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Part 3. Submission Processing

Chapter 12. Error Resolution

Section 217. Error Resolution Instructions for Form 1120S (Cont. 1)

3.12.217  Error Resolution Instructions for Form 1120S (Cont. 1)

3.12.217.2 
Section 01

3.12.217.2.15  (01-01-2010)
Preparer EIN 01PEN

  1. Description – The Preparer's EIN is transcribed from the bottom of Page 1, Form 1120S.

  2. Valid Condition – This field can be blank or it can be numeric, if numeric it cannot be all zeros and it cannot be all nines.

  3. Invalid Condition – This field is invalid if it is all zeros, all nines or less than nine positions.

  4. Correction Procedures –

    1. Correct coding and transcription errors.

    2. If unable to determine a valid entry, delete Field 01PEN.

3.12.217.2.16  (01-01-2010)
Preparer Telephone Number - Field 01PTN

  1. The Paid Preparer Phone Number is transcribed from the bottom of page 1, Form 1120S below the Paid Preparers EIN.

    Note:

    If the taxpayer checked the paid preparer check box "Yes" , a telephone number for the paid preparer must be entered to allow contact.

  2. Invalid Condition:

    • Field 01PTN is invalid if other than alpha or numeric.

  3. Correction Procedures:

    • Correct all coding and transcription errors. If invalid, delete the field.

3.12.217.2.17  (01-01-2010)
Field 01MSC - Missing Schedule Code

  1. Beginning with tax period 200812, Form 1120S will be charged penalties for not providing a complete return. Code & Edit (C&E) will be responsible for initiating correspondence when needed, requesting the missing information, and ERS will be responsible for coding the Field 01MSC appropriately if the missing information is not received.

  2. Enter Field 01MSC whenever the taxpayer does not respond to our request for missing information. See the chart below for the correct code

    Missing Schedule(s) Code
    Schedule(s) K-1 33
    Schedule L (Balance Sheet) 34
    Schedule(s) K-1 and L 36
    Schedule K 45
    Schedule K and K-1 46
    Schedules K and L 47
    Schedules K, K-1 and L 49

  3. Invalid Condition:

    • Field 01MSC is invalid if it is not numeric and not one of the numbers shown above.

      Note:

      There is always a possibility that a Missing Schedule Code is edited by C&E. However, employees working the suspense files in ERS must be entering the appropriate code based on the response received from the taxpayer.

  4. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. If taxpayer does not respond with the missing information, input the appropriate Missing Schedule Code as shown in (2) above.

  5. Suspense Procedures:

    If Then
    Taxpayer responds with missing information Enter Correspondence Received Date in Field 01CRD and continue processing.
    Taxpayer does not respond Enter appropriate Missing Schedule Code in Field 01MSC
    Taxpayer does not provide missing TINs on Schedule K-1 Enter Missing Schedule Code 33 in Field 01MSC and continue processing.
    Taxpayer provides missing K-1's and/or missing TINs Write the DLN of the return on the first Schedule K-1, in the upper left hand corner, then detach and send for processing. Enter Correspondence Received Date in Field 01CRD.

    Caution:

    Enter missing TINS on each Schedule K-1 before detaching for processing.

3.12.217.3  (01-01-2010)
Section 02

  1. Section 02 contains address (entity) information. It will be present when a change of address has been entered.

  2. All fields are of variable length and it is not necessary to account for every position allotted.

  3. This section is not present on a "G" Coded Return.

    Field
    Designator     		Max
    Length     		Title
     
    Location
    02FAD 35 Foreign Address Page 1, number and street line, or corrected entry in pre-addressed label.
    02CON 35 In-Care-of-Name Page 1, corrected entry in pre-addressed label
    02ADD 35 Street Address Page 1, number and street line, or corrected entry in pre-addressed label.
    02CTY 22 City Page 1, city, state, zip line or corrected entry on pre-addressed label.
    02ST 2 State Page 1, city, state, zip line or corrected entry on pre-addressed label.
    02ZIP 5/9/12 ZIP Code Page 1, city, state, zip line or corrected entry on pre-addressed label.

3.12.217.3.1  (01-01-2010)
♦In Care of Name Line 02CON♦

  1. Field 02CON is the in-care-of name.

  2. Valid Conditions - Field 02CON has 35 positions and the valid characters are alpha, numeric, ampersand, dash or slash.

    Note:

    The first position must be alpha or numeric

  3. Invalid Condition Field 02CON is invalid if any of the following conditions are present:

    • The first position is % (percent) and the second position is not blank, or

    • The first position is blank, or

    • The first position is not alpha or numeric, or

    • There are two consecutive blanks between significant characters.

  4. Correction Procedures:

    • Correct all coding and transcription errors.

    IF THEN
    A % (percent) is in the first position

    1. Verify there is a blank in the second position.

    2. If not blank, enter a blank space followed by the "in-care-of " name beginning with an alpha or numeric in Field 02CON

    A blank is in the first position

    1. Delete blank.

    2. Enter the "in care of" name beginning with an alpha or numeric in Field 02CON.

    First position is not alpha or numeric

    1. Verify "in care of" name on return

    2. Enter the "in care of" name beginning with an alpha or numeric in Field 02CON.

    Two consecutive blanks present between significant characters Delete any unnecessary blanks in Field 02CON.

3.12.217.3.2  (01-01-2010)
♦Field 02FAD - Foreign Address ♦

  1. Description - Field 02FAD is the foreign address information.

    • This field will contain an entry when there is a foreign address present on the return.

    • Field 02FAD should not be present on "G" coded short length returns.

  2. Valid Characters: Valid characters are alpha, numeric, and special characters.

  3. Invalid Condition: Field 02FAD will generate as an error when any of the following conditions are present:

    • The first position is blank.

    • Any character follows two consecutive blanks.

    • There are more than 35 characters present in the field.

      Note:

      ISRP is instructed to input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return.

  4. Correction Procedures:

    1. Correct all coding and transcription errors.

      If... Then...
      Field 02FAD is present 1. GTSEC 02
      2. Ensure Field 02CTY contains a foreign country code and Field 02ST (State) contains a period/space (. ).
      See Document 7475, State Abbreviations, Major City Codes and Address Abbreviations, for a list of Country codes.

      Exception:

      Use the country code based on the province in Field 02CTY if the foreign address is from Canada, and the address contains a province name or abbreviation. See chart below.

      A province abbreviation is not present for Australia, Brazil, Cuba, Italy, Mexico or the Netherlands, but a province name is present Enter the province abbreviation in Field 02FAD. See Exhibit 3.12.217-13.
      A foreign address is not present on the return 1. SSPND "610."
      2. Renumber return with a domestic DLN

    2. Canada Only Province/ Country Code Chart:

      Canadian Province Province Abbreviation Country Code Field 02CTY
      Alberta AB XA
      British Columbia BC XB
      Manitoba MB XM
      New Brunswick NB XN
      Newfoundland and Labrador NL XL
      Northwest Territories NT XT
      Nova Scotia NS XS
      Nunavut NU XV
      Ontario ON XO
      Prince Edward Island PE XP
      Quebec QC XQ
      Saskatchewan SK XW
      Yukon YT XY

    3. If Form 8822 (Change of Address) is attached to the return, compare the name and address information on the Form 8822 to the return.

      If . . . Then . . .
      The information is the same Continue processing.
      The information is different

      1. Enter address shown on Form 8822 in Field 02FAD

      2. Notate "8822 detached" on tax return

      3. Detach Form 8822 and route to Entity using Form 4227 or follow local procedures.

      4. Notate on Form 4227, "Change of Address per Form 8822"

    Note:

    The lead tax examiner is required to batch all Forms 8822 daily and handcarry them to Entity Control for expedite processing.

3.12.217.3.3  (01-01-2010)
Field 02ADD - Street Address

  1. This field is transcribed from the Street Address line of the entity portion of the return.

  2. Invalid Condition - Field 02ADD is invalid if:

    1. Street Address is present and the first position is blank,

    2. A character other than alpha, numeric, blank, dash or slash is present,

    3. Any character follows two consecutive blanks, or

    4. There are more than 35 characters in this field.

      Note:

      ISRP will input a pound (#) sign as the 35th character to indicate an overflow condition.

  3. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. If the 35th character is a pound sign (#), refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries. Abbreviate the address to 35 or fewer characters.

    3. If unable to correct, DLSEC 02.

3.12.217.3.4  (01-01-2010)
Field 02CTY - City

  1. This field is transcribed from the City, State, Zip line of the entity portion, on page 1 of the return.

    1. Certain cities are designated "Major Cities" and have been assigned a designator that consists of two alpha characters. This code represents both the city and state.

    2. Whenever the city is on the Major City list, ISRP will enter the Major City Code instead of entering the entire name of the city and the state.

    3. When a Major City Code is used, it will be the first two positions of Field 02CTY.

  2. Invalid Condition - Field 02CTY is invalid if:

    1. City is present and the first position is blank.

    2. Any character other than alpha or blank is present.

    3. Any character follows two consecutive blanks.

    4. A Major City Code is present and it is not a valid Major City Code.

  3. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. Follow procedures below:

      If ... Then ...
      Valid city is not available from return or envelope

      • Research using CC INOLES or ENMOD or

      • Refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, or

      • Follow local Submission Processing (SP) procedures

      Major city code is found Enter in Field 02CTY and delete Field 02ST
      Unable to correct DLSEC 02

3.12.217.3.5  (01-01-2010)
Field 02ST - State

  1. This field is transcribed from the City, State, Zip Code line of the entity portion of the return.

  2. If the address is a foreign address, defined as not within the 50 states or the District of Columbia, SSPND with Action Code "650" and attach a Form 4227 with a notation to forward to the Ogden Submission Processing Campus.

    Note:

    An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) address is not considered a foreign address, but an address in an American possession.

  3. Invalid Condition - Field 02ST is invalid if the entry is not a state code that is listed in the State Code Table in Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

  4. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. If a valid State Code is not available from the return or envelope, take any of the following steps:

      • Research using INOLES and/or ENMOD to determine state,

      • Refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, and determine Major City Code, or

      • Follow local Submission Processing procedures.

        Note:

        If a major city code is found, GTSEC 02. Enter the code in Field 02CTY and delete Field 02ST.

    3. If unable to correct, DLSEC 02.

3.12.217.3.6  (01-01-2010)
Field 02ZIP - ZIP Code

  1. This field is transcribed from the City, State, Zip line of the entity portion of the return.

  2. Invalid Condition - Field 02ZIP is invalid if:

    • Zip Code is present and the first 5 positions are not numeric,

    • The last 4 positions are not all numeric or all blank, or

    • Positions 4 and 5 are "00"

      Exception:

      Zip Code 20500

  3. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. If a valid zip code is not available from the return or envelope, research using any of the following to determine the zip code.

    3. INOLES, ENMOD. and/or Document 7475, Major City, State and Address Abbreviations, ZIP Codes and Countries.

3.12.217.4  (01-01-2010)
Section 03

  1. Section 03 is a General Information section.

  2. The list below gives the designation, length, title and the location on the return where the fields are displayed in Section 03 of Form 1120S.

    Field
    Designator     		Max
    Length     		Title Location
    03PRI 1 Precomputed Penalty/Interest (P/I)Code Entered as L2 followed by the P&I code next to line 9 (deductions section)
    03TPC 1 Tax Preference Code (TPC) Entered as L4 followed by TPC code next to line 9 (deductions section)
    03SWC 1 Salary and Wage Code Pg 1, line 8, right margin
    03ADC 9 Audit Code Entered as L1 followed by the appropriate Audit Code next to line 9 (deductions section)
    03ISI 1 Installment Sales
    Indicator     		Edited as L3 followed by the appropriate Installment Sales Indicator next to line 9 (deductions section)
    03IRC 1 Initial Return Code Box G, Page 1
    03GSH 4 Number of Shareholders Page 1, line I
    03AMC 1 Accounting Method Code Sch B, line 1
    03QG 1 Consolidated S Corp Indicator 199712 and prior only. ERS input only. If Box G on page 1 is checked, input a 1 in Field 03QG.
    03LIC 11 Low Income Housing
    Credit     		Edited as L5 followed by Form 8586 credit next to line 9 (deductions section)
    03RLI 11 Total Recapture Credit Edited as L6- followed by the Form 8611 credit

3.12.217.4.1  (01-01-2010)
Penalty/Interest Code 03PRI

  1. The precomputed Penalty and Interest Code "1" is entered when the precomputed penalty and interest ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the original due date.

  2. Transcription is from the left hand margin next to line 9. If applicable "L2" followed by "1" has been edited.

  3. If interest only is indicated, CCC "R" must also be present in 01CCC.

  4. 03PRI must be blank or "1" .

3.12.217.4.2  (01-01-2010)
Tax Preference Code 03TPC

  1. The Tax Preference Code 1 is used to identify an excess amount claimed by taxpayer.

  2. Transcription is from the left hand margin next to line 9. If applicable "L4" followed by "1" has been edited.

  3. The valid entries are blank and "1" .

  4. Schedule K–1, Items of Tax Preference, totals ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ period.

  5. Generally a Tax Preference Code of "1" is required when Form 4626, Alternative Minimum Tax - Corporations, or substitute is attached.

3.12.217.4.3  (01-01-2010)
Salary and Wage Indicator 03SWC

  1. The Salary and Wage Code "1" must be entered when Salary and Wages are present.

  2. Valid codes are blank or 1.

  3. A Code "1" must be present if:

    • line 8, page 1 of the 1120S has an amount for salaries/wages.

    • line 3, Schedule A, page 2, has an amount for salaries/wages.

    • If there are other attachments with salaries/wages indicated.

  4. Field 03SWC may be blank if there is no indication of salaries/wages.

3.12.217.4.4  (01-01-2010)
Audit Code 03ADC

  1. The Audit Codes are entered to monitor the taxpayers and their filing behavior.

  2. Field 03ADC will be transcribed from the left hand margin next to line 9. If applicable "L1" followed by the appropriate audit code (1-9) has been edited.

  3. The entry can be blank, or up to nine digits.

  4. The valid codes are 1-9.

  5. If Field 03ADC was transcribed incorrectly, enter the correct code from the left hand margin as indicated in (2) above.

3.12.217.4.5  (01-01-2010)
Audit Code

  1. Audit Code 1 (Disclosure)

    1. Form 8082, Notice of Inconsistent Treatment or Amended Return (Administrative Adjustment Request (AAR) is attached.

    2. Form 8275, Disclosure Statement is attached.

    3. Form 8275-R, Regulation Disclosure Statement, is attached.

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

  2. Audit Code 2 (International Issues)

    1. Form 1120S, Schedule K, line 14(l) Total Foreign Taxes,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

    3. For periods beginning after 199912, if an affirmative answer is given to any question other than Question 6, on Schedule N.

    4. Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations is attached.

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

    6. Form 8621, Return By A Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund is attached and Part IV 10a - 11f has an ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    7. Form 5713, International Boycott Report, Tax Effect of the International Boycott Provisions is attached and both questions in 7(f) are answered "yes" .

    8. Form 8832, Entity Classification Election, is attached and either box 2(d), (e) or (f) is checked.

    9. Form 8833, Treaty Based Return Position Disclosure Under section 6114 or 7701(b), is attached.

    10. Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities, is attached.

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

  3. Audit Code 3

    1. Form 8283, Noncash Charitable Contributions, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Form 8283 is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

  4. Audit Code 4

    1. Form 1120 processed with a valid election on file (Form 2553) and converted to Form 1120S.

  5. Audit Code 5 - Large Loss

    1. Schedule K - line 10 reflects a loss ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. Audit Code 6- Form 3115

    1. Presence of Form 3115, Change of Accounting Method , is attached.

  7. Audit Code 7

    1. Form 1120S, Schedule K, line 14(l) Total Foreign Taxes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Form 5713, International Boycott Report is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ " .

    3. Form 8621, Return by a Shareholder of a Passive Foreign Investment Company, or Qualifying Electing Fund, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  8. Audit Code 8 - Form M-3

    1. Form M-3 attached.

  9. Audit Code 9 - First Year "S" Election

    1. The date in Box A falls during the tax year for which the S corporation is being filed.

3.12.217.4.6  (01-01-2010)
Installment Sales Indicator–03ISI

  1. The taxpayer has computed installment sales income.

    1. Transcription is from left hand margin next to line 9. If applicable "L3" followed by the appropriate Installment Sales Indicator (1–3) has been edited.

    2. The valid entries are 1, 2, 3, or blank.

    3. Enter the Installment Sales Indicator code indicated by the shareholder’s response to Question 3, Form 6252, Installment Sale Income.

    Question 3 Code
    Yes 1
    No 2
    Blank Blank
    Yes and No 3

  2. Correction

    1. Examine the return and attachments to determine the correct code.

    2. Delete the incorrect entry and enter the correct code on the screen in Field 03ISI and on the left side margin next to line 9.

    3. If a code should not be present, blank the entry on the screen.

3.12.217.4.7  (01-01-2010)
Initial Return Code–03IRC

  1. This code is entered as an indication that this is a first time filer.

  2. This field is determined from the Initial Return Box, line G, page 1.

  3. The valid entries are 2 and blank.

  4. ISRP will transcribe this field from the code edited to the upper right margin of page 1, Box E.

  5. If there is an indication the return is an initial return, enter a "2" when:

    1. the initial return box, located below the entity area is checked.

    2. the date of incorporation, Box E, is within 12 months of the tax period ending.

    3. there is an indication of an initial filing written on the return such as "Initial Return" , "First Return" or "New Corporation" .

    4. the date of incorporation is within 24 months (or is not shown) and the beginning balance sheet is blank or zeros.

3.12.217.4.8  (01-01-2010)
Number of Shareholders-03GSH

  1. The valid entries are blank, 0001 thru 9999.

  2. ISRP will transcribe this field from Page 1, line I.

3.12.217.4.9  (01-01-2010)
Accounting Method Code—03AMC

  1. This code is input to identify taxpayer’s accounting method.

  2. Transcription is from line 1, Schedule B.

  3. Valid entries for this field are blank, 1, 2, or 3.

  4. Input the Accounting Method Code as follows:

    • Code 1 if box (a) is checked.

    • Code 2 if box (b) is checked.

    • Code 3 if box (c) is checked.

  5. Leave blank if multiple or no boxes are checked.

3.12.217.4.10  (01-01-2010)
Low Income Housing Credit 03LIC

  1. The taxpayer is claiming a Low Income Housing Credit.

  2. Transcription is from the left hand side margin next to line 9 (deductions section). If applicable "L5" followed by the Form 8586 credit amount.

  3. The money amount is entered in dollars only and must be positive.

  4. If Forms 8586, 8609, or Schedule A (Form 8609) are attached or Low Income Housing Credit is claimed (entries present on Schedule K, lines 13a or 13b), enter "9" in Field 01CCC.

  5. Valid tax periods are 198701 and subsequent. If Tax Period is 198612 or prior, delete the credit.

  6. If Low Income Housing Credit is claimed, Form 8586 must be attached. Form 8609 and Schedule A (Form 8609) must also be attached if Form 8586 has any entries in lines 1 through 4. If missing, correspond.

  7. If no reply, enter CCC 3 .

3.12.217.4.11  (01-01-2010)
Total Recapture Credit—03RLI

  1. The taxpayer is filing a Form 8611 to recapture the Low Income Housing Credit.

  2. Transcription is from the left hand side margin next to line 9 (deductions section). If applicable "L6" has been edited with the Form 8611 credit amount

  3. The entry amount is notated next to "L6" it has been edited from Form 8611, line 14 (prior year line 12).

  4. The money amount is edited in dollars only and must be positive.

  5. If Form 8693, Low Income Housing Credit Disposition Bond, is attached, enter "9" in Field 01CCC (if not present).

  6. If this field has an entry, Form 8611 must be attached.

  7. If missing, correspond. If no reply, enter CCC 3.

  8. Valid Tax Periods are 198701 and subsequent.

3.12.217.5  (01-01-2010)
Section 04

  1. Section 04 is the income lines (1–6) on Form 1120S.

  2. Listed below are the fields displayed in Section 04 of Form 1120S.

  3. Verify the figures to ensure that the taxpayer used the appropriate line.

    Designator Max Length Title Dollars/Cents Positive/Negative
    Location
    0401A 11 Gross Receipts $ +/- Pg 1, line 1a
    0401C 11 Gross Receipts Less Returns $ +/− Pg 1, line 1c
    0402 11 Cost of Goods Sold $ +/− Pg 1, line 2
    0404 11 Net Gain/Loss $ +/− Pg 1, line 4
    0405 11 Other Income $ +/− Pg 1, line 5
    0406 15 Total Income $ +/− Pg 1, line 6

3.12.217.5.1  (01-01-2010)
Section 05

  1. Section 05 is the deduction lines (7–21) on Form 1120S.

  2. Listed below are the fields displayed in Section 05 of Form 1120S.

  3. Verify the figure to ensure that the taxpayer used the appropriate line.

    Designator Max
    Length     		Title Dollars/Cents Positive/Negative
    Location
    0507 11 Compensation of Officers $ +/− Pg 1, Line 7
    0508C 11 Salary and Wages Less Job Credit $ +/− Pg 1, line 8
    0509 11 Repairs and Maintenance $ +/− Pg 1, line 9
    0510 11 Bad Debts $ +/− Pg 1, line 10
    0511 11 Rents $ +/− Pg 1, line 11
    0512 11 Taxes and Licenses $ +/− Pg 1, line 12
    0513 11 Deductible Interest $ +/− Pg 1, line 13
    0514 11 Depreciation not claimed on Schedule A or elsewhere (Form 4562) $ +/− Pg 1, line 14
    0515 11 Depletion $ +/− Pg 1, line 15
    0516 11 Advertising $ +/− Pg 1, line 16
    0517 11 Pension, Profit Sharing Plan $ +/− Pg 1, line 17
    0518 11 Employee Benefit Program $ +/− Pg 1, line 18
    0519 11 Other Deductions $ +/− Pg 1, line 19
    0520 15 Total Deductions $ +/− Pg 1, line 20
    0521 15 Ordinary Income Loss $ +/− Pg 1, line 21

3.12.217.5.2  (01-01-2010)
Section 06

  1. Section 06 is the Tax and Payment lines on Form 1120S.

  2. Listed below are the fields displayed in Section 06 of Form 1120S.

  3. Field 0617, Total Gross Rents cannot be a negative field. If the taxpayer enters a negative amount, make Field 0617 a positive field.

  4. Verify the figures to ensure that the taxpayer used the appropriate line.

    Designator Max Length Title Dollars / Cents Positive / Negative Location
    0617 11 Total Gross Rents $ + Form 8825 line 17
    0622C 15 Total Tax Taxpayer $/C + Page 1, line 22c
    0623A 15 Estimated Tax Payment $/C + Page 1, line 23a
    0623B 15 Form 7004 Payment $/C + Page 1, line 23b
    0623D 15 Telephone Excise Tax Paid $/C + Page 1 line 23d (200612-200711)
    06TRV 15 Telephone Excise Tax Paid - Verify Field $/C + Corrected TETR amount based on correspondence reply
    0623E 15 Total lines 23a-23c $/C   Page 1, line 23d
    0624 15 Estimated Tax Penalty $/C + Page 1, line 24
    0625 15 Balance Due Over-Payment Taxpayer $/C +/− Page 1, line 25, 26
    0627 15 Credit Elect Amount $/C + Page 1, line 27, Center
    06A01 11 Beginning Inventory $ + Pg 2, Sch A, line 1
    06A07 11 Ending Inventory $ + Pg 2, Sch A, line 7
    0613F 11 Credit for Alcohol used as Fuel $ + Page 3, line 13f, Schedule K
    0616D 13 Total Property Distribution $ +/- Schedule K, line 16d
    0617E 13 Income (Loss) $ +/- Schedule K, line 18
    06BXE 15 Total Assets End $ + Page 1, Form 1120S, Box F
    06MCT 12 Manually Corrected $ + Page 1, line 22c, Left
    06K4 11 Portfolio Interest $ +/− Pg 2, line 4, Schedule K
    06LTS 13 Loans to Shareholders (end of year) $ +/- Schedule L, line 7d
    06TAB 13 Total Assets Beginning $ +/- Schedule L, line 15b
    06LFS 13 Loans from Shareholders $ +/- Schedule L, line 19d
    06CSE 13 Capitol Stock (EOY) $ +/- Schedule L, line 22d
    06ACE 13 Additional Paid in Capital $ +/- Schedule L, line 23d
    06REE 13 Retained Earnings (EOY) $ +/- Schedule L, line 24d
    06OTH 13 Travel and Entertainment $ +/- Pg 4, Sch M-1, line 3b
    06AAA 13 Sch. M-2 Balance (BOY) $ +/- Schedule M-2, line 1A

3.12.217.6  (01-01-2010)
Section 12

  1. Section 12 contains data for Direct Deposit refunds for businesses.

  2. If direct deposit is requested, filers of Forms 1120S must use Form 8050, Direct Deposit of Corporate Tax Refund, to request that the IRS deposit a corporate income tax refund (including a refund of $1 million or more) directly into an account at any U.S. bank or other financial Institution (such as a mutual fund or brokerage firm) that accepts direct deposits.

  3. Direct Deposit refunds are not valid for prior year returns.

3.12.217.6.1  (01-01-2010)
Error Record Format Section 12

  1. The Error Record Format for Section 12 is:

    Field Designator Field Length Title Location
    12RTN 9 Routing Transit Number (RTN) Form 8050
    12DAN 17 Depositors Account Number (DAN) Form 8050
    12DDC 2 Direct Deposit Code Form 8050
    12TDA 1 Type Depositor Account (TDA) Form 8050

3.12.217.6.2  (01-01-2010)
Routing Transit Number (RTN) – Field 12RTN

  1. Field 12RTN is transcribed from line 1, Form 8050.

  2. Field 12RTN is a 9 digit numeric field.

  3. The first two digits of Field 12RTN must be numeric and as follows:

    1. Between 01 through 12; or

    2. Between 21 through 32.

  4. Correction Procedure—Check for transcription and/or coding errors and correct accordingly.

  5. If Field 12RTN is not valid, blank the field.

3.12.217.6.3  (01-01-2010)
Depositors Account Number (DAN) – Field 12DAN

  1. Field 12DAN is transcribed from line 2, Form 8050.

  2. Field 12RTN is valid up to 17 characters. The valid characters for Field 12RTN are as follows:

    1. Numeric

    2. Alpha

    3. Hyphens

    4. Spaces

  3. The first two digits of Field 12RTN must be numeric and as follows:

    1. Between 01 through 12; or

    2. Between 21 through 32.

  4. Correction Procedure—Check for transcription and/or coding errors and correct accordingly.

  5. If Field 12DAN is not valid, blank the field.

3.12.217.6.4  (01-01-2010)
Direct Deposit Code-Field 12DDC

  1. Field 12DDC is a computer generated field and is not correctable. The Direct Deposit Code is included in the Section 12 screen display for information only.

  2. Field 12DDC may be blank or it may contain a two digit number that is used by Master File to generate a notice to the taxpayer.

3.12.217.6.5  (01-01-2010)
Type Depositor Account Field (TDA) – 12TDA

  1. Field 12TDA is transcribed from line 3, Form 8050.

  2. Field 12TDA is a 1 digit alpha field. It must be either a "C" for Checking or a "S" for Saving.

  3. Correction Procedure—Check for transcription and/or coding errors and correct accordingly.

  4. If both or neither box is checked, enter C in Field 12TDA

3.12.217.7  (01-01-2010)
Section 14

  1. Section 14 contains data from Form 1120S , Schedule N, Foreign Operations of U.S. Corporations. See Exhibit 3.12.217-3 for a copy of Schedule N.

  2. Section 14 data is valid for tax periods beginning after 199912. Schedule N was not available for tax periods 199912 and prior.

3.12.217.7.1  (01-01-2010)
Error Record Format Section 14

  1. The Error Record Format for Section 14 is:

    Field Designator Field Length Title Location
    14Q01 1 Disregarded Entity Form 1120S , Schedule N, line 1a
    14Q02 3 Number of Forms 8865 Form 1120S, Schedule N, line 2
    14Q03 1 Direct/Indirect Interest Form 1120S, Schedule N, line 3
    14Q4A 1 Controlled Foreign Corporation Form 1120S, Schedule N, line 4a
    14Q4B 3 Number of Forms 5471 Form 1120S, Schedule N, line 4b
    14Q05 1 Foreign Trust Distribution Form 1120S, Schedule N, line 5
    14Q6A 1 Foreign Country Financial Account Form 1120S, Schedule N, line 6a
    14Q6B 2 Foreign Country Code Form 1120S, Schedule N, line 6b
    14Q7A 1 Extraterritorial Income (EI) Exclusion Form 1120S, Schedule N, line 7a
    14Q7B 3 Number of Forms 8873 Form 1120S, Schedule N, line 7b
    14Q7C 15 Total EI Exclusion Form 1120S, Schedule N, line 7c

3.12.217.7.2  (01-01-2010)
Disregarded Entity–Field 14Q01

  1. Field 14Q01 is transcribed from line 1a, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure—Check for coding and transcription errors and correct accordingly.

3.12.217.7.3  (01-01-2010)
Number of Forms 8865 – Field 14Q02

  1. Field 14Q02 is transcribed from the dotted line portion of line 2, Schedule N, Form 1120S .

  2. This Field is invalid if it is not all numeric or blank.

  3. The valid numeric range is from 0 to 999.

  4. Correction Procedure—

    1. Check for coding and transcription errors and correct accordingly.

    2. If Schedule N, line 2 is blank and Forms 8865 are attached, overlay with the correct number.

3.12.217.7.4  (01-01-2010)
Direct/Indirect Interest–Field 14Q03

  1. Field 14Q03 is transcribed from the line 3, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure—Check for coding and transcription errors and correct accordingly.

3.12.217.7.5  (01-01-2010)
Controlled Foreign Corporation–Field 14Q4A

  1. Field 14Q4A is transcribed from line 4a, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure—Check for coding and transcription errors and correct accordingly.

3.12.217.7.6  (01-01-2010)
Number of Forms 5471 – Field 14Q4B

  1. Field 14Q4B is transcribed from the dotted line portion of line 4b, Schedule N, Form 1120S.

  2. This Field is invalid if it is not all numeric or blank.

  3. The valid numeric range is from 0 to 999.

  4. Correction Procedure—

    1. Check for coding and transcription errors and correct accordingly.

    2. If Schedule N, line 4b is blank and Forms 5471 are attached, overlay with the correct number.

3.12.217.7.7  (01-01-2010)
Foreign Trust Distribution–Field 14Q05

  1. Field 14Q05 is transcribed from line 5, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure—Check for coding and transcription errors and correct accordingly.

3.12.217.7.8  (01-01-2010)
Foreign Country Financial Account–Field 14Q6A

  1. Field 14Q6A is transcribed from line 6a, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure—Check for coding and transcription errors and correct accordingly.

3.12.217.7.9  (01-01-2010)
Foreign Country Code–Field 14Q6B

  1. Field 14Q6B is transcribed from line 6b, Schedule N, Form 1120S.

  2. This Field must be a two digit alpha field or blank if Schedule N is not present.

  3. If the Foreign Country is present on line 6b, Schedule N, Form 1120S, enter the Foreign Country Code to the left of line 6b, Schedule N, Form 1120S, and in Field 14Q6B.

3.12.217.7.10  (01-01-2010)
Extraterritorial Income Exclusion–Field 14Q7A

  1. Field 14Q7A is transcribed from the left of line 7a, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure—Check for coding and transcription errors and correct accordingly.

3.12.217.7.11  (01-01-2010)
Number of Forms 8873 – Field 14Q7B

  1. Field 14Q7B is transcribed from the dotted line area of line 7b, Schedule N, Form 1120S.

  2. This Field is invalid if it is not all numeric or blank.

  3. The valid numeric range is from 1 to 999.

  4. Correction Procedure—Check for coding and transcription errors and correct accordingly.

3.12.217.7.12  (01-01-2010)
Total Extraterritorial Income Exclusion–Field 14Q7C

  1. Field 14Q7C is transcribed from the dotted line area of line 7c, Schedule N, Form 1120S.

  2. Field 14Q7C can be positive or negative and is dollars only.

  3. This Field is invalid if it is not all numeric or blank.

3.12.217.8  (01-01-2010)
Section 15-18 Data - Forms 1120S

  1. This section contains instructions for correcting Sections 15-18 Field Errors.

  2. Computer generated fields are described under the appropriate Error Code(s).

  3. Section 15 -18 contains data from Form 4136, Credit for Federal Tax Paid on Fuels. All fields are transcribed in dollars and cents and must be positive.

    Note:

    Example: Taxpayer reports a credit of $4,500.00 on line 3a and $600.00 on line 5b, Form 4136. Section 15 will show the amount transcribed from line 3a as 15A01, $4,500.00 with 15C01 as 360 (CRN) and amount transcribed as 15A02 $600.00 and 15C02 as 355 (CRN). In this scenario only Screen 15 would appear since only two credits were claimed. Screens 16-18 will not appear.

  4. Screens 15-18 could generate on an account if the TP claimed as many as 43 different credits. Screen 15 indicates the first 12 credits transcribed, Screen 16 will indicate credits 13-24, Screen 17 will indicate credits 25-36, and Screen 18 will indicate credits 37-43.

3.12.217.8.1  (01-01-2010)
Section 15-18 Field Errors

  1. Correctable Section 15–18 fields are listed below:

    Field Display Meaning
    15A01 First credit reported on Form 4136
    15C01 CRN for first credit reported on Form 4136
    15A02-15A12 Second thru twelfth credit amounts reported on Form 4136
    15C02-15C12 Second thru twelfth CRN(s) reported on Form 4136
    16A01 Thirteenth credit reported by TP on Form 4136 (appears on Screen 16).
    16C01 Thirteenth CRN reported on Form 4136 (appears on Screen 16)
    16A02-16A12 Fourteenth thru twenty -fourth credit amount reported on Form 4136
    16C02-16C12 Fourteenth thru twenty-fourth CRN(s) reported on Form 4136
    17A01 Twenty-fifth credit reported on Form 4136 (appears on Screen 17)
    17C01 Twenty-fifth CRN reported on Form 4136 (Screen 17)
    17A02-17A12 Twenty-sixth thru thirty-sixth credit amounts reported on Form 4136.
    17C02-17C12 Twenty-sixth thru thirty sixth CRN reported on Form 4136
    18A01 Thirty-seventh credit amount reported on Form 4136 (Screen 18)
    18C01 Thirty-seventh CRN reported on Form 4136 (Screen 18)
    18A02-18A07 Thirty-eighth thru forty-third credits reported on Form 4136
    18C02-18C07 Thirty-eighth thru forty-third CRN reported on Form 4136.

  2. Invalid Condition - Section 15-18 field errors will display if:

    1. A field is not all numeric.

    2. An entry exceeds the maximum field length.

    3. A "positive only" field is negative.

  3. Correction Procedures:

    1. Check for coding and transcription errors.

    2. Make necessary corrections.

    3. If a "positive only" field is negative, delete the field.

  4. Current valid Credit Reference Numbers with their valid periods are listed below:

    CRN Valid Tax Periods
    306 200601 and later
    307 200601 and later
    309 200601 and later
    310 200601 and later
    318 199708 and prior
    324 200101 and later
    346 200101 and later
    347 200601 and later
    350 200101 and later
    352 200101 and later
    353 200101 and later
    354 200101 and later
    355 200101 and later
    356 200101 and later
    357 200101-200511
    359 200101-200511
    360 200101 and later
    361 200101 and later
    362 200101 and later
    363 200101-200511
    369 200101 and later
    375 200101-200511
    376 200101-200511
    377 200101 and later
    388 200501 and later
    390 200501 and later
    393 200501 and later
    394 200501 and later
    395 200501-200709
    411 200601 and later
    412 200601 and later
    413 200601 and later
    414 200601 and later
    415 200601 and later
    416 200601 and later
    417 200601 and later
    418 200601 and later
    419 200510 and later
    420 200510 and later
    421 200510 and later
    422 200510 and later
    423 200601 and later
    424 200601 and later
    425 200601 and later
    426 200601 and later
    427 200601 and later
    428 200601 and later
    429 200601 and later
    430 200601 and later
    431 200601 and later
    432 200601 and later
    433 200510 and later
    434 200510 thru 200712
    435 200810 and later
    436 200810 and later
    437 200810 and later

  5. For tax periods 2000 and prior use the following conversion chart below:

    If Tax Year is 2000 or prior and CRN is ... Then Convert to CRN
    301 362
    302 356
    303 360
    304 361
    305 353
    307 324
    310 369
    312 359

3.12.217.9  (01-01-2010)
Section 20 Data-Telephone Excise Tax Refund

  1. Section 20 contains information reported on Form 8913, Credit For Federal Telephone Excise Tax Paid.

  2. This section is not required.

  3. All fields in Section 20 are numeric only and transcribed in dollars and cents.

  4. All fields in Section 20 must be positive.

  5. Listed below are all valid fields:

    Field Designator Maximum Length Title Location Form 8913
    20TTR 15 Telephone Excise Tax 15(d)
    20TTI 15 Telephone Excise Tax Credit Interest 15(e)

  6. TETR can only be claimed on returns with tax periods ending 200612–200711.

3.12.217.10  (01-01-2010)
Math/Consistency Priority IV

  1. These errors will be displayed with the Error Code assigned to them for the specific error in ascending numerical order. The screen display will show the error code assigned and the fields needed to make the necessary correction.

  2. The blank field "CL" will be displayed for the entry of a Clear Code on records where the possibility exists that a change or correction may not be needed.

  3. All errors must be resolved by either eliminating the error, entering a Clear Code, or entering a Taxpayer Notice Code.


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