Business Employee Credit — Form 8884

  1. No editing required.

3.11.16.10.13.23  (01-01-2012)
Low Sulfur Diesel Fuel Production Credit — Form 8896

  1. Form 8896, Low Sulfur Diesel Fuel Production Credit, is required to be filed with Corporate tax returns when claiming Form 8896 credit.

  2. When an amount is present on Form 3800, Part III, Line 1m* or Form 1120, Schedule J, Line 5c** for Form 8896, take the following actions:
    *(Part I, Line 1m for 2008-2010, Line 1n for 2007, 1q for 2006-2004.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8896 is not attached, Edit MSC "62" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.24  (01-01-2012)
Qualified Railroad Track Maintenance Credit — Form 8900

  1. Form 8900, Qualified Railroad Track Maintenance Credit, is required to be filed with Corporate tax returns when claiming Form 8900 credit.

  2. When an amount is present on Form 3800, Part III, Line 4g* or Form 1120, Line 5c** for Form 8900, take the following action:
    *(Line 29g for 2010–2008, Line 1l for 2007, Line 1o for 2006-2005.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8900 is not attached, Edit MSC "63" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.


3.11.16.10.13.25  (01-01-2012)
Distilled Spirits Credit — Form 8906

  1. Form 8906, Distilled Spirits Credit, is required to be filed with Corporate tax returns when claiming Form 8906 credit.

  2. When an amount is present on Form 3800, Part III, Line 1n* or Form 1120, Schedule J, Line 5c** for Form 8906, take the following actions:
    *(Part I, Line 1n for 2008-2010, Line 1o for 2007, Line 1r for 2006-2005.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8906 is not attached, Edit MSC "65" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.26  (01-01-2012)
Nonconventional Source Fuel Credit — Form 8907

  1. Form 8907, Nonconventional Source Fuel Credit, is required to be filed with Corporate tax returns when claiming Form 8907 credit.

  2. When an amount is present on Form 3800, Part III, Line 1o* or Form 1120, Schedule J, Line 5c** for Form 8907, take the following actions:
    *(Part I, Line 1o for 2008-2010, Line 1p for 2007, Line 1s for 2006-2005.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8907 is not attached, Edit MSC "66" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.27  (01-01-2012)
Energy Efficient Home Credit — Form 8908

  1. Form 8908, Energy Efficient Home Credit, is required to be filed with Corporate tax returns when claiming Form 8908 credit.

  2. When an amount is present on Form 3800, Pat III, Line 1p* or Form 1120, Schedule J, Line 5c** for Form 8908, take the following actions:
    *(Part I, Line 1p for 2008-2010, Line 1q for 2007, Line 1t for 2006-2005.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8908 is not attached, Edit MSC "67" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.28  (01-01-2012)
Energy Efficient Appliance Credit — Form 8909

  1. Form 8909, Energy Efficient Appliance Credit, is required to be filed with Corporate tax returns when claiming Form 8909 credit.

  2. When an amount is present on Form 3800, Part III, Line 1q* or Form 1120, Schedule J, Line 5c** for Form 8909, take the following actions:
    *(Part I, Line 1q for 2008-2010, Line 1r for 2007, Line 1u for 2006.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8909 is not attached, Edit MSC "71" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.29  (01-01-2012)
Alternative Motor Vehicle Credit — Form 8910

  1. Form 8910, Alternative Motor Vehicle Credit, is required to be filed with Corporate tax returns when claiming Form 8910 credit.

  2. When an amount is present on Form 3800, Part III, Line 1r* or Form 1120, Schedule J, Line 5c** for Form 8910, take the following actions:
    *(Part I, Line 1r for 2008-2010, Line 1s for 2007, Line 1v for 2006, Line 1u for 2005.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8910 is not attached, Edit MSC "68" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

  3. When Form 8910 is attached, check for invalid in service dates:

    If... Then...
    Form 8910, Part I, Line 3, Column (a), or (b) include an in service date of 02/16/2009 or earlier,
    *(Part I, Line 2, Column (a), (b) or (c) for 2010 and prior versions.)     		Edit CCC "C" and circle the invalid in service date(s).

3.11.16.10.13.30  (01-01-2012)
Alternative Fuel Vehicle Refueling Property Credit — Form 8911

  1. Form 8911, Alternative Fuel Vehicle Refueling Property Credit, is required to be filed with Corporate tax returns when claiming Form 8911 credit.

  2. When an amount is present on Form 3800, Part III, Line 1s* or Form 1120, Schedule J, Line 5c** for Form 8911, take the following actions:
    *(Part I, Line 1s for 2008-2010, Line 1t for 2007, Line 1w for 2006, Line 1v for 2005.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8911 is not attached, Edit MSC "69" (or correspond if 2 or more MSCs apply).

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not edit MSC or correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.31  (01-01-2012)
Mine Rescue Team Training Credit — Form 8923

  1. Form 8923, Mine Rescue Team Training Credit, is required to filed with Corporate tax returns when claiming Form 8923 credit.

  2. When an amount is present on Form 3800, Part III, Line 1u* or Form 1120, Schedule J, Line 5c** for Form 8923:
    *(Part I, Line 1u for 2010 and prior.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8923 is not attached, Correspond for missing Form 8923.

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.32  (01-01-2012)
Agricultural Chemicals Security Credit — Form 8931

  1. Form 8931, Agricultural Chemicals Security Credit, is required to be filed with Corporate tax returns when claiming Form 8931 credit.

  2. When an amount is present on Form 3800, Part III, Line 1v* or Form 1120, Schedule J, Line 5c** for Form 8931:
    *(Part I, Line 1v for 2010 and prior.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8931 is not attached, Correspond for missing Form 8931.

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.33  (01-01-2012)
Credit for Employer Differential Wage Payments — Form 8932

  1. Form 8932, Credit for Employer Differential Wage Payments, is required to be filed with Corporate tax returns when claiming Form 8932 credit.

  2. When an amount is present on Form 3800, Part III, Line 1w* or Form 1120, Schedule J, Line 5c** for Form 8932:
    *(Part I, Line 1w for 2010–2008, Line 1v for 2007, Line 1y for 2006.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8932 is not attached, Correspond for missing Form 8932.

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.34  (01-01-2012)
Carbon Dioxide Sequestration Credit — Form 8933

  1. Form 8933, Carbon Dioxide Sequestration Credit, is required to be filed with Corporate tax returns when claiming Form 8933 credit.

  2. When an amount is present on Form 3800, Part III, Line 1x* or Form 1120, Schedule J, Line 5c** for Form 8933:
    *(Part I, Line 1x for 2010 and prior) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8933 is not attached, Correspond for missing Form 8933.

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not correspond. The credit is from a pass-through entity and the form is not required.

3.11.16.10.13.35  (01-01-2012)
Qualified Plug-in Electric Drive Motor Vehicle Credit — Form 8936

  1. Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, is required to be filed with Corporate tax returns when claiming Form 8936 credit.

  2. When an amount is present on Form 3800, Part III, Line 1y* or Form 1120, Schedule J, Line 5c contains and entry for Form 8936:
    *(Part I, Line 1y for 2010 and prior.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8936 is not attached, Correspond for missing Form 8936.

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not correspond. The credit is from a pass-through entity and the form is not required.

  3. When Form 8936 is attached, check for invalid vehicle years and invalid in service dates:

    If... Then...
    Form 8936, *Part I, Line 1, Column (a), or (b) include a vehicle year of 2008 or earlier,
    *(Part I, Line 1, Column (a), (b) or (c) for 2010 and prior year revisions.)     		Edit CCC "C" and circle the invalid vehicle year(s) and/or the invalid in service date(s).
    Form 8936, *Part I, Line 3, Column (a), or (b) include an in service date of 12/31/2008 or earlier,
    *(Part I, Line 2, Column (a), (b) or (c) for 2010 and prior year revisions.)

3.11.16.10.13.36  (01-01-2011)
Credit for Small Employer Health Insurance Premiums — Form 8941

  1. Form 8941, Credit for Small Employer Health Insurance Premiums, is required to be filed with corporate tax returns when claiming Form 8941 credit.

  2. If an amount is present on Form 3800, Part III, Line 4h* or Form 1120, Schedule J, Line 5c for Form 8941:
    *(Part II, Line 29h for 2010.) **(Line 6d for 2005 to 2000.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8941 is not attached, Correspond for missing Form 8941.

    Exception:

    If an EIN is present on Form 3800, Page 3, Column (b), do not correspond. The credit is from a pass-through entity and the form is not required.

    Form 8941 is present, Place in sequence order if significant entries are present.

3.11.16.10.13.37  (01-01-2012)
Schedule J, Line 5d – Form 8827, Credit for Prior Year Minimum Tax
(Schedule J, Line 6e for 2005 - 2000)

  1. This credit is valid 8812 and subsequent. If Schedule J, Line 5d* has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8827 is not attached, edit Missing Schedule Code "46" .
    *(Line 6e for 2005–2000, Line 4e for 1999–1995.)

3.11.16.10.13.38  (01-01-2012)
Schedule J, Line 5e – Form 8860, Qualified Zone Academy Bond Credit and
Form 8912, Credit to Holders of Tax Credit Bonds
(2007 and prior Credit for Clean Renewable Energy and Gulf Tax Credit Bonds
(Schedule J, Line 6f for 2005 - 2000)

  1. When editing Schedule J, Line 5e* and the Form 8860 box is marked (2007 and prior tax return), take the following actions:
    *(Line 6f for 2005–2000, Line 11 for 1999–1998.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8860 is not attached, Edit MSC "56" (or correspond if 2 or more MSCs apply).


  2. When Schedule J, Line 5e has an entry for Form 8912 or the Form 8912 box is marked (2007 and prior tax return), take the following action:

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8912 is not attached, Edit MSC "72" (or correspond if 2 or more MSCs apply).


3.11.16.10.14  (01-01-2012)
Schedule J, Line 6 – Total Credits
(Schedule J, Line 7 for 2005 - 2000)

  1. When editing Line 6*, take the following action:
    *(Line 7 for 2005–2000.)

    If... Then...
    Line 6 is blank and there are entries on any of Lines 5a through 5e*,
    *(Lines 6a through 6f for 2005–2000.)     		Add Lines 5a through 5e and enter on Line 6.
    There is no tax on Schedule J, Line 2*,
    *(Line 3 for 2005–2000.)     		"X" the Line 6 entry and "X" Lines 5a through 5e.
    Line 6 as an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Lines 5a through 5e are blank, Correspond for documentation to support the entry on Line 6.


3.11.16.10.15  (01-01-2012)
Schedule J, Line 8 – Personal Holding Company Tax
(Schedule J, Line 9 for 2005 - 2000)

  1. If Schedule J, Line 8*, Personal Holding Company Tax, has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Schedule 1120-PH is not attached, edit Missing Schedule Code "30" or correspond if corresponding for other issues.
    *(Line 9 for 2002–2000.)

    Note:

    A significant entry on Schedule J, Line 8 would also require editing an ABLM Code. See ABLM Code and Schedule M-3 Checkbox, IRM 3.11.16.8.2.

3.11.16.10.16  (01-01-2012)
Schedule J, Line 9a through 9f — Other Taxes
(Line 9 for 2010-2006, Line 10 for 2005-2000)

  1. This section contains instructions for Schedule J, Lines 9a* through 9f*.
    *(Line 9 for 2010-2006, Line 10 for 2005–-2000.)

3.11.16.10.16.1  (01-01-2012)
Schedule J, Line 9a – Recapture of investment credit (Form 4255)
(Schedule J, Line 9 – Other Taxes for 2010 - 2006)
(Schedule J, Line 10 for 2005 - 2000)

  1. If an amount is present on Schedule J, Line 9a*, Recapture of Investment Credit (Form 4255) or Form 4255 is attached:
    *(Line 9 for 2010-2006 revisions, Line 10 for 2005–2000 revisions.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 4255 is not attached,
    *(Schedule J, Line 9 for 2010-2006 revisions, Line 10 2005-2000 revisions)     		Edit Missing Schedule Code "33" (or correspond if 2 or more MSCs apply).
    Form 4255 is attached and Line 9a* is blank,
    *(Schedule J, Line 9 for 2010-2006 revisions, Line 10 2005-2000 revisions.)     		Edit the amount from Line 15*, Form 4255 to Schedule J, Line 9a**, Form 1120.
    *(Line 13 for 2010 and prior revisions.)
    **(Schedule J, Line 6, Form 1120-REIT.)
    (For 2010 and prior revisions: dummy 2011 revision of Schedule J and edit the amount from Form 4255, Line 15 to Schedule J, Line 9a. "X" through the prior year revision Schedule J)


3.11.16.10.16.2  (01-01-2012)
Schedule J, Line 9b – Recapture of Low-Income Housing Credited (Form 8611)
(Schedule J, Line 9 – Other Taxes for 2010 - 2006)
(Schedule J, Line 10 for 2005 - 2000)

  1. If an amount is present on Schedule J, Line 9b*, Recapture of Low-Income Housing Credit, or Form 8611 is attached:
    *(Line 9 for 2010-2006 revisions, Line 10 for 2005–2000 revisions.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8611 is not attached, Edit Missing Schedule Code "45" (or correspond if 2 or more MSCs apply).
    Form 8611 is attached and Line 9b is blank,
    *(Schedule J, Line 9 for 2010-2006 revisions, Line 10 2005-2000 revisions.)

    1. Edit the amount from Line 14*, Form 8611 to Schedule J, Line 9b. (Dotted portion of Schedule J, Line 6 of Form 1120-REIT.)
      *(Line 12 for 1999 and prior revisions.)


    (For 2010 and prior revisions - dummy 2011 revision of Schedule J and edit the amount from Form 8611, Line 14 to Schedule J, Line 9b. "X" through the prior year revision Schedule J)
    More than one Form 8611 is attached,

    1. Combine Form 8611, Line 14*.
      *(Line 12 for 1999 and prior.)

    2. Edit the total to Schedule J, Line 9b. (Dotted portion of Schedule J, Line 6 of Form 1120-REIT.)
      (For 2010 and prior revisions - dummy 2011 revision of Schedule J and edit the combined amount from all Form 8611, Line 14 to Schedule J, Line 9b. "X" through the prior year revision Schedule J)

  2. Edit CCC "9" to Page 1 of Form 1120 in the income section when at least one of the following conditions exists:

    1. Schedule J, Line 9b (Line 9 for 2010-2007 with Form 8611 indication) contains an amount; or

    2. Form 8611 or Form 8693 is attached; or

    3. The taxpayer notes "Form 8693" .

3.11.16.10.16.3  (01-01-2012)
Schedule J, Line 9c – Interest Computation Under the Look-Back Method for Completed Long-Term Contracts (Form 8697)
(Schedule J, Line 9 – Other Taxes for 2010 - 2006)
(Schedule J, Line 10 for 2005 - 2001)

  1. If an amount is present on Schedule J, Line 9c, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, or Form 8697 is attached:
    *(Line 9 for 2010-2006 revisions, Line 10 for 2005–2001 revisions.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8697 is not attached, Correspond for missing Form 8697.
    Form 8697 is attached and the tax from Part I, Line 10 or Part II, Line 11 is shown on Schedule J, Line 9c, Edit CCC "K" .
    Form 8697 is attached and Schedule J, Line 9c is blank,
    *(Schedule J, Line 9 for 2010-2006 revisions, Line 10 2005-2001 revisions.)     		Edit the amount from Form 8697, Part I, Line 10 or Part II, Line 11 to Schedule J, Line 9c.
    Edit CCC "K" .
    (2010 and prior revisions – dummy 2011 revision of Schedule J and edit the amount from Form 8697, Part I, Line 10 or Part II, Line 11 to Schedule J, Line 9c. "X" through the prior year revision Schedule J)

3.11.16.10.16.4  (01-01-2012)
Schedule J, Line 9e – Alternative Tax on Qualifying Shipping Activities (form 8902)
(Schedule J, Line 9 – Other Taxes for 2010 - 2006)
(Schedule J, Line 10 for 2005)

  1. If an amount is present on Schedule J, Line 9e, Alternative Tax on Qualifying Shipping Activities, or Form 8902 is attached:
    *(Line 9 for 2010-2006 revisions, Line 10 for 2005 revision.)

    If... Then...
    Form 8902 is attached, Edit Audit Code "2" .
    Form 8902 is attached and Schedule J, Line 9e is blank,
    *(Schedule J, Line 9 for 2010-2006 revisions, Line 10 2005 revision.)     		Edit the amount from Line 30, Form 8902 to Schedule J, Line 9e.
    (For 2010 - prior revisions – dummy 2011 revision of Schedule J and edit the amount from Form 8902, Line 30 to Schedule J, Line 9e. "X" through the prior year revision Schedule J)

3.11.16.10.17  (01-01-2012)
Schedule J, Line 11 – Total Tax
(Schedule J, Line 10 for 2010 - 2006)
(Schedule J, Line 11 for 2005 - 2000)

  1. Form 1120, Schedule J, Line 11* may contain "add on" taxes that will be identified by an explanation in the dotted portion to the left of Line 11*.
    *(Line 10 for 2010–2006, Line 11 for 2005–2000.)

    1. If the only entry on Form 1120, Schedule J is Line 11*, edit the amount to Schedule J, Line 2**.
      *(Line 10 for 2010–2006, Line 11 for 2005–2000.) **(Line 3 for 2005–2000.)

    2. If any identifiable "add on" taxes are misplaced on Lines 3, 8, or 9*, "X" them but be sure that they have been included in Line 31, Total Tax on Page 1 of the Form 1120.
      *(Lines 4, 9, or 10 for 2005–2000.)

3.11.16.10.18  (01-01-2012)
Schedule J, Part II Lines 13 – 21

  1. This section contains instructions for Schedule J, Part II, Lines 13* through 21.
    *(Form 2010 and prior revisions – Lines 12-21 were previously Page 1, Lines 32a-32g)

3.11.16.10.18.1  (01-01-2012)
Schedule J, Part II, Line 13 – Estimated Tax Payments
(Formerly for 2010 and prior revisions — Page 1, Line 32b)

  1. IRC Section 847 Deduction. If a significant entry is present on Schedule J, Part II, Line 13 (Page 1, Line 32b for 2010 and prior revisions) and "847" and/or "Form 8816" are notated, see IRC Section 847 Deduction, IRM 3.11.16.2.10.

3.11.16.10.18.2  (01-01-2012)
Schedule J, Part II, Line 15 – Payments
(Formerly for 2010 and prior revisions — Page 1, Line 32d)

  1. If Schedule J, Part II, Line 15 is blank, add Lines 12 (Page 1, Line 32a for 2010 and prior revisions) and 13 (Page 1, Line 32b for 2010 and prior revisions). Subtract Line 14 (Page 1, Line 32c for 2010 and prior revisions) and enter the total amount on Line 15 (Page 1, Line 32d for 2010 and prior revisions). If there is an entry on Line 14 (Page 1, Line 32c for 2010 and prior revisions), see CCC "O" – Module Freeze, IRM 3.11.16.8.1.11.

  2. For 2010 and prior revisions if significant amounts are present:

    1. Dummy a Schedule J and place in sequence order

    2. "X" through the prior year revision Schedule J

3.11.16.10.18.3  (01-01-2012)
Schedule J, Part II, Line 16 – Tax Deposited with Form 7004
(Formerly for 2010 and prior revisions — Page 1, Line 32e)

  1. Accept taxpayer's entry.

  2. If the taxpayer indicates a Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback, credit on Line 16*, disallow and delete amount of credit from Line 16*.
    *(Page 1, Line 32e for 2010 and prior revisions).

  3. For 2010 and prior revisions if significant amounts are present:

    1. Dummy a Schedule J and place in sequence order.

    2. "X" through the prior year revision Schedule J.

3.11.16.10.18.4  (01-01-2012)
Schedule J, Part II, Line 18 – Total Payments

  1. If Line 18* is the only entry for Lines 12 through 18, arrow the amount to Line 15.
    *(Page 1, Line 32h for 2010 - 2005, Line 32g for 2007, Line 32h for 2006, Line 32g for 2005, Line 32h for 2004 and prior.)

  2. For 2010 and prior revisions if significant amounts are present:

    1. Dummy a Schedule J and place in sequence order.

    2. "X" through the prior year revision Schedule J.

3.11.16.10.18.5  (01-01-2012)
Schedule J, Part II, Line 19a – Regulated Investment Co. Credit, Form 2439
(Formerly for 2010 and prior revisions — Page 1, Line 32f)

  1. Compare Form 1120, Schedule J, Line 19a* to Form 2439, Line 2:
    *(Page 1, Line 32f(1) for 2010 - 2005, Line 32f for 2004 and prior.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 2439 is missing, Correspond.
    Form 2439 shows a lesser amount, Place an "X" to the left of the entry on Schedule J, Part II, Line 19a (Page 1, Line 32f(1) for 2010 - 2005, Line 32f 2004 and prior, Form 1120). Edit the lesser amount to the left of the "X" .
    Form 2439 shows a larger amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Correspond.

  2. Follow the instructions below for 2010 and prior revisions:

  3. If significant amounts are present:

    1. Dummy a Schedule J.

    2. Edit write-in credits such as Section 960(b)(5) to Schedule J, Part II, Line 19d.

      Note:

      If unusual refundable credits are included in Page 1, Line 32f(1), edit the total of the unusual refundable credits to Line 19d. For a description of the most typical unusual refundable credits, see CCC "N" – Joint Committee Case, IRM 3.11.16.8.1.10.

    3. Place in sequence order

    4. Line through or "X" the prior year revision Schedule J

  4. If Page 1, Lines 32f(1) and 32f(2)* are blank and there is a significant amount on Page 1, Line 32f follow the instructions below:
    *(Page 1, Line 32g for 2004 and prior.)

    If... Then...
    Both Form 2439 and Form 4136 are missing, Correspond for missing forms to support the entry on Page 1, Line 32f.
    Both Form 2439 and Form 4136 are attached,

    1. Dummy a Schedule J.

    2. Edit the Form 2439 amount to Schedule J, Part II, Line 19a.

    3. Line through or "X" prior year revision Schedule J.

    Form 2439 is the only form attached,

    1. Dummy a Schedule J.

    2. Edit the smaller of Form 2439 or Page 1, Line 32f amount to Schedule J, Part II, Line 19a.

    3. Line through or "X" prior year revision Schedule J.

    4. Correspond for missing Form 4136 if the entry on Page 1, Line 32f is more than the Form 2439 amount.
    Form 4136 is the only form attached,

    1. Subtract the Form 4136 amount from Page 1, Line 32f and edit the difference to Schedule J, Part II, Line 19a.

    2. Correspond for missing Form 2439 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .
    Exception: Do not correspond for Form 2439 or Page 1, Line 32f if the amount is identified as a write-in credit (e.g., unusual refundable credits, Backup Withholding, FIRPTA Credit, Form 1042-S Credit, etc.).

3.11.16.10.18.6  (01-01-2012)
Schedule J, Part II, Line 19b – Fuel Tax Credit, Form 4136
(Formerly for 2010 and prior revisions — Page 1, Line 32f)

  1. If Line 19b* contains a significant entry and Form 4136 is not present, correspond for the missing Form 4136.
    *(Page 1, Line 32f(2) for 2010 - 2005, Page 1, Line 32g for 2004 and prior.)

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

  3. For processing instructions, see Form 4136 — Credit for Federal Tax Paid on Fuels, IRM 3.11.16.15.

3.11.16.10.18.7  (01-01-2012)
Schedule J, Part II, Line 19c - Form 3800 and Form 8827
(Formerly for 2010 and prior revisions — Page 1, Line 32g)

  1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ either Form 3800 or Form 8827 must be attached to substantiate the credit. Correspond for missing forms to substantiate the credit.

  2. For 2010 and prior revisions if a significant amount is present on Line 32g*:
    *2006, 2004 - 1999 Line 32h)

    1. Dummy a Schedule J.

    2. Place in sequence order.

    3. Line through or "X" the prior year revision Schedule J.

3.11.16.10.18.8  (01-01-2012)
Schedule J, Part II, Line 19d - Other
(Formerly for 2010 and prior revisions — Page 1, Line 32f)

  1. Accept taxpayer entry.

  2. For 2010 and prior revisions if a significant amount is present:

    1. Dummy a Schedule J.

    2. Place in sequence order.

    3. Line through or "X" the prior year revision Schedule J.

3.11.16.10.18.9  (01-01-2012)
Schedule J, Part II, Line 21 – Total Payments and Credits
(Formerly for 2010 and prior revisions — Page 1, Line 32h)

  1. If Line 21 is the only entry for Lines 12 through 21, arrow the amount to Line 15.

  2. For 2010 and prior revisions only - If Page 1, Line 32h* is the only entry for Page 1, Lines 32a through 32h:
    *(Line 32g for 2007, Line 32h for 2006, Line 32g for 2005, Line 32h for 2004 and prior.)

    1. Dummy a Schedule J and edit the amount from Line 32h* to Schedule J, Part II, Line 15.

    2. Place in sequence order.

    3. Line through or "X" the prior year revision Schedule J.

3.11.16.10.19  (01-01-2010)
Schedule K, Line 2a – NAICS Code

  1. The Principal Business Activity (PBA) Code is based on the North American Industry Classification System Code (NAICS). These codes are a high priority to the Service. It is critical data for Statistics of Income, Examination, Research and other Service organizations.

  2. The NAICS Code is a six-digit code on Schedule K, Line 2a of Form 1120. On returns with a preprinted label, the code is printed to the right of the Area Office Code.

  3. A NAICS Code is required on all Forms 1120 (Form 1120-C, Form 1120-F, and Form 1120-FSC).

    Exception:

    Do not edit a NAICS Code on "G" coded returns (amended returns).

  4. Only one NAICS Code can be used on the return. Edit the NAICS Code as follows:

    If... Then...
    A legible six-digit NAICS Code is shown on Schedule K, Line 2a,
    Note: The number may not contain all repeating numbers, e.g., "000000" , "333333" , "666666" , "999999" , etc.     		No editing is necessary.
    A legible four-digit NAICS Code is shown on Schedule K, Line 2a,
    Schedule K, Line 2a, 2b, and 2c are blank and the code on the preprinted label is a six-digit NAICS Code (taxpayer may change/correct the label), Edit the preprinted NAICS Code from the label to Schedule K, Line 2a.
    There is more than one NAICS Code on Schedule K, Line 2a, Circle all but the first NAICS Code listed.
    Schedule K, Line 2a is blank or illegible,

    1. Edit NAICS Code "899000" if the business is some kind of service (e.g., attorney, doctor, architect, etc.),
      (Use Schedule K, Lines 2b and 2c, if present and/or attachments.) or

    2. Edit NAICS Code "999000" if you cannot make a determination the business is some kind of service (e.g., manufacturing, sales, etc.).
      (Use Schedule K, Lines 2b and 2c, if present and/or attachments.)

    The code is other than four or six-digits,
    A NAICS Code with all repeating numbers is present, e.g., "000000" , "333333" , "666666" , "999999" , etc.,


3.11.16.10.20  (01-01-2012)
Schedule K, Question 3
(Schedule K, Question 4 for 2007 and Prior)

  1. If Schedule K, Question 3* meets one of the following conditions, a Name Control and EIN must be edited.
    *(Question 4 for 2007 and prior.)

    If... And... Then...
    Question 3 is checked "Yes" , or both the "yes" and "no" boxes are checked, The name and EIN is the same as the return name and/or EIN.

    1. Circle out the name and EIN,

    2. Check the attachments for another name control and/or EIN,

    3. Edit (from attachments) the Name Control on Line 3. If unable to locate a Name Control, edit "XXXX" .

    4. Edit (from attachments) the TIN on Line 3. If unable to locate the TIN, edit "12–9999999" .

    Question 3 is checked "Yes" or both the "Yes" and "No" boxes are checked, The name and/or EIN is different from the return name and/or EIN, Underline the Name Control and TIN on Line 3.
    Note: If something other than a corporation name and/or EIN is present on Line 3, circle that information.
    Question 3 is checked "Yes" or both the "Yes" and "No" boxes are checked, There is no Name and/or EIN present on Line 3,

    1. Check attachments for name control and/or EIN.

    2. Edit from attachments the Name Control on Line 3. If unable to locate a Name Control, edit “XXXX”.

    3. Edit from attachments the TIN on Line 3. If unable to locate the TIN, edit “12-9999999”.


    Note:

    If something other than a corporation name and/or EIN is present on Line 3, circle that information.
    Question 3 is checked "No" or neither box is checked, a corporation name and/or EIN is present (must be different than that on the return),

    1. Underline the Name Control on Line 3.

    2. Underline the TIN on Line 3.

    Note:

    If something other than a corporation name and/or EIN is present on Line 3, circle that information.
    Question 3 is answered "No" or neither box is checked, a corporation name and EIN are not present, No editing is necessary.
    Question 3 is answered "No" or neither box is checked, a corporation name and EIN are the same as the return name and/or EIN, Circle the name and/or EIN.


3.11.16.10.21  (01-01-2010)
Schedule K, Questions 7 and 8

  1. Reserved for future instructions.

3.11.16.10.22  (01-01-2009)
Schedule K, Line 12 – NOL Carryover

  1. Accept taxpayer's entry.

3.11.16.10.23  (01-01-2009)
Schedule K, Question 13

  1. This is not a transcription line and does not require editing. If the "Yes" box is checked for this question it is an indication that the taxpayer is not required to complete Schedule L, Balance Sheet entries.

3.11.16.10.24  (01-01-2012)
Schedule L, Balance Sheet

  1. This section provides instructions for processing the Balance Sheet. The Balance Sheet is found on Form 1120, Page 5 (Page 4 for 2007 and prior).

    Note:

    The Balance Sheet programming requires a significant entry to be present on Schedule L, Line 15, Column (d) when Total Assets are $250,000 or more or Total Receipts are $250,000 or more.

    Exception:

    CCC "G" or "F" is edited or there are no significant entries in the income and deduction sections.

  2. To determine if editing a Balance Sheet that contains significant entries is necessary follow the chart below:

    If... And... Then...
    Note: The following chart is listed in "Priority" order.
    The return is "Amended" ,   No action is required. The Balance Sheet will not be transcribed.
    There are no significant entries on Form 1120, Page 1, Lines 1 through 27,   Delete the Balance Sheet.
    The "Yes" box is checked on Form 1120, Page 4*, Schedule K, Question 13
    *(Page 3 for 2007 and prior.)

    1. The entry on Page 1, Box D is less than $250,000 and,

    2. All entries on Page 1, Line 1c and Lines 4 through 10 are less than $250,000,

      Note:

      C&E is not required to add the amounts on Lines 4 through 10.

    		 Delete the Balance Sheet.
    None of these conditions exist,   Edit the Balance Sheet, see IRM 3.11.16.10.24.1 for editing procedures.

  3. To determine if correspondence is necessary for a Balance Sheet that contains no significant entries , is not present, or there is no statement for the balance sheet, follow the chart below:

    If... And... Then...
    Note: The following chart is listed in "Priority" order.
    The return is "Amended" ,   Do not correspond. No action is required.
    The return is "Final" ,   Do not correspond. No action is required.
    The "Yes" box is checked on Form 1120, Page 4*, Schedule K, Question 13, *(Page 3 for 2007 and prior.)   Do not correspond. No action is required.
    There are no significant entries on Form 1120, Page 1, Lines 1 through 27,   Do not correspond. No action is required.
    Form 1120, Page 1, Box D is blank, dash, "none" , "N/A" , or zero Schedule L, Line 15, Column (d) entry is dash, "none" , "N/A" , or zero, Do not correspond instead, edit a "1" to Line 15, Column (d) and edit "1" in Box D.*
    Form 1120, Page 1, Box D has a significant entry Schedule L, Line 15, Column (d) entry is dash, "none" , "N/A" , or zero, Do not correspond instead, edit a "1" to Line 15, Column (d).*
    Form 1120, Page 1, Box D is less than $250,000 Total Receipts, Line 1c plus Lines 4 through 10 are less than $250,000, Do not correspond. No action is required.
    The "cash" box on Schedule K is checked or the taxpayer has notated "Single Entry" , "See Books" , "Balance Sheet not available" , or similar entry,  

    1. Edit a "1" to Schedule L, Line 15, Column (d) if blank, dash, "none" , "N/A" , or zero.*

      Note:

      Dummy a Schedule L if not present.

    2. Edit a "1" on Page 1, Box D if blank, dash, "none" , "N/A" , or zero.*
      See Figure 3.11.16-25.

    None of these conditions exist,   Correspond for the Balance Sheet.
    *The editing of a "1" on Form 1120 Page 1, Box D and Schedule L, Line 15, Column (d) allows the return to bypass ERS in the situations where significant entries are required.

    Figure 3.11.16-25

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

    Example of editing a "1" on Form 1120 Page 1 and Schedule L, Line 15, Column (d) to bypass ERS.

3.11.16.10.24.1  (01-01-2010)
Editing Schedule L, Balance Sheet

  1. After following all Balance Sheet instructions, if Line 15(d) is blank, zero, dash, "none" , or "N/A" , and the Balance Sheet is not being deleted or corresponded for, edit a "1" on Line 15(d). Also edit a "1" to Page 1, Box D if blank, dash, "none" , "N/A" , or zero.

  2. Place Page 5, Schedule L in sequence order when the Balance Sheet is required.

  3. Edit Balance Sheet amounts in dollars only.

  4. If Schedule L is required and blank or missing, but an attachment is present with significant Schedule L amounts, edit the applicable line entries from the attachment. If necessary insert a blank Schedule L to edit the applicable entries.

  5. The following lines are transcribed fields:

    Note:

    Letters in brackets "( )" designate columns.

    • Trade Notes and Accounts Receivable – Ending Schedule L, Line 2a(c) (positive/negative)

    • Loans to Shareholders – Ending Schedule L, Line 7(d) (positive/negative)

    • Less Accumulated Depreciation – Ending Schedule L, Line 10b(d) (positive)

    • Total Assets – Beginning Schedule L, Line 15(b) (positive/negative)

    • Total Assets – Ending Schedule L, Line 15(d) (positive/negative)

    • Other Current Liabilities – Ending Schedule L, Line 18(d) (positive/negative)

    • Loans from Shareholders – Ending Schedule L, Line 19(d) (positive/negative)

    • Other Liabilities – Ending Schedule L, Line 21(d) (positive/negative)

    • Capital Stock – Ending Schedule L, Line 22b(d) (positive)

    • Retained Earnings-Unappropriated – Beginning Schedule L, Line 25(b) (positive/negative)

    • Total Liabilities – Ending Schedule L, Line 28(d) (positive)

  6. When it is necessary to edit Schedule L, Balance Sheet entries, follow the instructions below:

    1. "X" negative entries on Lines 10b(d), 22b(d), and 28(d). Accept negative entries on Lines 2a(c), 7(d), 15(b), 15(d), 18(d), 19(d), 21(d), and 25(b) only.

    2. If line titles on Schedule L have been changed, edit the items which are to be perfected to their proper location on the return.

    3. Edit lines as follows:

      If... And... Then...
      There is no entry on Line 2a, Column (c) Line 2b, Column (c) contains an entry, Add Line 2b(c) to Line 2b(d) and edit the total to Line 2a, Column (c).
      Bracket if negative.
      Line 2b, Column (c) is blank, Edit the Line 2b(d) amount to Line 2a(c) if present.
      Bracket if negative.
      There is no entry on Line 10b, Column (d),   Compute and enter Line 10b, Column (d) by subtracting the Line 10b, Column (c) amount from Line 10a, Column (c).
      Positive only.
      There is no entry on Line 15, Column (b) Lines 2b, 10b, 11b, and 13b, Column (b) are blank, Use appropriate Column (a) entries (if present) to compute Column (b) entries.
      Entries are present on Lines 1 through 14, Column (b), Add Lines 1 through 14, Column (b) and edit the total to Line 15, Column (b).
      Bracket if negative.
      There is no entry on Line 15, Column (d) Lines 2b, 10b, 11b, and 13b, Column (d) are blank, Use appropriate Column (c) entries (if present) to compute Column (d) entries.
      Entries are present on Lines 1 through 14, Column (d), Add Lines 1 through 14, Column (d) and edit the total to Line 15, Column (d).
      Bracket if negative.
      After editing the Balance Sheet, Line 15, Column (d) is blank, zero, dash, "none" , or "N/A" ,

      1. Edit a "1" on Line 15(d).

      2. Edit a "1" to Page 1, Box D if blank, dash, "none" , "N/A" , or zero.

      If Line 22b, Column (d) is blank,   Add Line 22a, Column (c) and Line 22b, Column (c) and edit the total to Line 22b, Column (d).
      Positive only.
      There is no entry on Line 28, Column (d)   Compute and enter Line 28, Column (d) by adding Lines 16 through 27, Column (d).
      Positive only.


3.11.16.10.25  (01-01-2010)
Schedule N (Form 1120) — Foreign Operations of U.S. Corporations

  1. Schedule N (Form 1120), Foreign Operations of U.S. Corporations is valid for Tax Periods beginning 01-01-2000. Delete Schedule N if the tax period begins prior to 01-01-2000.

  2. Corporations that, at any time during the tax year, have assets in or operate a business in a Foreign Country or U.S. possession may have to file Schedule N (Form 1120) with Form 1120, Form 1120-C, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

  3. Do not correspond if Schedule N is missing. Dummy a Schedule N and edit the applicable entries when Form 5471, Form 8865, or Form 8873 are attached to the tax return.

  4. If Schedule N is present and contains no entries, do not correspond.

  5. If more than one Schedule N is attached, combine the information from all Schedules N, including all subsidiaries and:

    1. Edit to the first Schedule N that contains the EIN of the return being processed. "Staple up" any remaining Schedules N, or

    2. Dummy and edit a Schedule N, for the parent return if one is not present on a consolidated return.

3.11.16.10.25.1  (01-01-2009)
Schedule N, Line 1 – Form 8858, Foreign Disregarded Entities

  1. Beginning Tax Period 2004, Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities, will be required to be filed by U.S. persons that are tax owners of Foreign Disregarded Entities.

  2. Edit Audit Code "2" if:

    1. Schedule N, Question 1a is answered "Yes" .

    2. Form 8858 is present.

  3. Convert prior year (2003–2000) Schedule N, Line 1 to Line 1a.

3.11.16.10.25.2  (01-01-2012)
Schedule N, Line 2 – Number of Forms 8865

  1. No entry is required for Schedule N, Line 2 unless Form 8865 is present.

  2. Edit Line 2 as follows:

    If... And... Then...
    A number is present for Schedule N, Question 2,   Take no further action.
    Schedule N, Line 2 is blank, Form(s) 8865 is attached, Edit the number of Forms 8865 in the dotted line area of Question 2.
    Form 8865 is attached, Schedule N is not present, Dummy a Schedule N and edit the number of Forms 8865 to Schedule N, Line 2.


  3. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Form 8865 is attached. See Audit Codes, IRM 3.11.16.9.1.

3.11.16.10.25.3  (01-01-2012)
Schedule N, Line 3 – Form 8865 Question

  1. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Schedule N, Question 3 is answered "Yes" or Form 8865 is attached. See Audit Codes, IRM 3.11.16.9.1.

3.11.16.10.25.4  (01-01-2012)
Schedule N, Line 4 – Form 5471, Controlled Foreign Corporation

  1. Edit Audit Code "2" if Schedule N, Question 4a is answered "Yes" or Form 5471 is attached. See Audit Codes, IRM 3.11.16.9.1.

  2. No entry is required for Schedule N, Line 4b unless Form 5471 is present.

  3. Edit Schedule N, Line 4b as follows:

    If... And... Then...
    A number is present for Schedule N, Line 4b,   Take no further action.
    Schedule N, Line 4b is blank, Form(s) 5471 is attached, Edit the number of Forms 5471 in the dotted line area of Question 4b.
    Note: Document Perfection is responsible for determining the number of any and all Form(s) 5471 received, whether attached to a parent return in a consolidated group, or found as an attachment to a subsidiary return.
    Form 5471 is attached, Schedule N is not present, Dummy a Schedule N and edit the number of Forms 5471 to Schedule N, Line 4b.


3.11.16.10.25.5  (01-01-2012)
Schedule N, Line 5 – Form 3520 Question

  1. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Schedule N, Question 5 is answered "Yes" or Form 3520 is attached. See Audit Codes, IRM 3.11.16.9.1.

3.11.16.10.25.6  (01-01-2010)
Schedule N, Line 6b – Foreign Country Code

  1. Edit Schedule N, Line 6b as follows:

    If... And... Then...
    The taxpayer has entered the name of a Foreign Country in Question 6b,   Edit the two letter "Country Code" to the left of Question 6b. See Acceptable Foreign Countries in Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes, and Countries.

    Exception:

    Edit Country Code "OC" if the foreign country is not listed in Document 7475.

    Note: Use "UK" for England, Northern Ireland, Scotland, and Wales. Also, "Holland" is not an official country name, but is part of The Netherlands, "NL" .
    No Foreign Country is present or "US" , "USA" , "America" or similar reference to the United States is present, Box 6a is checked "Yes" , Edit "Country Code" , "OC" .
    More than one Foreign Country is present,   Edit the "Country Code" of the first Foreign Country shown.


3.11.16.10.25.7  (01-01-2012)
Schedule N, Line 7a – Form 8873 Question

  1. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Schedule N, Question 7a is answered "Yes" . See Audit Codes, IRM 3.11.16.9.1.

3.11.16.10.25.8  (01-01-2009)
Schedule N, Line 7b – Number of Forms 8873

  1. No entry is required for Schedule N, Line 7b unless Form 8873 is present.

    Note:

    TC "971" input is required when Form 8873 is present. See Form 8873 — Extraterritorial Income Exclusion, IRM 3.11.16.11.

  2. Edit Schedule N, Line 7b as follows:

    If... And... Then...
    A number is present for Schedule N, Question 7b, Form(s) 8873 is attached, Process Form 8873.
    See Form 8873 — Extraterritorial Income Exclusion, IRM 3.11.16.11.
    Form(s) 8873 are not attached, Take no further action.
    Schedule N, Line 7b is blank Form(s) 8873 is attached,

    1. Edit the number of Forms 8873 in the dotted line area of Question 7b.

    2. Process Form 8873.
      See Form 8873 — Extraterritorial Income Exclusion, IRM 3.11.16.11.

    Form 8873 is attached, Schedule N is not present,

    1. Dummy a Schedule N and edit the number of Forms 8873 to Line 7b of Schedule N.

    2. Process Form 8873.
      See Form 8873 — Extraterritorial Income Exclusion, IRM 3.11.16.11.


3.11.16.10.25.9  (01-01-2009)
Schedule N, Line 7c – Total Extraterritorial Income Exclusion

  1. No entry is required for Schedule N, Line 7c unless Form 8873 is present.

  2. Edit Schedule N, Line 7c as follows:

    If... And... Then...
    An amount is present for Schedule N, Question 7c Form 8873 is attached, Process Form 8873.
    See Form 8873 — Extraterritorial Income Exclusion, IRM 3.11.16.11.
    Form 8873 is not attached, Take no further action.
    Schedule N, Line 7c is blank Form(s) 8873 is attached,

    1. Compute the total amount of extraterritorial income exclusion from Line 52* and edit to the area provided on Line 7c.
      *(Line 54 for 2006 - 2005, Line 52b or if 52b is blank, Line 52a for 2004, Line 52 for 2003 - 2002, and Line 55 for 2001 - 2000,)

    2. Process Form 8873.
      See Form 8873 — Extraterritorial Income Exclusion, IRM 3.11.16.11.

    Form 8873 is present with a significant entry on Line 52*
    *(Line 54 for 2006 - 2005, Line 52b or if 52b is blank, Line 52a for 2004, Line 52 for 2003 - 2002, and Line 55 for 2001 - 2000.)     		Schedule N is not attached,

    1. Dummy a Schedule N and compute the total amount of extraterritorial income exclusion from all attached Forms 8873. Edit the total to the area provided on Schedule N, Line 7c.

    2. Process Form 8873.
      See Form 8873 — Extraterritorial Income Exclusion, IRM 3.11.16.11.

    Reminder:

    Form 8873, Extraterritorial Income Exclusion, requires TC "971" input. See Form 8873 — Extraterritorial Income Exclusion, IRM 3.11.16.11.



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