- Instructions for Form 1120-C - Introductory Material
- General Instructions
- Purpose of Form
- Who Must File
- Where To File
- When To File
- Who Must Sign
- Assembling the Return
- Tax Payments
- Estimated Tax Payments
- Interest and Penalties
- Accounting Methods
- Accounting Period
- Rounding Off To Whole Dollars
- Other Forms and Statements That May Be Required
- Reportable transaction disclosure statement.
- Reportable transactions by material advisors.
- Transfers to a cooperative controlled by the transferor.
- Dual consolidated losses.
- Election to reduce basis under section 362(e)(2)(C).
- Annual information statement for elections under section 108(i).
- Other forms and statements.
- Specific Instructions
- Period Covered
- Name and Address
- Item A. Identifying Information
- Item B. Employer Identification Number (EIN)
- Item C. Type of Cooperative
- Item D. Initial Return, Final Return, Name Change, Address Change, or Amended Return
- Exception for income from qualifying shipping activities.
- Line 1. Gross Receipts or Sales
- Line 2. Cost of Goods Sold
- Line 4. Dividends and Inclusions
- Line 5. Interest
- Line 6. Gross Rents and Royalties
- Line 9. Other Income
- Limitations on Deductions
- Section 263A uniform capitalization rules.
- Transactions between related taxpayers.
- Limitations on business interest expense.
- Section 291 limitations.
- Election to deduct business start-up and organizational costs.
- Passive activity limitations.
- Reducing certain expenses for which credits are allowable.
- Limitations on deductions related to property leased to tax-exempt entities.
- Line 11. Compensation of Officers
- Line 12. Salaries and Wages
- Line 13. Bad Debts
- Line 14. Rents
- Line 15. Taxes and Licenses
- Line 16. Interest
- Line 17. Charitable Contributions
- Limitation on deduction.
- Suspension of 10% limitation for farmers and ranchers and certain Native Corporations.
- Temporary suspension of 10% limitation for certain disaster-related contributions.
- Cash contributions.
- Contributions of $250 or more.
- Contributions of property other than cash.
- Line 18. Depreciation
- Line 20. Pension, Profit-Sharing, etc., Plans
- Line 21. Employee Benefit Programs
- Line 22. Domestic Production Activities Deduction (DPAD)
- Line 23. Other Deductions
- Line 25a. Taxable Income Before Adjustments and Special Deductions
- Line 25b. Deductions and Adjustments From Schedule H
- Line 25c. Taxable Income Before Net Operating Loss and Special Deductions
- Line 26a. Net Operating Loss Deduction
- Line 26b. Special Deductions
- Line 26c. Total NOL and Special Deductions
- Limitations on Deductions
- Tax, Refundable Credits, and Payments
- Line 27. Taxable Income
- Line 29.
- Line 30a. 2017 Overpayment Credited to 2018
- Line 30b. Estimated Tax Payments
- Line 30c. Overpaid Estimated Tax
- Line 30d. Net Tax Payments
- Line 30f.
- Line 30g. Refundable Credits From Form 8827
- Line 30h. Section 1383 Adjustment
- Line 30j. Total Payments, Refundable Credits, Section 1383 Adjustments, and Net 965 Tax Liability
- Line 31. Estimated Tax Penalty
- Line 32. Amount Owed
- Line 34. Refund
- Schedule C. Dividends, Inclusions, and Special Deductions
- Consolidated returns.
- Line 1, Column (a)
- Line 2, Column (a)
- Line 3, Column (a)
- Line 3, Columns (b) and (c)
- Line 4, Column (a)
- Line 5, Column (a)
- Line 6, Column (a)
- Line 7, Column (a)
- Line 8, Column (a)
- Line 9, Column (c)
- Line 10, Columns (a) and (c)
- Line 11, Columns (a) and (c)
- Line 12, Columns (a) and (b)
- Line 13, Column (a)
- Line 14, Column (a)
- Line 15, Column (a)
- Line 15, Column (c)
- Line 16a, Column (a)
- Line 16b, Column (a)
- Line 16c, Column (a)
- Line 17, Column (a)
- Line 18, Column (a)
- Line 19, Column (a)
- Line 20, Column (a)
- Line 21, Column (c)
- Line 22, Column (c)
- Schedule G. Allocation of Patronage and Nonpatronage Income and Deductions
- Schedule H. Deductions and Adjustments Under Section 1382
- Line 1. Dividends Paid on Capital Stock (Section 521 Cooperatives Only)
- Line 2. Nonpatronage Income Allocated to Patrons (Section 521 Cooperatives Only)
- Line 3. Patronage Dividends
- Schedule J. Tax Computation
- Line 1. Members of a Controlled Group
- Line 2. Income Tax
- Line 3. Base Erosion Minimum Tax
- Line 5a. Foreign Tax Credit
- Line 5b. Qualified Electric Vehicle Credit
- Line 5c. General Business Credit
- Line 5d. Credit for Prior Year Minimum Tax
- Line 5e. Bond Credits
- Line 6. Total Credits
- Line 8. Other Taxes
- Line 9. Total Tax
- Schedule K. Other Information
- Schedule L. Balance Sheets per Books
- Schedule M-1. Reconciliation of Income (Loss) per Books With Income per Return
- Instructions for Form 1120-C - Notices
- Instructions for Form 1120-C - Additional Material
- Form 1120-C
- Agriculture, Forestry, Fishing, and Hunting
- Food Manufacturing
- Beverage and Tobacco Product Manufacturing
- Textile Mills and Textile Product Mills
- Apparel Manufacturing
- Leather and Allied Product Manufacturing
- Wood Product Manufacturing
- Paper Manufacturing
- Printing and Related Support Activities
- Petroleum and Coal Products Manufacturing
- Chemical Manufacturing
- Plastics and Rubber Products Manufacturing
- Nonmetallic Mineral Product Manufacturing
- Primary Metal Manufacturing
- Fabricated Metal Product Manufacturing
- Machinery Manufacturing
- Computer and Electronic Product Manufacturing
- Electrical Equipment, Appliance, and Component Manufacturing
- Transportation Equipment Manufacturing
- Furniture and Related Product Manufacturing
- Miscellaneous Manufacturing
- Wholesale Trade
- Retail Trade
- Motor Vehicle and Parts Dealers
- Furniture and Home Furnishings Stores
- Electronics and Appliance Stores
- Building Material and Garden Equipment and Supplies Dealers
- Food and Beverage Stores
- Health and Personal Care Stores
- Gasoline Stations
- Clothing and Clothing Accessories Stores
- Sporting Goods, Hobby, Book, and Music Stores
- General Merchandise Stores
- Miscellaneous Store Retailers
- Nonstore Retailers
- Transportation and Warehousing
- Finance and Insurance
- Depository Credit Intermediation
- Nondepository Credit Intermediation
- Activities Related to Credit Intermediation
- Securities, Commodity Contracts, and Other Financial Investments and Related Activities
- Insurance Carriers and Related Activities
- Funds, Trusts, and Other Financial Vehicles
- "Offices of Bank Holding Companies" and "Offices of Other Holding Companies" are located under Management of Companies (Holding Companies), later.
- Real Estate, Rental, and Leasing
- Professional, Scientific, and Technical Services
- Management of Companies (Holding Companies)
- Administrative and Support, Waste Management, and Remediation Services
- Educational Services
- Health Care and Social Assistance
- Arts, Entertainment, and Recreation
- Accommodation and Food Services
- Other Services
- Form 1120-C
Instructions for Form 1120-C (2018)
U.S. Income Tax Return for Cooperative Associations
For the latest information about developments related to Form 1120-C and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form1120c.
Tax rates. For tax years beginning after 2017, the Tax Cuts and Jobs Act (P.L. 115-97) replaced the graduated corporate tax structure with a flat 21% corporate tax rate. See the instructions for Schedule J, line 2.
Alternative minimum tax. The alternative minimum tax does not apply to cooperatives for tax years beginning after December 31, 2017. In addition, cooperatives may treat a portion of their prior year alternative minimum tax credit carryover as refundable. See Form 8827. Also see the instructions for Schedule J, line 5d.
Base erosion minimum tax. If the cooperative had gross receipts of at least $500 million in any one of the 3 tax years preceding the current tax year, complete Form 8991. See section 59A and the Instructions for Form 8991. Also see the instructions for Schedule J, line 3, and the instructions for Schedule K, question 16.
Small business taxpayers. Effective for tax years beginning after 2017, P.L. 115-97 expanded the eligibility of small business taxpayers to use the cash method. See Accounting Methods, later.
Limitation on business interest expense. For tax years beginning after 2017, taxpayers who deduct business interest are required to file Form 8990, Limitation on Business Interest Expense Under Section 163(j), unless an exception for filing is met. See the instructions for Schedule K, questions 17 and 18. Also see Form 8990 and the Instructions for Form 8990.
Deduction for foreign-source portion of dividends received by domestic corporations from specified 10%-owned foreign corporations. Certain domestic corporations that are U.S. shareholders of specified 10%-owned foreign corporations are allowed a 100% deduction ("participation exemption DRD") for the foreign-source portion of dividends received from the foreign corporation. This applies to distributions after December 31, 2017. See new section 245A.
Treatment of deferred foreign income upon transition to participation exemption system of taxation. U.S. shareholders of specified foreign corporations (as defined under section 965(e), as amended by P.L. 115-97) may have an inclusion under section 965 based on the post-1986 deferred foreign income of the specified foreign corporations determined as of November 2, 2017 or December 31, 2017. The U.S shareholders may elect to pay the liability under section 965 on the post-1986 deferred foreign income in eight installments. See section 965, as amended.
Inclusion of Global Intangible Low-Taxed Income (GILTI). P.L. 115-97 enacted new section 951A, which requires certain domestic corporations that are U.S. shareholders of controlled foreign corporations to determine and include their GILTI in taxable income every year. Section 951A is effective for tax years of foreign corporations beginning after December 31, 2017, and to tax years of U.S. shareholders in which or with which such tax years of foreign corporations end. Use Form 8992 to figure the domestic corporation's GILTI and attach it to Form 1120-C. See section 951A and the Instructions for Form 8992 for more information.
Foreign-Derived Intangible Income (FDII). New section 250 allows certain domestic corporations a deduction for their eligible percentage of FDII and GILTI. Section 250 is effective for tax years beginning after December 31, 2017. Use Form 8993 to figure the amount of the eligible deduction for FDII and GILTI under section 250 and attach it to Form 1120-C. See section 250 and the Instructions for Form 8993 for more information.
Domestic Production Activities Deduction (DPAD). The DPAD is repealed for tax years beginning after 2017, with limited exceptions. See the Line 22. Domestic Production Activities Deduction (DPAD).
Net operating loss. The general 2-year net operating loss (NOL) carryback rule does not apply to NOLs arising in tax years ending after December 31, 2017. Exceptions apply to certain farming losses and NOLs of insurance companies other than life insurance companies. See section 172(b). Also, see Net operating loss (NOL), later.
Credit for paid family and medical leave. Cooperatives may qualify for a credit for wages paid in tax years beginning after 2017 to qualifying employees on family and medical leave. See section 45S. Also see Form 8994 and the Instructions for Form 8994.
At the time these instructions went to print, several credits and deductions available to corporations expired December 31, 2017. To find out if legislation extended the credits and deductions and made them available for 2018, go to IRS.gov/Form1120c.
The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. TAS's job is to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights.
As a taxpayer, the cooperative has rights that the IRS must abide by in its dealings with the cooperative. TAS can help the cooperative if:
Problems are causing financial difficulty for the business.
The business is facing an immediate threat of adverse action.
The cooperative has tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised.
The TAS tax toolkit at TaxpayerAdvocate.IRSgov can help the corporation understand these rights.
TAS has offices in every state, the District of Columbia, and Puerto Rico. The cooperative's local advocate's number is in its local directory and at TaxpayerAdvocate.IRSgov. The cooperative can also call TAS at 1-877-777-4778.
TAS also works to resolve large-scale or systemic problems that affect many taxpayers. If the cooperative knows of one of these broad issues, please report it to TAS through the Systemic Advocacy Management System at IRS.gov/Sams.
For more information go to IRS.gov/Advocate.
To help reduce debt held by the public, make a check payable to "Bureau of the Public Debt." Send it to:Bureau of the Public Debt
P.O. Box 2188
Parkersburg, WV 26106-2188
Or the cooperative can enclose a check with its income tax return. Do not add the contributions to any tax the cooperative may owe. Contributions to reduce debt held by the public are deductible subject to the rules and limitations for charitable contributions.
You can access the IRS website 24 hours a day, 7 days a week, at IRS.gov to:
Download forms, instructions, and publications;
Order IRS products online;
Research your tax questions online;
Search publications online by topic or keyword;
Use the online Internal Revenue Code, regulations, or other official guidance;
View Internal Revenue Bulletins (IRBs) published in the last few years; and
Sign up to receive local and national tax news by email.
Tax forms and publications.
The cooperative can download or print all of the forms and publications it may need on IRS.gov/FormsPubs. Otherwise, the cooperative can go to IRS.gov/OrderForms to place an order and have forms mailed to it.
The cooperative should receive its order within 10 business days.
Use Form 1120-C, U.S. Income Tax Return for Cooperative Associations, to report income, gains, losses, deductions, credits, and to figure the income tax liability of the cooperative.
Any corporation operating on a cooperative basis under IRC section 1381 and allocating amounts to patrons on the basis of business done with or for such patrons should file Form 1120-C (including farmers' cooperatives under section 521 whether or not it has taxable income).
This does not apply to organizations which are:
Exempt from income tax under chapter 1 (other than exempt farmers' cooperatives under section 521);
Subject to Part II (section 591 and following), subchapter H, chapter 1 (relating to mutual savings banks);
Subject to subchapter L (section 801 and following), chapter 1 (relating to insurance companies); or
Engaged in generating, transmitting, or otherwise furnishing electric energy or providing telephone service to persons in rural areas.
If the cooperative's principal business, office, or agency is located in the United States, file Form 1120-C at the following address:Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0012
If the cooperative's principal business, office, or agency is located in a foreign country or a U.S. possession, file Form 1120-C at the following address:Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
A cooperative described in section 6072(d) generally must file its income tax return by the 15th day of the 9th month after the end of its tax year.
Any cooperative not described in section 6072(d) must generally file its tax return by the 15th day of the 4th month after the end of its tax year. However, a cooperative with a fiscal tax year ending June 30 must file by the 15th day of the 3rd month after the end of its tax year. A cooperative with a short tax year ending anytime in June will be treated as if the short year ended on June 30, and must file by the 15th day of the 3rd month after the end of its tax year.
If the due date falls on a Saturday, Sunday, or legal holiday, the cooperative can file on the next business day.
Cooperatives can use certain private delivery services (PDS) designated by the IRS to meet the "timely mailing as timely filing" rule for tax returns. Go to IRS.gov/PDS for the current list of designated services.
The PDS can tell you how to get written proof of the mailing date.
For the IRS mailing address to use if you’re using PDS, go to IRS.gov/PDSStreetAddresses.
Private delivery services can't deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.
File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, to request an extension of time to file. Generally, the cooperative must file Form 7004 by the regular due date of the return. See the Instructions for Form 7004.
The return must be signed and dated by:
The president, vice president, treasurer, assistant treasurer, chief accounting officer; or
Any other cooperative officer (such as tax officer) authorized to sign.
If a return is filed on behalf of a cooperative by a receiver, trustee, or assignee, the fiduciary must sign the return, instead of the cooperative officer. Returns and forms signed by a receiver or trustee in bankruptcy on behalf of a cooperative must be accompanied by a copy of the order or instructions of the court authorizing signing of the return or form.
If an employee of the cooperative completes Form 1120-C, the paid preparer space should remain blank. Anyone who prepares Form 1120-C but does not charge the cooperative should not complete that section. Generally, anyone who is paid to prepare the return must sign it and fill in the "Paid Preparer Use Only" area.
The paid preparer must complete the required preparer information and:
Sign the return in the space provided for the preparer's signature.
Give a copy of the return to the taxpayer.
A paid preparer may sign original or amended returns by rubber stamp, mechanical device, or computer software program.
If the cooperative wants to allow the IRS to discuss its 2018 tax return with the paid preparer who signed it, check the "Yes" box in the signature area of the return. This authorization applies only to the individual whose signature appears in the "Paid Preparer Use Only" section of the cooperative's return. It does not apply to the firm, if any, shown in that section.
If the "Yes" box is checked, the cooperative is authorizing the IRS to call the paid preparer to answer any questions that may arise during the processing of its return. The cooperative is also authorizing the paid preparer to:
Give the IRS any information that is missing from the return,
Call the IRS for information about the processing of the return or the status of any related refund or payment(s), and
Respond to certain IRS notices about math errors, offsets, and return preparation.
The cooperative is not authorizing the paid preparer to receive any refund check, bind the cooperative to anything (including any additional tax liability), or otherwise represent the cooperative before the IRS.
The authorization will automatically end no later than the due date (excluding extensions) for filing the cooperative's 2019 tax return. If the cooperative wants to expand the paid preparer's authorization or revoke the authorization before it ends, see Pub. 947, Practice Before the IRS and Power of Attorney.
To ensure that the cooperative's tax return is correctly processed, attach all schedules and other forms after Form 1120-C, page 5, in the following order.
Schedule N (Form 1120).
Schedule D (Form 1120).
Schedule O (Form 1120).
Additional schedules in alphabetical order.
Additional forms in numerical order.
Supporting statements and attachments.
Complete every applicable entry space on Form 1120-C. Do not enter "See Attached" or "Available Upon Request" instead of completing the entry spaces. If more space is needed on the forms or schedules, attach separate sheets using the same size and format as the printed forms.
If there are supporting statements and attachments, arrange them in the same order as the schedules or forms they support and attach them last. Show the totals on the printed forms. Enter the cooperative's name and EIN on each supporting statement or attachment.
Generally, the cooperative must pay any tax due in full no later than the due date for filing its return (not including extensions). If the due date falls on a Saturday, Sunday, or legal holiday, the payment is due on the next day that isn't a Saturday, Sunday, or legal holiday. See the instructions for line 32.
Cooperatives must use electronic funds transfer to make all federal tax deposits (such as deposits of employment, excise, and corporate income tax). Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). However, if the cooperative does not want to use EFTPS, it can arrange for its tax professional, financial institution, payroll service, or other trusted third party to make deposits on its behalf. Also, it may arrange for its financial institution to submit a same-day wire payment (discussed below) on its behalf. EFTPS is a free service provided by the Department of the Treasury. Services provided by a tax professional, financial institution, payroll service, or other third party may have a fee.
To get more information about EFTPS or to enroll in EFTPS, visit www.eftps.gov or call 1-800-555-4477 (TTY/TDD 1-800-733-4829).
Depositing on time.
For deposits made by EFTPS to be on time, the cooperative must submit the deposit by 8 p.m. Eastern time the day before the date the deposit is due. If the cooperative uses a third party to make deposits on its behalf, they may have different cutoff times.
Same-day wire payment option.
If the cooperative fails to submit a deposit transaction on EFTPS by 8 p.m. Eastern time the day before the date a deposit is due, it can still make the deposit on time by using the Federal Tax Collection Service (FTCS). To use the same-day wire payment method, the cooperative will need to make arrangements with its financial institution ahead of time regarding availability, deadlines, and costs. The cooperative's financial institution may charge a fee for payments made this way. To learn more about the information the cooperative will need to provide to its financial institution to make a same-day wire payment, go to IRS.gov/SameDayWire.
Generally, the following rules apply to the cooperative's payments of estimated tax.
The cooperative must make installment payments of estimated tax if it expects its total tax for the year (less applicable credits) to be $500 or more.
The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If any due date falls on a Saturday, Sunday, or legal holiday, the payment of the installment is due on the next regular business day.
The cooperative must use electronic funds transfer to make installment payments of estimated tax.
Use Form 1120-W as a worksheet to compute estimated tax. See the Instructions for Form 1120-W.
Penalties may apply if the cooperative does not make required estimated tax payment deposits. See Estimated tax penalty below.
If the cooperative overpaid estimated tax, it may be able to get a quick refund by filing Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax.
See the instructions for lines 30b and 30c.
Estimated tax penalty.
A cooperative that does not make estimated tax payments when due may be subject to an underpayment penalty for the period of underpayment. Generally, a cooperative is subject to the penalty if its tax liability is $500 or more and it did not timely pay at least the smaller of:
Its tax liability for the current year, or
Its prior year's tax.
Use Form 2220, Underpayment of Estimated Tax by Corporations, to see if the cooperative owes a penalty and to figure the amount of the penalty. If Form 2220 is completed, enter the penalty on line 31. See the instructions for line 31.
If the cooperative receives a notice about penalties after it files its return, send the IRS an explanation and we will determine if the cooperative meets reasonable cause criteria. Do not attach an explanation when the cooperative's return is filed.
Interest is charged on taxes paid late even if an extension of time to file is granted. Interest is also charged on penalties imposed for failure to file, negligence, fraud, substantial valuation misstatements, substantial understatements of tax, and reportable transaction understatements from the due date (including extensions) to the date of payment. The interest charge is figured at a rate determined under section 6621.
Late filing of return.
A cooperative that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $210. The penalty will not be imposed if the cooperative can show that the failure to file on time was due to reasonable cause. See Caution above.
Late payment of tax.
A cooperative that does not pay the tax when due generally may be penalized ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. See Caution above.
Trust fund recovery penalty.
This penalty may apply if certain excise, income, social security, and Medicare taxes that must be collected or withheld are not collected or withheld, or these taxes are not paid. These taxes are generally reported on:
Form 720, Quarterly Federal Excise Tax Return;
Form 941, Employer's QUARTERLY Federal Tax Return;
Form 943, Employer's Annual Federal Tax Return for Agricultural Employees;
Form 944, Employer's ANNUAL Federal Tax Return; or
Form 945, Annual Return of Withheld Federal Income Tax.
The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to have been responsible for collecting, accounting for, or paying over these taxes, and who acted willfully in not doing so. The penalty is equal to the unpaid trust fund tax. See the Instructions for Form 720, Pub. 15 (Circular E), Employer's Tax Guide; or Pub. 51 (Circular A), Agricultural Employer's Tax Guide, for details, including the definition of responsible persons.
Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. See sections 6662, 6662A, and 6663.
Figure taxable income using the method of accounting regularly used in keeping the cooperative's books and records. In all cases, the method used must clearly show taxable income. Permissible methods include:
Any other method authorized by the Internal Revenue Code.
Certain cooperatives must use an accrual method of accounting. An exception applies for a small business taxpayer (defined below).
See Pub. 538, Accounting Periods and Methods, for more information.
Small business taxpayer.
A small business taxpayer is a taxpayer that (a) has average annual gross receipts of $25 million or less for the 3 prior tax years, and (b) is not a tax shelter (as defined in section 448(d)(3)). A small business taxpayer can adopt or change its accounting method to account for inventories (a) in the same manner as materials and supplies that are nonincidental, or (b) to conform to its treatment of inventories in an applicable financial statement (as defined in section 451(b)(3)). If it does not have an applicable financial statement, it can use the method of accounting used in its books and records prepared according to its accounting procedures.
Change in accounting method.
Generally, the cooperative must get IRS consent to change either an overall method of accounting or the accounting treatment of any material item. To do so, the cooperative generally must file Form 3115, Application for Change in Accounting Method. See the Instructions for Form 3115 for more information and exceptions. Also see Pub. 538, Accounting Periods and Methods.
If the cooperative's taxable income for the current tax year is figured under a method of accounting different from the method used in the preceding tax year, the cooperative may have to make an adjustment under section 481(a) to prevent amounts of income or expense from being duplicated or omitted.
If the net section 481(a) adjustment is positive, report it on Form 1120-C, line 9, as other income. If the net section 481(a) adjustment is negative, report it on Form 1120-C, line 23, as a deduction.
A cooperative must figure its taxable income on the basis of a tax year. A tax year is the annual accounting period a cooperative uses to keep its records and report its income and expenses. Generally, cooperatives can use a calendar year or a fiscal year.
Change of tax year.
Generally, a cooperative must get the consent of the IRS before changing its tax year by filing Form 1128, Application to Adopt, Change, or Retain a Tax Year. However, under certain conditions, exceptions may apply. See the Instructions for Form 1128 and Pub. 538 for more information.
The cooperative can round off cents to whole dollars on its return and schedules. If the cooperative does round to whole dollars, it must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.
If two or more amounts must be added to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.
Keep the cooperative's records for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Usually, records that support an item of income, deduction, or credit on the return must be kept for 3 years from the date the return is due or filed, whichever is later. Keep records that verify the cooperative's basis in property for as long as they are needed to figure the basis of the original or replacement property.
The cooperative should keep copies of all filed returns. They help in preparing future and amended returns and in the calculation of earnings and profits.
Reportable transaction disclosure statement.
Disclose information for each reportable transaction in which the cooperative participated. Form 8886, Reportable Transaction Disclosure Statement, must be filed for each tax year that the federal income tax liability of the cooperative is affected by its participation in the transaction. The following are reportable transactions.
Any listed transaction, which is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction and identified by notice, regulation, or other published guidance as a listed transaction.
Any transaction offered under conditions of confidentiality for which the cooperative (or a related party) paid an advisor a fee of at least $250,000.
Certain transactions for which the cooperative (or a related party) has contractual protection against disallowance of the tax benefits.
Certain transactions resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.
Any transaction identified by the IRS by notice, regulation, or other published guidance as a "transaction of interest."
For more information, see Regulations section 1.6011-4. Also see the Instructions for Form 8886.
The cooperative may have to pay a penalty if it is required to disclose a reportable transaction under section 6011 and fails to properly complete and file Form 8886. Penalties may also apply under section 6707A if the cooperative fails to file Form 8886 with its cooperative return, fails to provide a copy of Form 8886 to the Office of Tax Shelter Analysis (OTSA), or files a form that fails to include all the information required (or includes incorrect information). Other penalties, such as an accuracy-related penalty under section 6662A, may also apply. See the Instructions for Form 8886 for details on these and other penalties.
Reportable transactions by material advisors.
Material advisors to any reportable transaction must disclose certain information about the reportable transaction by filing Form 8918, Material Advisor Disclosure Statement, with the IRS. For details, see the Instructions for Form 8918.
Transfers to a cooperative controlled by the transferor.
Every significant transferor (as defined in Regulations section 1.351-3(d)) that receives stock of a cooperative in exchange for property in a nonrecognition event must include the statement required by Regulations section 1.351-3(a) on or with the transferor's tax return for the tax year of the exchange. The transferee cooperative must include the statement required by Regulations section 1.351-3(b) on or with its return for the tax year of the exchange, unless all the required information is included in any statement(s) provided by a significant transferor that is attached to the same return for the same section 351 exchange.
Dual consolidated losses.
If a cooperative incurs a dual consolidated loss (as defined in Regulations section 1.1503-2(c)(5)), the cooperative (or consolidated group) may need to attach an elective relief agreement and/or annual certification as provided in Regulations section 1.1503-2(g)(2).
Election to reduce basis under section 362(e)(2)(C).
If property is transferred to a cooperative in transfers subject to section 362(e)(2), the transferor and the acquiring cooperative may elect, under section 362(e)(2)(C), to reduce the transferor's basis in the stock received instead of reducing the acquiring corporation's basis in the property transferred. Once made, the election is irrevocable. For more information, see section 362(e)(2) and Regulations section 1.362-4. If an election is made, a statement must be filed in accordance with Regulations section 1.362-4(d)(3).
Annual information statement for elections under section 108(i).
If the cooperative made an election in 2009 or 2010 to defer income from cancellation of debt (COD) in connection with the reacquisition of an applicable debt instrument, the cooperative must attach a statement to its return beginning with the tax year following the tax year for which the cooperative made the election, and ending the first tax year all income deferred has been included in income. In addition, the cooperative must annually include a copy of the election statement it filed to make the election to defer the income. For more information on reporting the deferred income, see the instructions for line 9.
Other forms and statements.
See Pub. 542, Corporations, for a list of other forms and statements that a cooperative may need to file in addition to the forms and statements discussed throughout these instructions.
File the 2018 return for calendar year 2018 and fiscal years that begin in 2018 and end in 2019. For a fiscal or short tax year return, fill in the tax year space at the top of the form.
The 2018 Form 1120-C can also be used if:
The cooperative has a tax year of less than 12 months that begins and ends in 2019, and
The 2019 Form 1120-C isn’t available at the time the cooperative is required to file its return.
The cooperative must show its 2019 tax year on the 2018 Form 1120-C and take into account any tax law changes that are effective for tax years beginning after December 31, 2018.
Enter the cooperative's true name (as set forth in the charter or other legal document creating it), address, and EIN on the appropriate lines. Enter the address of the cooperative's principal office or place of business. Include the suite, room, or other unit number after the street address. If the post office does not deliver mail to the street address and the cooperative has a P.O. box, show the box number instead.
Do not use the address of the registered agent for the state in which the cooperative is incorporated. For example, if the cooperative is incorporated in Delaware or Nevada and the cooperative's principal office is located in Little Rock, AR, the cooperative should enter the Little Rock address.
If the cooperative receives its mail in care of a third party (such as an accountant or an attorney), enter on the street address line "C/O" followed by the third party's name and street address or P.O. box.
If the cooperative has a foreign address, include the city or town, state or province, country, and foreign postal code. Do not abbreviate the country name. Follow the country's practice for entering the name of the state or province and postal code.
Cooperatives filing a consolidated return must check box 1 and attach Form 851, Affiliations Schedule, and other supporting statements to the return. Also, for the first year a subsidiary cooperative is being included in a consolidated return, attach Form 1122, Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return, to the parent's consolidated return. Attach a separate Form 1122 for each new subsidiary being included in the consolidated return.
If the cooperative is a farmers' tax exempt cooperative and checked Item C, box 1, it cannot file a consolidated return.
File supporting statements for each cooperative/corporation included in the consolidated return. Do not use Form 1120-C as a supporting statement. On the supporting statement, use columns to show the following, both before and after adjustments.
Items of gross income and deductions.
A computation of taxable income.
Balance sheets as of the beginning and end of the tax year.
A reconciliation of income per books with income per return.
A reconciliation of retained earnings.
Enter on Form 1120-C the totals for each item of income, gain, loss, expense, or deduction, net of eliminating entries for intercompany transactions between cooperatives/corporations within the consolidated group. Attach consolidated balance sheets and a reconciliation of consolidated retained earnings.
The cooperative does not have to provide the information requested in (3), (4), and (5) above, if its total receipts (page 1, lines 1a plus lines 4 through 9) and its total assets at the end of the tax year (Schedule L, line 13(d)) are less than $250,000. See Schedule K, Question 14.
For more information on consolidated returns, see the regulations under section 1502.
Schedule M-3 (Form 1120).
A cooperative with total assets (non-consolidated or consolidated for all cooperatives/corporations included with the consolidated tax group) of $10 million or more on the last day of the tax year must file Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More, instead of Form 1120-C, Schedule M-1. A cooperative or group of cooperatives that completes Parts II and III of Schedule M-3 is not required to complete Form 1120-C, Schedule M-1, Reconciliation of Income (Loss) per Books With Income per Return.
For cooperatives that (a) are required to file Schedule M-3 (Form 1120) and have less than $50 million total assets at the end of the tax year, or (b) are not required to file Schedule M-3 (Form 1120) and voluntarily file Schedule M-3 (Form 1120), must either (i) complete Schedule M-3 (Form 1120) entirely or (ii) complete Schedule M-3 (Form 1120) through Part I, and complete Form 1120-C, Schedule M-1, instead of completing Parts II and III of Schedule M-3 (Form 1120). If the cooperative chooses to complete Schedule M-1 instead of completing Parts II and III of Schedule M-3, the amount on Schedule M-1, line 1, must equal the amount on Schedule M-3, Part I, line 11. See the Instructions for Schedule M-3 for more details. Also, see the instructions for Schedule M-1, later.
If you are filing Schedule M-3, check Item A, box 2, to indicate that Schedule M-3 is attached.
Form 1120 filed previous year.
Check box 3 if the cooperative filed Form 1120 in a prior year as a subchapter T cooperative.
Enter the cooperative's EIN. If the cooperative does not have an EIN, it must apply for one. An EIN can be applied for:
Online. Go to IRS.gov/EIN. The EIN is issued immediately once the application information is validated.
By faxing or mailing Form SS-4, Application for Employer Identification Number.
Cooperatives located in the United States or U.S. possessions can use the online application. Foreign corporations should call 1-267-941-1099 (not a toll-free number) for more information on obtaining an EIN. See the Instructions for Form SS-4.
EIN applied for, but not received.
If the cooperative has not received its EIN by the time the return is due, enter "Applied for" and the date you applied in the space for the EIN.
For more information, see the Instructions for Form SS-4.
Farmers' tax exempt cooperative.
Check the "Farmers' tax exempt cooperative" box if the cooperative applied for and received status as a tax-exempt farmers', fruit growers', or like association, organized and operated on a cooperative basis as described in section 521.
If the cooperative has submitted Form 1028, Application for Recognition of Exemption, but has not received a determination letter from the IRS, enter "Application Pending" on Form 1120-C, at the top of page 1.
All other subchapter T cooperatives including farmers' cooperatives without section 521 exempt status, organized and operated as described under Who Must File, earlier, should check the "Nonexempt cooperative" box.
If this is the cooperative's first return, check the "Initial return" box.
If this is the cooperative's final return and it will no longer exist, file Form 1120-C and check the "Final return" box.
If the cooperative changed its name since it last filed a return, check the "Name change" box. Generally, a cooperative also must have amended its articles of incorporation and filed the amendment with the state in which it was incorporated.
If the cooperative has changed its address since it last filed a return (including a change to an "in care of" address), check the "Address change" box.
If the cooperative must change its originally filed return for any year, it should file a new return including any required attachments. Use the revision of the form applicable to the year being amended. The amended return must provide all the information called for by the form and instructions, not just the new or corrected information. Check the "Amended return" box.
Except as otherwise provided in the Internal Revenue Code, gross income includes all income from whatever source derived.
Exception for income from qualifying shipping activities.
Gross income does not include income from qualifying shipping activities if the cooperative makes an election under section 1354 to be taxed on its notional shipping income (as defined in section 1353) at the highest corporate rate. If the election is made, the cooperative generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. A cooperative making this election also may elect to defer gain on the disposition of a qualifying vessel.
Use Form 8902, Alternative Tax on Qualifying Shipping Activities, to figure the tax. Include the alternative tax on Schedule J, line 8.
Enter gross receipts or sales from all business operations except those that must be reported on lines 4
through 9. Special rules apply to certain income as discussed below.
In general, advance payments are reported in the year of receipt. For exceptions to this general rule for cooperatives that use the accrual method of accounting, see the following.
To report income from long-term contracts, see section 460.
For rules that allow a limited deferral of advance payments beyond the current tax year, see Rev. Proc. 2004-34, 2004-22 I.R.B. 991 and Notice 2018-35, 2018-18 I.R.B. 520 (or any successors). For more information on the tax treatment of advance payments, see Pub 538.
For information on adopting or changing to a permissible method for reporting certain advance payments for services and certain goods by an accrual method cooperative, see the Instructions for Form 3115.
Generally, the installment method cannot be used for dealer dispositions of property. A "dealer disposition" is any disposition of: (a) personal property by a person who regularly sells or otherwise disposes of personal property of the same type on the installment plan or (b) real property held for sale to customers in the ordinary course of the taxpayer's trade or business.
The restrictions on using the installment method do not apply to the following.
Dispositions of property used or produced in the trade or business of farming.
Certain dispositions of timeshares and residential lots reported under the installment method for which the cooperative elects to pay interest under section 453(l)(3).
Enter on line 1a (and carry to line 3), the gross profit on collections from installment sales. Attach a statement showing the following information for the current and the 3 preceding years: (a) gross sales, (b) cost of goods sold, (c) gross profits, (d) percentage of gross profits to gross sales, (e) amount collected, and (f) gross profit on the amount collected.
For sales of timeshares and residential lots reported under the installment method, if the cooperative elects to pay interest under section 453(l)(3), the cooperative's income tax is increased by the interest payable under section 453(l)(3). Report this addition to tax on Schedule J, line 8.
Nonaccrual experience method for service providers.
Cooperatives are not required to accrue certain amounts to be received from the performance of services that, based on their experience, will not be collected, if:
The services are in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; or
The cooperative's average annual gross receipts for any prior 3 tax-year period does not exceed $25 million. For more details, see section 448(d)(5).
This provision does not apply to any amount if interest is required to be paid on the amount or if there is any penalty for failure to timely pay the amount. See Regulations section 1.448-2 for information on the nonaccrual experience method, including information on safe harbor methods. For information on a book safe harbor method of accounting for cooperatives that use the nonaccrual experience method of accounting, see Rev. Proc. 2011-46, 2011-42 I.R.B. 518, as modified by Rev. Proc. 2016-29, 2016-21 I.R.B. 880. Also, see the Instructions for Form 3115 for procedures to obtain automatic consent to change to this method or make certain changes within this method.
Cooperatives that qualify to use the nonaccrual experience method should attach a statement showing total gross receipts, the amount not accrued as a result of the application of section 448(d)(5) and the net amount accrued. Enter the net amount on line 1a.
Complete and attach Form 1125-A, Cost of Goods Sold, if applicable. Enter on Form 1120-C, line 2, the amount from Form 1125-A, line 8. See Form 1125-A and its instructions.
See the instructions for Schedule C, later. Then, complete Schedule C and enter on line 4, the amount from Schedule C, line 19.
Enter taxable interest on U.S. obligations and on loans, notes, mortgages, bonds, bank deposits, corporate bonds, tax refunds, etc. Do not offset interest expense against interest income. Special rules apply to interest income from certain below-market-rate loans. See section 7872 for details.
Enter the gross amount received from the rental of property and royalties. Deduct expenses such as repairs, interest, taxes, and depreciation on the applicable lines.
Enter any other taxable income not reported on lines 1 through 8. List the type and amount of income on an attached statement. If the cooperative has only one item of other income, describe it in parentheses on line 9. Examples of other income to report on line 9 include the following.
Patronage dividends and per-unit retain allocations.
Include on line 9 the patronage dividends and per-unit retain allocations listed below. Attach a statement listing the name of each declaring association from which the cooperative received income from patronage dividends and per-unit retain allocations, and the total amount received from each association.
Include the items listed below.
Patronage dividends received in:
Qualified written notices of allocation, or
Other property (except nonqualified written notices of allocation).
Nonpatronage distributions received on a patronage basis from tax-exempt farmers' cooperatives in:
Qualified written notices of allocation, or
Other property (except nonqualified written notices of allocation), based on earnings of that cooperative either from business done with or for the United States or any of its agencies (or from sources other than patronage, such as investment income).
Qualified written notices of allocation at their stated dollar amounts and property at its fair market value (FMV).
Amounts received on the redemption, sale, or other disposition of nonqualified written notices of allocation.
Generally, patronage dividends from purchases of capital assets or depreciable property are not includible in income but must be used to reduce the basis of the assets. See section 1385(b) and the related regulations.
Amounts received (or the stated dollar value of qualified per-unit retain certificates received) from the sale or redemption of nonqualified per-unit retain certificates.
Per-unit retain allocations received (except nonqualified per-unit retain certificates). See section 1385.
Payments from the Commodity Credit Corporation to a farmers' cooperative for certain expenses of the co-op's farmers-producers under a "reseal" program of the U.S. Department of Agriculture are patronage-source income that may give rise to patronage dividends under section 1382(b)(1).
Examples of other income to report on line 9 include the following.
Recoveries of bad debts deducted in prior years under the specific charge-off method.
The amount included in income from Form 6478, Biofuel Producer Credit, if applicable.
The amount included in income from Form 8864, Biodiesel and Renewable Diesel Fuels Credit, if applicable.
Refunds of taxes deducted in prior years to the extent they reduced the amount of tax imposed. See section 111 and the related regulations. Do not offset current year taxes against any tax refunds.
Ordinary income from trade or business activities of a partnership (from Schedule K-1 (Form 1065 or 1065-B)). Do not offset ordinary losses against ordinary income. Instead, include the losses on line 23. Show the partnership's name, address, and EIN on a separate statement attached to this return. If the amount entered is from more than one partnership, identify the amount from each partnership.
The transferred loss amount identified as "Section 91 Transferred Loss Amount," which is required to be recognized when substantially all the assets of a foreign branch (within the meaning of section 367(a)(3)(C), as in effect before its repeal) is transferred to a foreign corporation with respect to which the corporation was a U.S. shareholder immediately after the transfer. See section 91.
Any net positive section 481(a) adjustment.
Part or all of the proceeds received from certain cooperative-owned life insurance contracts issued after August 17, 2006. See section 101(j) for details. Form 8925, Report of Employer-Owned Life Insurance Contracts, may also be required. See Form 8925 and its instructions.
Income from cancellation of debt (COD) for the repurchase of a debt instrument for less than its adjusted issue price.
Any COD income deferred from 2009 or 2010 that is includible in income in 2018. See section 108(i) and Rev. Proc. 2009-37. If the cooperative is a direct or indirect partner in a partnership, other special rules apply. See Regulations section 1.108(i)-2.
The cooperative's share of the following income from Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund.
Ordinary earnings of a qualified electing fund (QEF).
Gain or loss from marking passive foreign investment company (PFIC) stock to market.
Gain or loss from sale or other disposition of section 1296 stock.
Excess distributions from a section 1291 fund allocated to the current year and pre-PFIC years, if any.
See Form 8621 and the Instructions for Form 8621 for details.
Section 263A uniform capitalization rules.
The uniform capitalization (UNICAP) rules of section 263A generally require cooperatives to capitalize, or include in inventory, certain costs.
Cooperatives subject to the section 263A uniform capitalization rules are required to capitalize:
Direct costs of assets produced or acquired for resale, and
Certain indirect costs (including taxes) that are properly allocable to property produced or acquired for resale.
The costs required to be capitalized under section 263A are not deductible until the property (to which the costs relate) is sold, used, or otherwise disposed of by the cooperative. The cooperative recovers these costs through depreciation, amortization, or costs of goods sold.
A small business taxpayer (defined earlier) is not required to capitalize costs under section 263A. A small business taxpayer that wants to discontinue capitalizing costs under section 263A must change its method of accounting. See the Instructions for Form 3115. Also see Pub. 538.
For more information on the uniform capitalization rules, see Pub. 538. Also seeRegulations sections 1.263A-1 through 1.263A-3. For more information on non-small business taxpayers, seeRegulations section 1.263A-4 and Pub. 225, Farmer's Tax Guide, for rules for property produced in a farming business.
Transactions between related taxpayers.
Generally, an accrual basis taxpayer can only deduct business expenses and interest owed to a related party in the year payment is included in the income of the related party. See sections 163(e)(3), 163(j), and 267(a)(2) for the limitations on deductions for unpaid interest and expenses.
Limitations on business interest expense.
Business interest expense is limited for tax years beginning after December 31, 2017. See section163(j) and Form 8990. Also see Form 1120-C, Schedule K, Questions 17 and 18, later.
Section 291 limitations.
Cooperatives may be required to adjust deductions for depletion of iron ore and coal, intangible drilling, exploration and development costs, and the amortizable basis of pollution control facilities. See section 291 to determine the amount of the adjustment, later.
Election to deduct business start-up and organizational costs.
A cooperative can elect to deduct a limited amount of start-up and organizational costs it paid or incurred. Any remaining costs generally must be amortized over an 180-month period. See sections 195 and 248 and the related regulations.
The cooperative generally elects to deduct start-up or organizational costs by claiming the deduction on its income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. However, for start-up or organizational costs paid or incurred before September 9, 2008, the cooperative is required to attach a statement to its return to elect to deduct such costs. For more details, including special rules for costs paid or incurred before September 9, 2008, see the Instructions for Form 4562. Also see Pub. 535, Business Expenses.
If the cooperative timely filed its return for the year without making an election, it can still make an election by filing an amended return within 6 months of the due date of the return (excluding extensions). Clearly indicate the election on the amended return and write "Filed pursuant to section 301.9100-2" at the top of the amended return. File the amended return at the same address the cooperative filed its original return. The election applies when figuring taxable income for the current tax year and all subsequent years.
The cooperative can choose to forgo the elections above by affirmatively electing to capitalize its start-up or organizational costs on its income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins.
The election to either amortize or capitalize start-up costs is irrevocable and applies to all start-up costs that are related to the trade or business.
Report the deductible amount of start-up and organizational costs and any amortization on line 23. For amortization that begins during the current tax year, complete and attach Form 4562, Depreciation and Amortization.
Passive activity limitations.
Limitations on passive activity losses and credits under section 469 apply to closely held cooperatives (defined later).
Generally, the two kinds of passive activities are:
Trade or business activities in which the cooperative did not materially participate for the tax year, and
Rental activities, regardless of its participation.
Cooperatives subject to the passive activity limitations must complete Form 8810 to compute their allowable passive activity loss and credit. Before completing Form 8810, see Temporary Regulations section 1.163-8T, which provides rules for allocating interest expense among activities. If a passive activity is also subject to the at-risk rules of section 465, or the tax-exempt use loss rules of section 470, those rules apply before the passive loss rules.
For more information, see section 469, the related regulations, and Pub. 925, Passive Activity and At-Risk Rules.
A cooperative is "closely held" (as defined in section 469(j)(1)) if at any time during the last half of the tax year more than 50% in value of its outstanding stock is owned, directly or indirectly, by or for not more than five individuals.
Certain organizations are treated as individuals for purposes of this test. See section 542(a)(2). For rules for determining stock ownership, see section 544 (as modified by section 465(a)(3)).
Reducing certain expenses for which credits are allowable.
If the cooperative claims certain credits, it may need to reduce the otherwise allowable deductions for expenses used to figure the credit. This applies to credits such as the following.
Work opportunity credit (Form 5884).
Credit for increasing research activities (Form 6765).
Orphan drug credit (Form 8820).
Disabled access credit
Empowerment zone employment credit (Form 8844), if applicable.
Indian employment credit (Form 8845), if applicable.
Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846).
Credit for small employer pension plan start-up costs (Form 8881).
Credit for employer-provided childcare facilities and services
Low sulfur diesel fuel production credit (Form 8896).
Mine rescue team training credit (Form 8923), if applicable.
Credit for employer differential wage payments (Form 8932).
Credit for small employer health insurance premiums (Form 8941).
Employer credit for paid family and medical leave (Form 8994).
If the cooperative has any of these credits, figure the current year credit before figuring the deduction for expenses on which the credit is based. If the cooperative capitalized any costs on which it figured the credit, it may need to reduce the amount capitalized by the credit attributable to these costs.
See the instructions for the form used to figure the applicable credit for more details.
Limitations on deductions related to property leased to tax-exempt entities.
If a cooperative leases property to a governmental or other tax-exempt entity, the cooperative cannot claim deductions related to the property to the extent that they exceed the cooperative's income from the lease payments. This disallowed tax-exempt use loss can be carried over to the next tax year and treated as a deduction with respect to the property for that tax year. See section 470(d) for exceptions.
Enter deductible officers' compensation on line 11. Do not include compensation deductible elsewhere on the return, such as amounts included in cost of goods sold, elective contributions to a section 401(k) cash or deferred arrangement, or amounts contributed under a salary reduction SEP agreement or a SIMPLE IRA plan.
If the cooperative's total receipts (line 1a plus lines 4 through 9) are $500,000 or more, complete Form 1125-E, Compensation of Officers. On Form 1120-C, enter on line 11 the amount from Form 1125-E, line 4.
Enter the total salaries and wages paid for the tax year. Do not include salaries and wages deductible elsewhere on the return, such as amounts included in officers' compensation, cost of goods sold, elective contributions to a section 401(k) cash or deferred arrangement, or amounts contributed under a salary reduction SEP agreement or a SIMPLE IRA plan.
If the cooperative provided taxable fringe benefits to its employees, such as personal use of a car, do not deduct as wages the amount allocated for depreciation and other expenses claimed on lines 18 and 23.
If the cooperative claims a credit for any wages paid or incurred, it may need to reduce any corresponding deduction for officers' compensation and salaries and wages. See Reducing certain expenses for which credits are allowable, earlier.
Enter the total debts that became worthless in whole or in part during the tax year. A cooperative that uses the cash method of accounting cannot claim a bad debt deduction unless the amount was previously included in income.
If the cooperative rented or leased a vehicle, enter the total annual rent or lease expense paid or incurred during the year. Also complete Form 4562, Part V. If the cooperative leased a vehicle for a term of 30 days or more, the deduction for vehicle lease expense may have to be reduced by an amount includible in income called the inclusion amount. The cooperative may have an inclusion amount if:
|The lease term began:||And the vehicle's FMV on the first day of the lease exceeded:|
|Cars (excluding Trucks and Vans)|
|After 12/31/17 but before 1/1/19||$50,000|
|After 12/31/12 but before 1/1/18||$19,000|
|After 12/31/07 but before 1/1/13||$18,500|
|Trucks and Vans|
|After 12/31/17 but before 1/1/19||$50,000|
|After 12/31/13 but before 1/1/18||$19,500|
|After 12/31/09 but before 1/1/14||$19,000|
|After 12/31/08 but before 1/1/10||$18,500|
|After 12/31/07 but before 1/1/09||$19,000|
See Pub. 463, Travel, Entertainment, Gift, and Car Expenses, for instructions on figuring the inclusion amount. The inclusion amount for lease terms beginning in 2019 will be published in the Internal Revenue Bulletin in early 2019.
Enter taxes paid or accrued during the tax year, but do not include the following.
Federal income taxes.
Foreign or U.S. possession income taxes if a foreign tax credit is claimed.
Taxes not imposed on the cooperative.
Taxes, including state or local sales taxes, that are paid or incurred in connection with an acquisition or disposition of property (these taxes must be treated as part of the cost of the acquired property, or in the case of a disposition, as a reduction in the amount realized on the disposition).
Taxes assessed against local benefits that increase the value of the property assessed (such as for paving, etc.).
Taxes deducted elsewhere on the return, such as those reflected in cost of goods sold.
See section 164(d) for the rule on apportionment of taxes on real property between the seller and purchaser.
The cooperative must make an interest allocation if the proceeds of a loan were used for more than one purpose (for example, to purchase a portfolio investment and to acquire an interest in a passive activity). See Temporary Regulations section 1.163-8T for the interest allocation rules.
Do not deduct the following interest.
Interest on indebtedness incurred or continued to purchase or carry obligations if the interest is wholly exempt from income tax. For exceptions, see section 265(b).
For cash basis taxpayers, prepaid interest allocable to years following the current tax year. For example, a cash basis calendar year taxpayer who in 2018 prepaid interest allocable to any period after 2018 can deduct only the amount allocable to 2018.
Interest and carrying charges on straddles. Generally, these amounts must be capitalized. See section 263(g).
Interest on debt allocable to the production of designated property by a cooperative for its own use or for sale. The cooperative must capitalize this interest. Also capitalize any interest on debt allocable to an asset used to produce the property. See section 263A(f) and Regulations sections 1.263A-8 through 1.263A-15 for definitions and more information.
Interest paid or incurred on any portion of an underpayment of tax that is attributable to an understatement arising from an undisclosed listed transaction or an undisclosed reportable avoidance transaction (other than a listed transaction) entered into in tax years beginning after October 22, 2004.
Special rules apply to:
Forgone interest on certain below-market-rate loans (see section 7872).
OID on certain high yield discount obligations. See section 163(e)(5) to determine the amount of the deduction for OID that is deferred and the amount that is disallowed on a high yield discount obligation. The rules under section 163(e)(5) do not apply to certain high yield discount obligations issued after August 31, 2008, and before January 1, 2011. See section 163(e)(5)(F). Also see Notice 2010-11, 2010-4 I.R.B. 326.
Interest which is allocable to unborrowed policy cash values of life insurance, endowment, or annuity contracts issued after June 8, 1997. See section 264(f). Attach a statement showing the computation of the deduction.
Section 108(i) OID deduction. If the cooperative issued a debt instrument with OID that is subject to section 108(i)(2) because of an election to defer the income from COD, the interest deduction for this OID is deferred until the COD is includible in income. The accrued OID is allowed as a deduction ratably over the 5-year period that the income from COD is includible in income. The deduction is limited to the amount of COD subject to the section 108(i) election.
Enter contributions or gifts actually paid within the tax year to or for the use of charitable and governmental organizations described in section 170(c) and any unused contributions carried over from prior years. Special rules and limits apply to contributions to organizations conducting lobbying activities. See section 170(f)(9).
Cooperatives reporting taxable income on the accrual method can elect to treat as paid during the tax year any contributions paid by the due date for filing the cooperative’s return (not including extensions), if the contributions were authorized by the board of directors during the tax year. Attach a declaration to the return stating that the resolution authorizing the contributions was adopted by the board of directors during the tax year. The declaration must include the date the resolution was adopted.
Limitation on deduction.
The total amount claimed cannot be more than 10% of taxable income (line 27) computed without regard to the following.
Any deduction for contributions.
The special deductions on line 26b.
The limitation under section 249 on the deduction for bond premium.
Any net operating loss (NOL) carryback to the tax year under section 172.
Any capital loss carryback to the tax year under section 1212(a)(1).
Any domestic production activities deduction.
Charitable contributions over the 10% limitation cannot be deducted for the tax year but can be carried over to the next 5 tax years. See the exception below for farmers and ranchers and certain Native Corporations.
Special rules apply if the cooperative has an NOL carryover to the tax year. In figuring the charitable contributions deduction for the current tax year, the 10% limit is applied using the taxable income after taking into account any deduction for the NOL.
To figure the amount of any remaining NOL carryover to later years, taxable income must be modified (see section 172(b)). To the extent that contributions are used to reduce taxable income for this purpose and increase an NOL carryover, a contributions carryover is not allowed. See section 170(d)(2)(B).
Suspension of 10% limitation for farmers and ranchers and certain Native Corporations.
Certain cooperatives can deduct contributions of qualified conservation property without regard to the general 10% limit. This applies to:
A qualified farmer or rancher (as defined in section 170(b)(1)(E)(v)) that does not have publicly traded stock; and
A Native Corporation (as defined in section 170(b)(2)(C)(iii)) that contributes property which was land conveyed under the Alaska Native Claims Settlement Act.
The total amount of the contribution claimed for the qualified conservation property cannot exceed 100% of the excess of the cooperative's taxable income (as computed above substituting "100%" for "10%") over all other allowable charitable contributions. Any excess qualified conservation contributions can be carried over to the next 15 years, subject to the 100% limitation. See section 170(b)(2)(B) and (C).
Temporary suspension of 10% limitation for certain disaster-related contributions.
A cooperative may elect to deduct qualified cash contributions without regard to the 10% taxable income limit. Qualified contributions are contributions that were made after October 7, 2017, and before January 1, 2019, to a qualified charitable organization (other than certain private foundations described in section 509(a)(3) or donor-advised funds described in section 4966(d)(2)), for relief efforts in the California wildfire disaster area. The cooperative must obtain contemporaneous written acknowledgment (within the meaning of section 170(f)(8)) from the qualified charitable organization that the contribution was used or is to be used for disaster relief efforts.
The total amount of the contribution claimed for disaster relief efforts cannot exceed 100% of the excess of the cooperative's taxable income (as computed above substituting “100%” for “10%” ) over all other allowable charitable contributions. Any excess qualified contributions are carried over to the next 5 years. See Pub. 976.
For contributions of cash, check, or other monetary gifts (regardless of the amount), the cooperative must maintain a bank record, or a receipt, letter, or other written communication from the donee organization indicating the name of the organization, the date of the contribution, and the amount of the contribution.
Contributions of $250 or more.
A cooperative can deduct a contribution of $250 or more only if it gets a written acknowledgment from the donee organization that shows the amount of cash contributed, describes any property contributed (but not its value), and either gives a description and a good faith estimate of the value of any goods or services provided in return for the contribution or states that no goods or services were provided in return for the contribution. The acknowledgment must be obtained by the due date (including extensions) of the cooperative's return, or, if earlier, the date the return is filed. Do not attach the acknowledgment to the tax return, but keep it with the cooperative's records.
Contributions of property other than cash.
If a cooperative contributes property other than cash and claims over a $500 deduction for the property, it must attach a statement to the return describing the kind of property contributed and the method used to determine its fair market value (FMV). Complete and attach Form 8283, Noncash Charitable Contributions, for contributions of property (other than money) if the total claimed deduction for all property contributed was more than $5,000. Special rules apply to the contribution of certain property. See the Instructions for Form 8283.
Special rules apply to qualified conservation contributions, including contributions of certain easements on buildings located in a registered historic district. See section 170(h) and Pub. 526, Charitable Contributions.
The cooperative must reduce its deduction for contributions of certain capital gain property. See sections 170(e)(1) and 170(e)(5).
A larger deduction is allowed for certain contributions. See sections 170(e)(3) and (4).
For more information on charitable contributions, including substantiation and recordkeeping requirements, see section 170 and the related regulations, and Pub. 526. For special rules that apply to corporations, see Pub. 542.
Include on line 18 depreciation and the cost of certain property that the cooperative elected to expense under section 179 from Form 4562. Include amounts not claimed on Form 1125-A or elsewhere on the return. See Form 4562 and the Instructions for Form 4562.
Enter the deduction for contributions to qualified pension, profit-sharing, or other funded deferred compensation plans. Employers who maintain such a plan generally must file one of the forms listed below unless exempt from filing under regulations or other applicable guidance, even if the plan is not a qualified plan under the Internal Revenue Code. The filing requirement applies even if the cooperative does not claim a deduction for the current tax year. There are penalties for failure to file these forms timely and for overstating the pension plan deduction. See sections 6652(e) and 6662(f). Also see the instructions for the applicable form.
Annual Return/Report of Employee Benefit Plan.
Short Form Annual Return/Report of Small Employee Benefit Plan. File this form instead of Form 5500, generally if there were under 100 participants at the beginning of the plan year.
Form 5500 and Form 5500-SF must be filed electronically under the computerized ERISA Filing Acceptance System (EFAST2). For more information, see the EFAST2 website at www.efast.dol.gov.
Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan. File this form for a plan that only covers the owner (or the owner and his or her spouse) but only if the owner (or the owner and his or her spouse) owns the entire business.
Enter contributions to employee benefit programs not claimed elsewhere on the return (for example, insurance or health and welfare programs) that are not an incidental part of a pension, profit-sharing, etc., plan included on line 20.
P.L. 115-97 (as amended by the Consolidated Appropriations Act, 2018, P.L. 115-141), repealed the DPAD for tax years beginning after December 31, 2017. However, if the cooperative is a recipient of the DPAD from a flow- through entity (partnership, estate, trust or cooperative) with a tax year beginning before January 1, 2018, the DPAD can be taken in limited circumstances.
Cooperatives described in section 1381 are required to calculate the section 199 DPAD on Form 8903, Domestic Production Activities Deduction, and file it with Form 1120-C. Special rules apply to certain cooperatives with both patronage and nonpatronage income and losses. See Form 8903 and the Instructions for Form 8903 for tax years beginning before 2018.
For tax years beginning in 2018, specified agricultural or horticultural cooperatives to which Part I of subchapter T applies may qualify for a deduction under section 199A(g). For agricultural or horticultural cooperatives utilizing Form 8903 to compute a deduction under section 199A(g), write “SPECIFIED COOPERATIVE DPAD” across the top of Form 8903. The Form 8903 or other schedule must be attached to the cooperative’s return.
Attach a statement, listing by type and amount, all allowable deductions that are not deductible elsewhere on Form 1120-C. Enter the total on
See Special Rules, later, for limits on certain other deductions. Also, see Pub. 535 for details on other deductions that may apply to cooperatives.
Examples of other deductions include the following.
Certain film, television, or live theatrical productions acquired and placed in service after September 27, 2017 (for which a deduction would have been allowable under section 181 without regard to the dollar limitation), are qualified property eligible for the special depreciation allowance under section 168(k). See the Instructions for Form 4562.
Amortization. See Form 4562, Part VI.
Certain business start-up and organizational costs (discussed earlier under Election to deduct business start-up and organizational costs).
Certain costs of a qualified film, television, or live theatrical production commencing before January 1, 2018 (after December 31, 2015, and before January 1, 2018, for a live theatrical production). See section 181 and the related regulations.
Reforestation costs. The cooperative can elect to deduct up to $10,000 of qualifying reforestation expenses for each qualified timber property. The cooperative can elect to amortize over 84 months any amount not deducted. See Pub. 535.
See sections 613 and 613A for percentage depletion rates applicable to natural deposits. Also see section 291 for the limitation on the depletion deduction for iron ore and coal (including lignite).
Attach Form T (Timber), Forest Activities Schedule, if a deduction for depletion of timber is taken.
Foreign intangible drilling costs and foreign exploration and development costs must either be added to the cooperative's basis for cost depletion purposes or be deducted ratably over a 10-year period. See sections 263(i), 616, and 617 for details.
See Pub. 535 for more information on depletion.
Legal and professional fees.
Repairs and maintenance (discussed later).
Supplies used and consumed in the business.
Travel, meals, and entertainment expenses. Special rules apply (discussed later).
Ordinary losses from trade or business activities of a partnership (from Schedule K-1 (Form 1065 or 1065-B)). Do not offset ordinary income against ordinary losses. Instead, include the income on line 9. Show the partnership's name, address, and EIN on a separate statement attached to this return. If the amount entered is from more than one partnership, identify the amount from each partnership.
Any extraterritorial income exclusion (from Form 8873).
Any net negative section 481(a) adjustment. See the instructions for line 9.
Dividends paid in cash on stock held by an employee stock ownership plan.
However, a deduction can only be taken for the dividends above if, according to the plan, the dividends are:
Paid in cash directly to the plan participants or beneficiaries;
Paid to the plan, which distributes them in cash to the plan participants or their beneficiaries no later than 90 days after the end of the plan year in which the dividends are paid;
At the election of such participants or their beneficiaries (a) payable as provided under (1) or (2) above, or (b) paid to the plan and reinvested in qualifying employer securities; or
Used to make payments on a loan described in section 404(a)(9).
See section 404(k) for more details and the limitation on certain dividends.
Do not deduct the following.
Fines or penalties paid to a government for violating any law. However, exceptions apply for certain amounts paid or incurred after December 21, 2017. See section 162(f).
Any amount that is allocable to a class of exempt income. See section 265(b) for exceptions.
Lobbying expenses. However, see exceptions (discussed later).
Amounts paid or incurred for any settlement, payout, or attorney fees related to sexual harassment or sexual abuse, if such payments are subject to a nondisclosure agreement. See new section 162(q).
Repairs and maintenance.
Include the cost of repairs and maintenance not claimed elsewhere on the return, such as labor and supplies, that do not add to the value of the property or appreciably prolong its life. See Regulations section 1.162-4. The cooperative may elect to capitalize certain repair and maintenance costs consistent with its books and records. See Regulations section 1.263(a)-3(n) for information on how to make the election.
New buildings, machinery, or permanent improvements that increase the value of the property are not deductible. They must be depreciated or amortized. However, amounts paid for routine maintenance on property, including buildings, may be deductible. See Regulations section 1.263(a)-3(i).
Travel, meals, and entertainment.
Subject to limitations and restrictions discussed below, a cooperative can deduct ordinary and necessary travel, meals, and non-entertainment expenses paid or incurred in its trade or business. Generally, entertainment expenses, membership dues, and facilities used in connection with these activities cannot be deducted. Also, special rules apply to deductions for gifts, and convention expenses. See section 274 and Pub. 463 for details.
The cooperative cannot deduct travel expenses of any individual accompanying a cooperative officer or employee, including a spouse or dependent of the officer or employee, unless:
That individual is an employee of the cooperative, and
His or her travel is for a bona fide business purpose and would otherwise be deductible by that individual.
Generally, the cooperative can deduct only 50% of the amount otherwise allowable for non-entertainment related meal expenses. In addition (subject to exceptions under section 274(k)(2)):
Meals must not be lavish or extravagant; and
An employee of the cooperative must be present at the meal. For more information, see Pub. 535.
See section 274(n)(3) for a special rule that applies to expenses for meals consumed by individuals subject to the hours of service limits of the Department of Transportation.
The cooperative can deduct amounts paid or incurred for membership dues in civic or public service organizations, professional organizations (such as bar and medical associations), business leagues, trade associations, chambers of commerce, boards of trade, and real estate boards. However, no deduction is allowed if a principal purpose of the organization is to entertain, or provide entertainment facilities for members or their guests. In addition, cooperatives cannot deduct membership dues in any club organized for business, pleasure, recreation, or other social purpose. This includes country clubs, golf and athletic clubs, airline and hotel clubs, and clubs operated to provide meals under conditions favorable to business discussion.
The cooperative cannot deduct an expense paid or incurred for a facility (such as a yacht or hunting lodge) used for an activity usually considered entertainment, amusement, or recreation.
Generally, the cooperative may be able to deduct otherwise nondeductible entertainment, amusement, or recreation expenses if the amounts are treated as compensation to the recipient and reported on Form W-2, Wage and Tax Statement, for an employee or on Form 1099-MISC, Miscellaneous Income, for an independent contractor.
However, if the recipient is an officer, director, beneficial owner (directly or indirectly), or other "specified individual" (as defined in section 274(e)(2)(B) and Regulations section 1.274-9(b)), special rules apply. See section 274(e)(2) and Regulations sections 1.274-9 and 1.274-10.
Generally, lobbying expenses are not deductible. These expenses include amounts paid or incurred in connection with:
Influencing legislation, or
Any communication with certain federal executive branch officials in an attempt to influence the official actions or positions of the officials. See Regulations section 1.162-29 for the definition of "influencing legislation."
Dues and other similar amounts paid to certain tax-exempt organizations may not be deductible. If certain in-house expenditures do not exceed $2,000, they are deductible. See section 162(e)(4)(B).
Generally, special at-risk rules under section 465 apply to closely held cooperatives (see Passive activity limitations, earlier) engaged in any activity as a trade or business or for the production of income. These cooperatives may have to adjust the amount on line 25a. (See below.)
A taxpayer is generally considered "at-risk" for an amount equal to his or her investment in the entity. That investment consists of money and other property contributed to the entity and amounts borrowed on behalf of the entity.
The at-risk rules do not apply to:
Holding real property placed in service by the cooperative before 1987;
Equipment leasing under sections 465(c)(4), (5), and (6); or
Any qualifying business of a qualified cooperative under section 465(c)(7).
However, the at-risk rules do apply to the holding of mineral property.
If the at-risk rules apply, adjust the amount on this line for any section 465(d) losses. These losses are limited to the amount for which the cooperative is at risk for each separate activity at the close of the tax year. If the cooperative is involved in one or more activities, any of which incurs a loss for the year, report the losses for each activity separately. Attach Form 6198, At-Risk Limitations, showing the amount at risk and gross income and deductions for the activities with the losses.
If the cooperative sells or otherwise disposes of an asset or its interest (either total or partial) in an activity to which the at-risk rules apply, determine the net profit or loss from the activity by combining the gain or loss on the sale or disposition with the profit or loss from the activity. If the cooperative has a net loss, the loss may be limited because of the at-risk rules.
Treat any loss from an activity not allowed for the current tax year as a deduction allocable to the activity in the next tax year.
Cooperatives are required to allocate income and deductions between patronage and nonpatronage-related business. Cooperatives with gross receipts and assets of $250,000 or more must complete Schedule G. See the instructions for Schedule G.
Complete Schedule H. Enter on line 25b the amount from Schedule H, line 5. See the instructions for
Subtract line 25b from line 25a and enter the result on line 25c.
The cooperative must attach a statement separately accounting for patronage and nonpatronage-sourced NOLs.
A cooperative can use the NOL incurred in one tax year to reduce its taxable income in another tax year. Enter on line 26a the total NOL carryovers from other tax years, but do not enter more than the cooperative's taxable income (after special deductions). Attach a statement showing the computation of the NOL deduction. Also complete Schedule K, Item 12, if applicable.
The following special rules apply.
If an ownership change (described in section 382(g)) occurs, the amount of the taxable income of a loss cooperative that may be offset by the pre-change NOL carryovers may be limited. See section 382 and the related regulations. A loss cooperative must include the information statement as provided in Regulations section 1.382-11(a) with its income tax return for each tax year that it is a loss cooperative in which an ownership shift, equity structures shift, or other transaction described in Temporary Regulations section 1.382-2T(a)(2)(i) occurs. If the cooperative makes the closing-of-the-books election, see Regulations section 1.382-6(b).
The limitations under section 382 do not apply to certain ownership changes after February 17, 2009, made according to a restructuring plan under the Emergency Economic Stabilization Act of 2008. See section 382(n).
For guidance in applying section 382 to loss cooperatives whose instruments were acquired by Treasury under certain programs under the Emergency Economic Stabilization Act of 2008, see Notice 2010-2, 2010-2 I.R.B. 251.
If a cooperative acquires control of another cooperative (or acquires its assets in a reorganization), the amount of pre-acquisition losses that may offset recognized built-in gain may be limited (see section 384).
If a cooperative elects the alternative tax on qualifying shipping activities under section 1354, no deduction is allowed for an NOL attributable to the qualifying shipping activities to the extent that the loss is carried forward from a tax year preceding the first tax year for which the alternative tax election was made. See section 1358(b)(2).
For more details on the NOL deduction, see section 172 and Instructions for Form 1139.
See the instructions for Schedule C. Then, complete Schedule C and enter on line 26b, the amount from Schedule C, line 24.
See Schedule K, Question 14, to determine if the cooperative needs to complete Schedule G. Taxable income reported on page 1, line 27, cannot be less than the nonpatronage taxable income shown on Schedule G, line 10, column b.
Patronage source losses cannot be used to offset nonpatronage income. See the instructions for Schedule G.
Minimum taxable income.
The cooperative's taxable income cannot be less than the inversion gain of the cooperative for the tax year, if the cooperative is an expatriated entity or a partner in an expatriated entity. See section 7874(a).
Net operating loss (NOL).
If line 27 (figured without regard to the minimum taxable income rule stated above) is zero or less, the cooperative may have an NOL that can be carried back or forward as a deduction to other tax years.
Generally, a cooperative first carries back an NOL, attributable to farming losses 2 tax years. However, the cooperative can elect to waive the carryback period and instead carry the NOL forward to future tax years. To make the election, see the instructions for Schedule K, Item 12, later.
See the Instructions for Form 1139 for other special rules and elections.
The NOL is limited to 80% of taxable income (determined without regard to net operating losses) for losses arising in taxable years beginning after December 31, 2017.
Merchant Marine capital construction fund.
To take a deduction for amounts contributed to a capital construction fund (CCF), reduce the amount that would otherwise be entered on line 27 by the amount of the deduction. On the dotted line next to the entry space, enter "CCF" and the amount of the deduction. For more information, see section 7518.
Enter the amount of the section 965 net tax liability installment from Form 965-B, Part II, column (k), line 2.
Enter the amount of overpayment credited to 2018 from the tax return filed for 2017.
Enter any estimated tax payments the cooperative made for the tax year.
Beneficiaries of trusts.
If the cooperative is the beneficiary of a trust, and the trust makes a section 643(g) election to credit its estimated tax payments to its beneficiaries, include the cooperative's share of the payment in the total for line 30b. Enter "T" and the amount of the payment in the shaded space beside line 30b.
If the cooperative overpaid estimated tax, it may be able to get a quick refund by filing Form 4466. The overpayment must be at least 10% of the cooperative's expected income tax liability and at least $500. File Form 4466 after the end of the cooperative's tax year, and no later than the due date for filing the cooperative’s tax return. Form 4466 must be filed before the cooperative files its tax return. See the instructions for Form 4466.
Credit from Form 2439.
Enter any credit from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, for the cooperative's share of the tax paid by a regulated investment company (RIC) or a real estate investment trust (REIT) on undistributed long-term capital gains included in the cooperative's income. Attach Form 2439.
Credit for federal tax on fuels.
Enter the total income tax credit claimed on Form 4136, Credit for Federal Tax Paid on Fuels. Attach Form 4136.
Credit for tax on ozone-depleting chemicals.
Include on line 30f any credit the cooperative is claiming under section 4682(g)(2) for tax on ozone-depleting chemicals. Enter "ODC" next to the entry space.
Enter on line 30g the amounts from Form 8827, line 8c. See the instructions for Form 8827.
If the cooperative would pay less total tax by claiming the deduction for the redemption of nonqualified written notices of allocation or nonqualified per-unit retain certificates in the issue year versus the current tax year, refigure the tax for the years the nonqualified written notices or certificates were originally issued (deducting them in the issue year), then enter the amount of the reduction in the issue years' taxes on this line. Attach a statement showing how the adjustment was figured. This adjustment is treated as a payment, and any amount that is more than the tax on line 28 will be refunded.
Add the amounts on lines 30d through 30i and enter the total on line 30j.
If the cooperative had federal income tax withheld from any payments it received because, for example, it failed to give the payer its correct EIN, include the amount withheld in the total for line 30j. Enter the amount withheld and the words "Backup withholding" in the blank space above line 30j.
Generally, the cooperative does not have to file Form 2220 because the IRS can figure the penalty amount, if any, and bill the cooperative. However, even if the cooperative does not owe the penalty, it must complete and attach Form 2220 if:
The annualized income or adjusted seasonal installment method is used, or
The cooperative is a large corporation (as defined in the Instructions for Form 2220) computing its first required installment based on the prior year's tax. See the Instructions for Form 2220.
If Form 2220 is attached, check the box on line 31, and enter any penalty on this line.
If the cooperative cannot pay the full amount of tax owed, it can apply for an installment agreement online. The cooperative can apply for an installment agreement online if:
It cannot pay the full amount shown on line 32,
The total amount owed is $25,000 or less, and
The cooperative can pay the liability in full in 24 months.
To apply using the Online Payment Agreement Application, go to IRS.gov/OPA. Under an installment agreement, the cooperative can pay what it owes in monthly installments. There are certain conditions that must be met to enter into and maintain an installment agreement, such as paying the liability within 24 months and making all required deposits and timely filing tax returns during the length of the agreement. If the installment agreement is accepted, the cooperative will be charged a fee and it will be subject to penalties and interest on the amount of tax not paid by the due date of the return.
Enter the amount of any overpayment that should be refunded or applied to next year's estimated tax.
This election to apply some or all of the overpayment amount to the cooperative's 2018 estimated tax cannot be changed at a later date.
Direct deposit of refund.
If the cooperative has a refund of $1 million or more and wants it directly deposited into its checking or savings account at any U.S. bank or other financial institution instead of having a check sent to the cooperative, complete Form 8302 and attach it to the cooperative's tax return.
Do not report income from patronage dividends on Schedule C. Report income from patronage dividends and per-unit retain allocations on page 1, line 9.
For purposes of the 20% ownership test on lines 1 through 7, the percentage of stock owned by the cooperative is based on voting power and value of the stock. Preferred stock described in section 1504(a)(4) is not taken into account.
Cooperatives filing a consolidated return should see Regulations sections 1.1502-13, 1.1502-26, and 1.1502-27 before completing Schedule C.
Cooperatives filing a consolidated return must not report as dividends on Schedule C any amounts received from corporations within the consolidated group. Such dividends are eliminated in consolidation rather than offset by the dividends-received deduction.
Enter dividends (except those received on certain debt-financed stock acquired after July 18, 1984—see section 246A) that are:
Received from less-than-20%-owned domestic corporations subject to income tax, and
Qualified for the 50% deduction under section 243(a)(1).
Also include in line 1 the following.
Taxable distributions from an interest charge domestic international sales corporation (IC-DISC) or former domestic international sales corporation (former DISC) that are designated as eligible for the 50% deduction and certain dividends of Federal Home Loan Banks. See section 246(a)(2).
Dividends (except those received on debt-financed stock acquired after July 18, 1984) from a regulated investment company (RIC). The amount of dividends eligible for the dividends-received deduction under section 243 is limited by section 854(b). The cooperative should receive a notice from the RIC specifying the amount of dividends that qualify for the deduction.
Report so-called dividends or earnings received from mutual savings banks, etc., as interest. Do not treat them as dividends.
Enter on line 2:
Dividends (except those received on certain debt-financed stock acquired after July 18, 1984) that are received from 20%-or-more-owned domestic corporations subject to income tax and that are subject to the 65% deduction under section 243(c), and
Taxable distributions from an IC-DISC or former DISC that are considered eligible for the 65% deduction.
Enter the following:
Dividends received on certain debt-financed stock acquired after July 18, 1984, from domestic and foreign corporations subject to income tax that would otherwise be subject to the dividends-received deduction under section 243(a)(1), 243(c), or 245(a). Generally, debt-financed stock is stock that the cooperative acquired by incurring a debt (for example, it borrowed money to buy the stock).
Dividends received from a RIC on debt-financed stock. The amount of dividends eligible for the dividends-received deduction is limited by section 854(b). The cooperative should receive a notice from the RIC specifying the amount of dividends that qualify for the deduction.
Dividends received on certain debt-financed stock acquired after July 18, 1984, are not entitled to the full 50% or 65% dividends-received deduction under section 243 or 245(a). The 50% or 65% deduction is reduced by a percentage that is related to the amount of debt incurred to acquire the stock. See section 246A. Also see section 245(a) before making this computation for an additional limitation that applies to certain dividends received from foreign corporations. Attach a statement to Form 1120-C showing how the amount on line 3, column (c), was figured.
Enter dividends received on preferred stock of a less-than-20%-owned public utility that is subject to income tax and is allowed the 23.3% deduction provided in sections 244 and section 247 (as affected by P.L. 113-295, Div. A, section 221(a)(41)(A), Dec. 19, 2014, 128 Stat. 4043) for dividends paid.
Enter dividends received on preferred stock of a 20%-or-more-owned public utility that is subject to income tax and is allowed the 26.7% deduction provided in sections 244 andsection 247 (as affected by P.L. 113-295, Div. A, section 221(a)(41)(A), Dec. 19, 2014, 128 Stat. 4043) for dividends paid.
Enter the U.S.-source portion of dividends that:
Are received from less-than-20%-owned foreign corporations, and
Qualify for the 50% deduction under section 245(a). To qualify for the 50% deduction, the cooperative must own at least 10% of the stock of the foreign corporation by vote and value.
Also include dividends received from a less-than-20%-owned foreign sales corporation (FSC) that:
Are attributable to income treated as effectively connected with the conduct of a trade or business within the United States (excluding foreign trade income), and
Qualify for the 50% deduction under section 245(c)(1)(B).
Enter the U.S.-source portion of dividends that:
Are received from 20%-or-more-owned foreign corporations, and
Qualify for the 65% deduction under sections 245(a) and 243.
Also include dividends received from a 20%-or-more-owned FSC that:
Are attributable to income treated as effectively connected with the conduct of a trade or business within the United States (excluding foreign trade income), and
Qualify for the 65% deduction under section 245(c)(1)(B).
Enter dividends received from wholly owned foreign subsidiaries that are eligible for the 100% deduction under section 245(b).
In general, the deduction under section 245(b) applies to dividends paid out of the earnings and profits of a foreign corporation for a tax year during which:
All of its outstanding stock is directly or indirectly owned by the domestic cooperative receiving the dividends, and
All of its gross income from all sources is effectively connected with the conduct of a trade or business within the United States.
Generally, line 9, column (c), cannot exceed the amount from the worksheet below. However, in a year in which an NOL occurs, this limitation does not apply even if the loss is created by the dividends-received deduction. See sections 172(d) and 246(b).
Worksheet for Schedule C, line 9
(keep for your records)
|1.||Refigure Form 1120-C, page 1, line 25a, without any domestic production activities deduction, any adjustment under section 1059, and without any capital loss carryback to the tax year under section 1212(a)(1)|
|2.||Complete lines 10 through 13, column (c) and enter the total|
|3.||Subtract line 2 from line 1|
|4.||Multiply line 3 by 65% (0.65)|
|5.||Add lines 2, 5, 7, and 8, column (c) and the part of the deduction on line 3, column (c), that is attributable to dividends received from 20%-or-more-owned corporations|
|6.||Enter the smaller of line 4 or line 5. If line 5 is greater than line 4, stop here; enter the amount from line 6 on line 9, column (c). Do not complete the rest of this worksheet|
|7.||Enter the total amount of dividends received from 20%-or-more-owned corporations that are included on lines 2, 3, 5, 7, and 8, column (a)|
|8.||Subtract line 7 from line 3|
|9.||Multiply line 8 by 50% (0.50)|
|10.||Subtract line 5 from line 9, column (c)|
|11.||Enter the smaller of line 9 or
|12.||Dividends-received deduction after limitation (section 246(b)). Add lines 6 and 11. Enter the result here and on line 9, column (c)|
Small business investment companies operating under the Small Business Investment Act of 1958 (see 15 U.S.C. 661 and following) must enter dividends that are received from domestic corporations subject to income tax even though a deduction is allowed for the entire amount of those dividends. To claim the 100% deduction on line 10, column (c), the cooperative must file with its return a statement that it was a federal licensee under the Small Business Investment Act of 1958 at the time it received the dividends.
Enter only dividends that qualify under section 243(b) for the 100% dividends-received deduction described in section 243(a)(3). Cooperatives taking this deduction are subject to the provisions of section 1561.
The 100% deduction does not apply to affiliated group members that are joining in the filing of a consolidated return.
Enter in column (a) dividends from FSCs that are attributable to foreign trade income and that are eligible for the 100% deduction provided in section 245(c)(1)(A).
For cooperatives described in section 1381 that are engaged in the marketing of agricultural or horticultural products and are shareholders in a FSC, multiply the total dividends reported in column (a) by 16/23 or (0.6957), for the exempt portion of the dividends that are attributable to foreign trade income, and enter the amount in column (c). See sections 245(c)(2) (repealed) and 923(a)(4)(repealed) for additional information.
Enter the foreign-source portion of dividends that:
Are received from a specified 10%-owned foreign corporations (as defined in section 245A(b)), including gain from the sale of stock of a foreign corporation that is treated as a dividend under section 1248(a) and (j); and
Qualify for the section 245A deduction.
Enter foreign dividends not reportable on lines 3, 6, 7, 8, 12, or 13 of column (a).
Include on line 14 any hybrid dividends from a controlled foreign corporation (CFC). Hybrid dividends are generally dividends received from a CFC that would otherwise be reported on line 13 except the CFC receives a deduction (or other tax benefit) with respect to any income, war profits, or excess profits taxes imposed by any foreign country or possession of the U.S.
Also include on line 14 the cooperative's share of distributions from a section 1291 fund from Form 8621, to the extent that the amounts are taxed as dividends under section 301. See Form 8621 and the Instructions for Form 8621.
Enter the 2018 section 965(a) inclusion amount from Form 965, line 3. Complete and attach Form 965 and any applicable schedules. Also complete and attach Form 965-B.
Enter in column (c) the 2018 section 965(c) deduction amount from Form 965, line 17.
Enter the foreign-source portion of any subpart F inclusions attributable to the sale or exchange by a CFC of stock in another foreign corporation described in section 964(e)(4). This should equal the U.S. shareholder's pro rata share of the amount reported on Form 5471, Schedule I, line 1a.
Enter the pro rata share of subpart F inclusions attributable to hybrid dividends of tiered corporations under section 245A(e)(2). This should equal the U.S. shareholder's pro rata share of the amount reported on Form 5471, Schedule I, line 1b.
Enter all other amounts included in income under section 951, which should equal the U.S. shareholder's pro rata share of the sum of the amounts on Form 5471, Schedule I, lines 1(c), 2, 3, and 4.
Enter amounts included in income under section 951A. See Form 8992, Part II, line 3, and the Instructions for Form 8992. Also, if applicable, attach Form(s) 5471.
Consider the applicability of section 951A with respect to CFCs owned by domestic partnerships in which the cooperative has an interest.
Include gross-up for taxes deemed paid under sections 902 (for dividends paid in pre-2018 taxable years of foreign corporations) and 960.
Enter taxable distributions from an IC-DISC or former DISC that are designated as not eligible for a dividends-received deduction.
No deduction is allowed under section 243 for a dividend from an IC-DISC or former DISC (as defined in section 992(a)) to the extent the dividend:
Is paid out of the cooperative's accumulated IC-DISC income or previously taxed income, or
Is a deemed distribution under section 995(b)(1).
Include the following:
Dividends (other than capital gain distributions reported on Schedule D (Form 1120) and exempt-interest dividends) that are received from RICs and that are not subject to the 50% deduction.
Dividends from tax-exempt organizations.
Dividends (other than capital gain distributions) received from a REIT that, for the tax year of the trust in which the dividends are paid, qualifies under sections 856 through 860.
Dividends not eligible for a dividends-received deduction, which include the following.
Dividends received on any share of stock held for less than 46 days during the 91-day period beginning 45 days before the ex-dividend date. When counting the number of days the cooperative held the stock, you cannot count certain days during which the cooperative's risk of loss was diminished. See section 246(c)(4) and Regulations section 1.246-5 for more details.
Dividends attributable to periods totaling more than 366 days that the cooperative received on any share of preferred stock held for less than 91 days during the 181-day period that began 90 days before the ex-dividend date. When counting the number of days the cooperative held the stock, you cannot count certain days during which the cooperative's risk of loss was diminished. See section 246(c)(4) and Regulations section 1.246-5 for more details. Preferred dividends attributable to periods totaling less than 367 days are subject to the 46-day holding period rule above.
Dividends on any share of stock to the extent the cooperative is under an obligation (including a short sale) to make related payments with respect to positions in substantially similar or related property.
Any other taxable dividend income not properly reported elsewhere on Schedule C.
Section 247 (as affected by P.L. 113-295, Div. A, section 221(a)(41)(A), Dec. 19, 2014, 128 Stat. 4043) allows public utilities a deduction of 40% of the smaller of (a) dividends paid on their preferred stock during the tax year, or (b) taxable income computed without regard to this deduction. In a year in which an NOL occurs, compute the deduction without regard to section 247(a)(1)(B).
If the cooperative's total receipts (page 1, line 1a plus lines 4 through 9) for the tax year and its total assets at the end of the tax year are less than $250,000, the cooperative is not required to complete Schedule G. See Schedule K, Question 14.
Cooperatives are required to allocate income and deductions between patronage and nonpatronage business. If the transaction producing the income merely enhances the overall profitability of the cooperative, being merely incidental to the cooperative's operation, the income is from a nonpatronage source. But if the source of income or loss is from an activity that is an integral part of the cooperative's business (such as inventory), then the source may be patronage.
Special rules also apply if a cooperative has acquired the assets of another cooperative under a section 381(a) transaction. Cooperatives may elect to net earnings against losses under section 1388(j) and still be eligible for tax-exempt treatment.
For agricultural and horticultural cooperatives only, special rules apply in determining and reporting the domestic production activities deduction (DPAD). See the instructions for page 1, line 22. Also see the instructions for Form 8903.
Complete Schedule H before entering an amount on this line. Allocate the amount on Schedule H, line 5, between patronage and nonpatronage. Only farmers' cooperatives exempt under section 521 are allowed to take a deduction in column (b) for nonpatronage distributions under section 1382(c).
Compute and carry back or carry over patronage and nonpatronage NOLs separately. Under section 1388(j)(1), cooperatives can use losses from one or more allocation units to offset earnings of one or more other allocation units, as permitted by their bylaws, but only to the extent that the earnings and losses are from business done with or for patrons. If a cooperative exercises this option, it must provide the information specified in section 1388(j)(3) in a written notice to its patrons.
Allocate the amount of total special deductions reported on Schedule C, line 20, between patronage and nonpatronage business.
The taxable income reported on page 1, line 27, may not be less than the nonpatronage taxable income shown on Schedule G, line 10 (column b).
Any patronage source losses (line 10, column (a)) cannot be used to offset nonpatronage income (line 10, column (b)).
Enter the amount actually or constructively paid as dividends during the tax year on:
Common stock (whether voting or nonvoting),
Capital retain certificates,
Revolving fund certificates,
Letters of advice, or
Other documentary evidence of a proprietary interest in the cooperative association.
See Regulations section 1.1382-3(b) for more information.
Enter nonpatronage income allocated to patrons. Payment may be in:
Qualified written notices of allocation, or
Other property (except nonqualified written notices of allocation).
The amounts must be paid during the payment period that begins on the first day of the tax year and ends on the 15th day of the 9th month after the end of the tax year in which the income was earned.
Nonpatronage income includes incidental income from sources not directly related to:
Service activities of the cooperative, or
Income from business done with or for the U.S. Government, or any of its agencies.
See the instructions for line 3b below for a definition of "qualified written notice of allocation." See section 1382(c)(2)(B) for deductibility of amounts paid in redemption of nonqualified written notices of allocation. See section 1388(d) for a definition of a nonqualified written notice of allocation.
To be deductible, patronage dividends must be paid during the payment period that begins on the first day of the tax year in which the patronage occurs and ends on the 15th day of the 9th month after the end of that tax year.
See sections 1382(e) and (f) for special rules for the time when patronage occurs if products are marketed under a pooling arrangement, or if earnings are includible in the gross income of the cooperative for a tax year after the year in which the patronage occurred.
Patronage dividends include any amount paid to a patron by a cooperative based on the quantity or value of business done with or for that patron under a pre-existing obligation to pay that amount. The amount is determined by reference to the net earnings of the organization from business done with or for its patrons.
Net earnings are not reduced by dividends paid on capital stock of the organization if there is a legally enforceable agreement that such dividends are in addition to amounts otherwise payable to patrons derived from business done with or for patrons.
Patronage dividends may be paid in:
Qualified written notices of allocation, or
Other property (except nonqualified written notices of allocation).
Line 3b. Qualified written notices of allocation.
Any capital stock,
Revolving fund certificate,
Certificate of indebtedness,
Letter of advice, or
Other written notice, which states the dollar amount allocated to the patron by the cooperative and the part, if any, which is a patronage dividend.
Paid as part of a patronage dividend, in money or by qualified check equal to at least 20% of the patronage dividend, and
One of the following conditions is met:
The patron must have at least 90 days from the date the written notice of allocation is paid to redeem it in cash, and must receive written notice of the right of redemption at the time the patron receives the allocation; or
The patron must agree to have the allocation treated as constructively received and reinvested in the cooperative. See section 1388(c)(2) and the related regulations for information on how this consent must be made.
Line 3d. Nonqualified written notices of allocation
If a written notice of allocation does not qualify, no deduction is allowable at the time it is issued. However, the cooperative is entitled to a deduction or refund of tax when the nonqualified written notice of allocation is finally redeemed, if that notice was paid as a patronage dividend during the payment period for the tax year during which the patronage occurred. The deduction or refund is allowed, but only to the extent that amounts paid to redeem the nonqualified written notices of allocation are paid in money or other property (other than written notices of allocation) which do not exceed the stated dollar amounts of the nonqualified written notices of allocation. See section 1382(b), Regulations section 1.1382-2, and section 1383.
See section 1383 for special rules for figuring the cooperative's tax in the year nonqualified written notices of allocation are redeemed. The cooperative is entitled to:
A deduction in the tax year the nonqualified written notices of allocation are redeemed (if permitted under section 1382(b)(2) or (4) or section 1382(c)(2)(B)), or
A tax credit based on a recomputation of tax for the year(s) the nonqualified written notices of allocation were issued. See the instructions for page 1, line 29h.
Amounts paid to patrons are not patronage dividends if paid:
Out of earnings not from business done with or for patrons;
Out of earnings from business done with or for other patrons to whom no amounts or smaller amounts are paid for substantially identical transactions;
To redeem capital stock, certificates of indebtedness, revolving fund certificates, retain certificates, letters of advice, or other similar documents; or
Without reference to the net earnings of the cooperative organization from business done with or for its patrons.
Line 4. Domestic production activities deduction allocation (section 199 or 199A(g)).
For agricultural and horticultural cooperatives only, cooperatives engaged in the marketing or manufacture, production, growth, or extraction of agricultural or horticultural products, may be eligible to compute a domestic production activities deduction under section 199 or section 199A(g). See the instructions for page 1, line 22.
An agricultural or horticultural cooperative (as defined in Regulations section 1.199-6(f)) for the section 199 deduction and as defined in section 199A(g)(4) for the section 199A(g) deduction must reduce its section 1382 deduction by the amount of the domestic production activities deduction that was allocated to patrons.
Only include on line 4 the portion of the domestic production activities deduction attributable to the amounts reported on this schedule. Marketing cooperatives that distribute patronage as per-unit retain allocations must attach a statement showing the amount of the section 199(a) deduction under section 199, or section 199A(g), attributable to the per-unit retain allocations.
If the cooperative is a member of a controlled group, check the box on line 1. Complete and attach Schedule O (Form 1120), Consent Plan and Apportionment Schedule for a Controlled Group. Component members of a controlled group must use Schedule O to report the apportionment of certain tax benefits between the members of the group. See Schedule O and the Instructions for Schedule O for more information.
Cooperatives figure their tax by multiplying taxable income by 21%. Enter this amount on line 2.
Deferred tax under section 1291.
If the cooperative was a shareholder in a PFIC and received an excess distribution or disposed of its investment in the PFIC during the year, it must include the increase in taxes due under section 1291(c)(2) (from Form 8621) in the total for line 2. On the dotted line next to line 2, enter "Section 1291" and the amount.
Do not include on line 2 any interest due under section 1291(c)(3). Instead, include the amount of interest owed on Schedule J, line 8, as other interest.
For more information on reporting the deferred tax and interest, see the Instructions for Form 8621.
If the cooperative had gross receipts of at least $500 million in any one of the 3 tax years preceding the current tax year, complete and attach Form 8991. Enter on line 3 the base erosion minimum tax amount from Form 8991, Part IV, line 5e. See section 59A and the Instructions for Form 8991. Also see Schedule K, Question 16, later.
To find out when a cooperative can take the credit for payment of income tax to a foreign country or U.S. possession, see Form 1118, Foreign Tax Credit—Corporations.
Enter any qualified electric vehicle passive activity credits from prior years allowed for the current tax year from Form 8834, Qualified Electric Vehicle Credit, line 7. Attach Form 8834.
Enter on line 5c the allowable credit from Form 3800, Part II, line 38.
The cooperative is required to file Form 3800 to claim any of the business credits. See the Instructions for Form 3800 for exceptions. For a list of allowable credits, see Form 3800. Also, see the applicable credit form and its instructions.
Elective allocations to patrons of subchapter T cooperatives.
The cooperative may elect to allocate any or all of certain credits among the patrons based on the quantity or value of business done with or for such patrons. This includes the following, if applicable:
Biofuel producer credit (Form 6478);
Renewable electricity, refined coal, and Indian coal production credit (Form 8835);
Biodiesel and renewable diesel fuels credit (Form 8864); and
Low sulfur diesel fuel production credit (Form 8896).
For the allocation to take effect, the cooperative must designate the apportionment in a written notice mailed to its patrons before the due date of the cooperative's return. The credit amount allocated to patrons cannot be included on line 5c. Once made, the election cannot be revoked. For more information, see the instructions for the applicable credit form. Also, see the Instructions for Form 3800. For tax associated with a decrease in the credit allocated to patrons, see Other Taxes, later.
Required allocations to patrons of subchapter T cooperatives.
Any excess of the certain credits that are not used by the cooperative because of the tax liability limitation must be passed through to the patrons. This includes the following credits, if applicable.
Work opportunity credit (Form 5884).
Empowerment zone employment credit (Form 8844).
Indian employment credit (Form 8845).
Energy efficient appliance credit (Form 8909).
Credit for employer differential wage payments (Form 8932).
Credit for small employer health insurance premiums (Form 8941).
These credits cannot be carried back or over by the cooperative. See the applicable form and related instructions for details. For tax associated with a recapture of credit, see Other Taxes, later.
To figure the minimum tax credit and any carryforward of that credit, use Form 8827.
Enter allowable credits from Form 8912, Credit to Holders of Tax Credit Bonds, line 12.
Include any of the following taxes and interest in the total on line 8. Check the appropriate box(es) for the form, if any, used to compute the total.
Recapture of investment credit.
If the cooperative disposed of investment credit property or changed its use before the end of its useful life or recovery period, or is required to recapture a qualifying therapeutic discovery project grant, enter the increase in tax from Form 4255, Recapture of Investment Credit. See the Instructions for Form 4255.
Recapture of low-income housing credit.
If the cooperative disposed of property (or there was a reduction in the qualified basis of the property) for which it took the low-income housing credit and the cooperative did not follow the procedures that would have prevented recapture of the credit, it may owe a tax. See Form 8611, Recapture of Low-Income Housing Credit.
Alternative tax on qualifying shipping activities.
Enter any alternative tax on qualifying shipping activities from Form 8902. Check the box for Form 8902.
Check the box for "Other" if the cooperative includes any additional taxes and interest such as the items discussed below. If the cooperative checked the "Other" box, attach a statement showing the computation of each item included in the total for line 8 and identify the applicable Code section and the type of tax or interest.
Recapture of Indian employment credit. Generally, if an employer terminates the employment of a qualified employee less than 1 year after the date of initial employment, any Indian employment credit allowed for a prior tax year because of wages paid or incurred to that employee must be recaptured. For details, see Form 8845 and section 45A.
Recapture of new markets credit (see Form 8874, New Markets Credit, and Form 8874-B, Notice of Recapture Event for New Markets Credit).
Recapture of employer-provided childcare facilities and services credit (see Form 8882).
Interest on deferred tax attributable to (a) installment sales of certain timeshares and residential lots (section 453(l)(3)) and (b) certain nondealer installment obligations (section 453A(c)).
Interest due on deferred gain (section 1260(b)).
Interest due under section 1291(c)(3). See Form 8621 and the Instructions for Form 8621.
If the amount of any of the following elective credits apportioned to any patron is decreased, there is a tax imposed on the cooperative, not the patron.
Biofuel producer credit (Form 6478). See section 40(g)(6)(B)(iii).
Renewable electricity, refined coal, and Indian coal production credit (Form 8835). See section 45(e)(11)(C).
Biodiesel and renewable diesel fuels credit (Form 8864). See section 40A(e)(6)(B)(iii).
Low sulfur diesel fuel production credit (Form 8896). See section 45H(f)(3).
For details on the recapture of the credits, see the instructions for the applicable form.
If the cooperative allocated excess credit to patrons, any credit recapture applies as if the cooperative had claimed the entire credit. For details, see section 46(h) (as in effect prior to enactment of the Revenue Reconciliation Act of 1990). This applies to the following credits.
Investment credit (Form 3468).
Work opportunity credit (Form 5884).
Empowerment zone employment credit (Form 8844).
Indian employment credit (Form 8845).
Energy efficient appliance credit (Form 8909).
Credit for small employer health insurance premiums (Form 8941).
Credit for employer differential wage payments (Form 8932).
Include any deferred tax on the termination of a section 1294 election applicable to shareholders in a qualified electing fund in the amount entered on line 9. See the Instructions for Form 8621.
Subtract any deferred tax on the cooperative's share of undistributed earnings of a qualified electing fund. See the Instructions for Form 8621.
How to report.
If deferring tax, attach a statement showing the computation of each item included in, or subtracted from, the total for line 9. On the dotted line next to line 9, specify (a) the applicable Code section, (b) the type of tax, and (c) the amount of tax.
Complete all items and questions that apply to the cooperative.
See the list of Principal Business Activity Codes, later. Using the list of codes and activities, determine from which activity the cooperative derives the highest percentage of its total receipts. Enter on lines 2a, 2b, and 2c the principal business activity code number, the cooperative's business activity, and a description of the principal product or service of the cooperative.
Check the "Yes" box for Question 5 if:
The cooperative is a subsidiary in an affiliated group (defined later), but is not filing a consolidated return for the tax year with that group, or
The cooperative is a subsidiary in a parent-subsidiary controlled group. For a definition of a parent-subsidiary controlled group, see the Instructions for Schedule O (Form 1120).
Any cooperative that meets either of the above requirements should check the "Yes" box. This applies even if the cooperative is a subsidiary member of one group and the parent corporation of another.
If the cooperative is an "excluded member" of a controlled group (see definition in the Instructions for Schedule O (Form 1120)), it is still considered a member of a controlled group for this purpose.
An affiliated group is one or more chains of includible corporations (section 1504(a)) connected through stock ownership with a common parent corporation. The common parent must be an includible corporation and the following requirements must be met.
The common parent must own directly stock that represents at least 80% of the total voting power and at least 80% of the total value of the stock of at least one of the other includible corporations, and
Stock that represents at least 80% of the total voting power and at least 80% of the total value of the stock of each of the other corporations (except for the common parent) must be owned directly by one or more of the other includible corporations.
For this purpose, "stock" generally does not include any stock that (a) is nonvoting, (b) is nonconvertible, (c) is limited and preferred as to dividends and does not participate significantly in corporate growth, and (d) has redemption and liquidation rights that do not exceed the issue price of the stock (except for a reasonable redemption or liquidation premium). See section 1504(a)(4).
Enter the cooperative's total assets (as determined by the accounting method regularly used in keeping the cooperative's books and records) at the end of the tax year. If there are no assets at the end of the tax year,
If the cooperative is required to complete Schedule L, enter total assets from Schedule L, line 13, column (d). If filing a consolidated return, report total consolidated assets for all cooperatives and corporations joining in the return.
Check the "Yes" box if one foreign person owned at least 25% of (a) the total voting power of all classes of stock of the cooperative entitled to vote, or (b) the total value of all classes of stock of the cooperative.
The constructive ownership rules of section 318 apply in determining if a cooperative is foreign owned. See section 6038A(c)(5) and the related regulations.
If the cooperative checked "Yes," enter on line 8a the percentage owned by the foreign person specified in Question 8. On line 8b, enter the name of the owner's country.
If there is more than one 25%-or-more foreign owner, complete lines 8a and 8b for the foreign person with the highest percentage of ownership.
The term "foreign person" means:
An individual who is not a citizen or resident of the United States;
An individual who is a citizen or resident of a U.S. possession who is not otherwise a citizen or resident of the United States;
Any partnership, association, company, or corporation that is not created or organized in the United States;
Any foreign estate or trust within the meaning of section 7701(a)(31); or
A foreign government (or one of its agencies or instrumentalities) to the extent that it is engaged in the conduct of a commercial activity as described in section 892.
However, the term "foreign person" does not include any foreign person who consents to the filing of a joint income tax return.
For individuals, the term "owner's country" means the country of residence. For all others, it is the country where incorporated, organized, created, or administered.
Requirement to file Form 5472.
If the cooperative checked "Yes," it may have to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Generally, a 25% foreign-owned cooperative that had a reportable transaction with a foreign or domestic related party during the tax year must file Form 5472. See the Instructions for Form 5472 for filing instructions and penalties for failure to file.
Show any tax-exempt interest received or accrued. Include any exempt-interest dividends received as a shareholder in a mutual fund or other RIC. Also, if required, include the same amount on Schedule M-1, line 7 (or Schedule M-3 (Form 1120), Part II, line 13, if applicable).
If the cooperative has an NOL, it generally can elect to waive the entire carryback period for the NOL and instead carry the NOL forward to future tax years. To do so, check the box in Item 12 and file the return by its due date, including extensions. Do not attach the statement described in Temporary Regulations section 301.9100-12T. Once made, the election is irrevocable.
If the corporation timely filed its return for the loss year without making the election, it can make the election on an amended return filed within 6 months of the due date of the loss year return (excluding extensions). Attach the election to the amended return and write "Filed pursuant to section 301.9100-2" on the election statement. See the Instructions for Form 1139.
Cooperatives filing a consolidated return that elect to waive the entire carryback period for the group must check the box in Item 12 and attach the statement required by Regulations section 1.1502-21(b)(3) or the election will not be valid.
Enter the amount of the NOL carryover to the tax year from prior years, even if some of the loss is used to offset income on this return. The amount to enter is the total of all NOLs generated in prior years but not used to offset income (either as a carryback or carryover) in a tax year prior to 2018. Do not reduce the amount by any NOL deduction reported on page 1, line 26a.
If the cooperative had gross receipts of at least $500 million in any one of the three preceding tax years, complete Form 8991 and attach it to this return. For this purpose, the cooperative's gross receipts include the gross receipts of all persons aggregated with the cooperative as specified in 59A(e)(3). See the instructions of Form 8991 to determine if the cooperative is subject to the base erosion minimum tax.
For tax years beginning after 2017, the limitation on business interest expense applies to every taxpayer with a trade or business, unless the taxpayer meets certain specified exceptions. A taxpayer may elect out of the limitation for certain businesses otherwise subject to the business interest expense limitation.
Certain real property trades or businesses and farming businesses qualify to make an election not to limit business interest expense. This is an irrevocable election. If you make this election, you are required to use the alternative depreciation system to depreciate any property with a recovery period of 10 years or more. Also, you are not entitled to the special depreciation allowance for that property. For a taxpayer with more than one qualifying business, the election is made with respect to each business.
Check “Yes” if the taxpayer has an election in effect to exclude a real property trade or business or a farming business from section 163(j). For more information, see section 163(j) and the Instructions for Form 8990.
Generally, a taxpayer with a trade or business must file Form 8990 to claim a deduction for business interest. In addition, Form 8990 must be filed by any taxpayer that owns an interest in a partnership with current year, or prior year carryover, excess business interest expense allocated from the partnership.
Exclusions from filing.
A taxpayer is not required to file Form 8990 if the taxpayer is a small business taxpayer and does not have excess business interest expense from a partnership. A taxpayer is also not required to file Form 8990 if the taxpayer only has business interest expense from these excepted trades or businesses:
An electing real property trade or business,
An electing farming business, or
Certain utility businesses.
Small business taxpayer.
A small business taxpayer is not subject to the business interest expense limitation and is not required to file Form 8990. A small business taxpayer is a taxpayer that (a) is not a tax shelter (as defined in section 448(d)(3)) and (b) meets the gross receipts test of section 448(c), discussed next.
Gross receipts test.
A taxpayer meets the gross receipts test if the taxpayer has average annual gross receipts of $25 million or less for the 3 prior tax years. A taxpayer's average annual gross receipts for the 3 prior tax years is determined by adding the gross receipts for the 3 prior tax years and dividing the total by 3. Gross receipts include the aggregate gross receipts from all persons treated as a single employer, such as a controlled group of corporations, commonly controlled partnerships, or proprietorships, and affiliated service groups. See section 448(c) and the Instructions for Form 8990 for additional information.
The balance sheets should agree with the cooperative's books and records.
Cooperatives with total receipts (page 1, line 1a plus lines 4 through 9) and total assets at the end of the tax year less than $250,000 are not required to complete Schedules L, M-1, and M-2 if the "Yes" box on Schedule K, Question 14, is checked.
Cooperatives with total assets non-consolidated (or consolidated for all cooperatives and corporations included within the consolidated tax group) of $10 million or more on the last day of the tax year must file Schedule M-3 (Form 1120). However, see the instructions for Schedule M-1, later. See the separate Instructions for Schedule M-3 (Form 1120) for provisions that also affect Schedule L.
If filing a consolidated return, report total consolidated assets, liabilities, and shareholder's equity for all cooperatives and corporations joining in the return. See Consolidated return, earlier.
Include on this line:
State and local government obligations, the interest on which is excludable from gross income under section 103(a); and
Stock in a mutual fund or other RIC that distributed exempt-interest dividends during the tax year of the cooperative.
Some examples of adjustments to report on this line include:
Unrealized gains and losses on securities held "available for sale."
Foreign currency translation adjustments.
The excess of additional pension liability over unrecognized prior service cost.
Guarantees of employee stock (ESOP) debt.
Compensation related to employee stock award plans.
If the total adjustment to be entered on line 26 is a negative amount, enter the amount in parentheses.
In completing Schedule M-1, the following apply.
Cooperatives with total receipts (page 1, line 1a plus lines 4 through 9) and total assets at the end of the tax year less than $250,000 are not required to complete Schedules L, M-1, and M-2 if the "Yes" box on Schedule K, Question 14, is checked.
Cooperatives with total assets non-consolidated (or consolidated for all cooperatives/corporations included with the tax consolidation group) of $10 million or more on the last day of the tax year must file Schedule M-3 (Form 1120) instead of Schedule M-1.
A cooperative filing Form 1120-C that is not required to file Schedule M-3 (Form 1120) may voluntarily file Schedule M-3 instead of Schedule M-1.
Cooperatives that (a) are required to file Schedule M-3 (Form 1120) and have less than $50 million total assets at the end of the tax year, or (b) are not required to file Schedule M-3 (Form 1120) and voluntarily file Schedule M-3 (Form 1120), must either (i) complete Schedule M-3 (Form 1120) entirely or (ii) complete Schedule M-3 (Form 1120) through Part I, and complete Form 1120, Schedule M-1 instead of completing Part II and III of Schedule M-3 (Form 1120). If the cooperative chooses to complete Schedule M-1 instead of completing Parts II and III of Schedule M-3, the amount on Schedule M-1, line 1, must equal the amount on Schedule M-3, Part I, line 11. See the Instructions for Schedule M-3 (Form 1120) for more information.
Include any of the following:
Meal expenses not deductible under section 274(n).
Entertainment expenses not deductible under section 274(a).
Expenses for the use of an entertainment facility.
The part of business gifts over $25.
Expenses of an individual over $2,000, which are allocable to conventions on cruise ships.
Employee achievement awards of non-tangible property or of tangible property over $400 ($1,600 if part of a qualified plan).
Nondeductible club dues.
The part of luxury water travel expenses not deductible under section 274(m).
Expenses for travel as a form of education.
Other nondeductible expenses for travel and entertainment.
We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for business taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates shown in the instructions for their business income tax return.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Click on More Information and then on "Give us feedback." Or write to the Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send Form 1120-C to this address. Instead, see Where To File, earlier.
This list of principal business activities and their associated codes is designed to classify an enterprise by the type of activity in which it is engaged to facilitate the administration of the Internal Revenue Code. These principal business activity codes are based on the North American Industry Classification System.
Using the list of activities and codes below, determine from which activity the company derives the largest percentage of its "total receipts." Total receipts is defined as the sum of gross receipts or sales (page 1, line 1a) plus all other income (page 1, lines 4 through 10). If the company purchases raw materials and supplies them to a subcontractor to produce the finished product, but retains title to the product, the company is considered a manufacturer and must use one of the manufacturing codes (311110-339900).
Once the principal business activity is determined, entries must be made on Form 1120-C, Schedule K, lines 2a, 2b, and 2c. On line 2a, enter the six-digit code selected from the list below. On line 2b, enter the company's business activity. On line 2c, enter a brief description of the principal product or service of the company.
111210 - Vegetable & Melon Farming (including potatoes & yams)
111300 - Fruit & Tree Nut Farming
111400 - Greenhouse, Nursery, & Floriculture Production
111900 - Other Crop Farming (including tobacco, cotton, sugarcane, hay, peanut, sugar beet, & all other crop farming)
112112 - Cattle Feedlots
112120 - Dairy Cattle & Milk Production
112210 - Hog & Pig Farming
112300 - Poultry & Egg Production
112400 - Sheep & Goat Farming
112510 - Aquaculture (including shellfish & finfish farms & hatcheries)
112900 - Other Animal Production
113210 - Forest Nurseries & Gathering of Forest Products
113310 - Logging
211130 - Natural Gas Extraction
212110 - Coal Mining
212200 - Metal Ore Mining
212310 - Stone Mining & Quarrying
212320 - Sand, Gravel, Clay, & Ceramic & Refractory Minerals Mining & Quarrying
212390 - Other Nonmetallic Mineral Mining & Quarrying
213110 - Support Activities for Mining
221210 - Natural Gas Distribution
221300 - Water, Sewage & Other Systems
221500 - Combination Gas & Electric
236200 - Nonresidential Building Construction
237210 - Land Subdivision
237310 - Highway, Street, & Bridge Construction
237990 - Other Heavy & Civil Engineering Construction
238210 - Electrical Contractors
238220 - Plumbing, Heating, & Air-Conditioning Contractors
238290 - Other Building Equipment Contractors
238300 - Building Finishing Contractors (including drywall, insulation, painting, wallcovering, flooring, tile, & finish carpentry)
238900 - Other Specialty Trade Contractors (including site preparation)
311200 - Grain & Oilseed Milling
311300 - Sugar & Confectionery Product Mfg
311400 - Fruit & Vegetable Preserving & Specialty Food Mfg
311500 - Dairy Product Mfg
311610 - Animal Slaughtering and Processing
311710 - Seafood Product Preparation & Packaging
311800 - Bakeries,Tortilla, & Dry Pasta Mfg
311900 - Other Food Mfg (including coffee, tea, flavorings, & seasonings)
312120 - Breweries
312130 - Wineries
312140 - Distilleries
312200 - Tobacco Manufacturing
315210 - Cut & Sew Apparel Contractors
315220 - Men's & Boys' Cut & Sew Apparel Mfg
315240 - Women's, Girls' and Infants Cut & Sew Apparel Mfg
315280 - Other Cut & Sew Apparel Mfg
315990 - Apparel Accessories & Other Apparel Mfg
316210 - Footwear Mfg (including rubber & plastics)
316990 - Other Leather & Allied Product Mfg
321210 - Veneer, Plywood, & Engineered Wood Product Mfg
321900 - Other Wood Product Mfg
324120 - Asphalt Paving, Roofing, & Saturated Materials Mfg
324190 - Other Petroleum & Coal Products Mfg
325200 - Resin, Synthetic Rubber, & Artificial & Synthetic Fibers & Filaments Mfg
325300 - Pesticide, Fertilizer, & Other Agricultural Chemical Mfg
325410 - Pharmaceutical & Medicine Mfg
325500 - Paint, Coating, & Adhesive Mfg
325600 - Soap, Cleaning Compound, & Toilet Preparation Mfg
325900 - Other Chemical Product & Preparation Mfg
326200 - Rubber Product Mfg
327210 - Glass & Glass Product Mfg
327300 - Cement & Concrete Product Mfg
327400 - Lime & Gypsum Product Mfg
327900 - Other Nonmetallic Mineral Product Mfg
331200 - Steel Product Mfg from Purchased Steel
331310 - Alumina & Aluminum Production & Processing
331400 - Nonferrous Metal (except Aluminum) Production & Processing
331500 - Foundries
332210 - Cutlery & Handtool Mfg
332300 - Architectural & Structural Metals Mfg
332400 - Boiler, Tank, & Shipping Container Mfg
332510 - Hardware Mfg
332610 - Spring & Wire Product Mfg
332700 - Machine Shops; Turned Product; & Screw, Nut, & Bolt Mfg
332810 - Coating, Engraving, Heat Treating, & Allied Activities
332900 - Other Fabricated Metal Product Mfg
333200 - Industrial Machinery Mfg
333310 - Commercial & Service Industry Machinery Mfg
333410 - Ventilation, Heating, Air-Conditioning, & Commercial Refrigeration Equipment Mfg
333510 - Metalworking Machinery Mfg
333610 - Engine, Turbine & Power Transmission Equipment Mfg
333900 - Other General Purpose Machinery Mfg
334200 - Communications Equipment Mfg
334310 - Audio & Video Equipment Mfg
334410 - Semiconductor & Other Electronic Component Mfg
334500 - Navigational, Measuring, Electromedical, & Control Instruments Mfg
334610 - Manufacturing & Reproducing Magnetic & Optical Media
335200 - Major Household Appliance Mfg
335310 - Electrical Equipment Mfg
335900 - Other Electrical Equipment & Component Mfg
336210 - Motor Vehicle Body & Trailer Mfg
336300 - Motor Vehicle Parts Mfg
336410 - Aerospace Product & Parts Mfg
336510 - Railroad Rolling Stock Mfg
336610 - Ship & Boat Building
336990 - Other Transportation Equipment Mfg
423200 - Furniture & Home Furnishings
423300 - Lumber & Other Construction Materials
423400 - Professional & Commercial Equipment & Supplies
423500 - Metal & Mineral (except Petroleum)
423600 - Household Appliances and Electrical & Electronic Goods
423700 - Hardware, Plumbing, Heating Equipment & Supplies
423800 - Machinery, Equipment, & Supplies
423910 - Sporting & Recreational Goods & Supplies
423920 - Toy & Hobby Goods & Supplies
423930 - Recyclable Materials
423940 - Jewelry, Watch, Precious Stone, & Precious Metals
423990 - Other Miscellaneous Durable Goods
424210 - Drugs & Druggists' Sundries
424300 - Apparel, Piece Goods, & Notions
424400 - Grocery & Related Products
424500 - Farm Product Raw Materials
424600 - Chemical & Allied Products
424700 - Petroleum & Petroleum Products
424800 - Beer, Wine, & Distilled Alcoholic Beverages
424910 - Farm Supplies
424920 - Book, Periodical, & Newspapers
424930 - Flower, Nursery Stock, & Florists' Supplies
424940 - Tobacco & Tobacco Products
424950 - Paint, Varnish, & Supplies
424990 - Other Miscellaneous Nondurable Goods
441120 - Used Car Dealers
441210 - Recreational Vehicle Dealers
441222 - Boat Dealers
441228 - Motorcycle, ATV, and All Other Motor Vehicle Dealers
441300 - Automotive Parts, Accessories, & Tire Stores
442210 - Floor Covering Stores
442291 - Window Treatment Stores
442299 - All Other Home Furnishings Stores
443142 - Electronics Stores (including Audio, Video, Computer, and Camera Stores)
444120 - Paint & Wallpaper Stores
444130 - Hardware Stores
444190 - Other Building Material Dealers
444200 - Lawn & Garden Equipment & Supplies Stores
445120 - Convenience Stores
445210 - Meat Markets
445220 - Fish & Seafood Markets
445230 - Fruit & Vegetable Markets
445291 - Baked Goods Stores
445292 - Confectionery & Nut Stores
445299 - All Other Specialty Food Stores
445310 - Beer, Wine, & Liquor Stores
446120 - Cosmetics, Beauty Supplies, & Perfume Stores
446130 - Optical Goods Stores
446190 - Other Health & Personal Care Stores
448120 - Women's Clothing Stores
448130 - Children's & Infants' Clothing Stores
448140 - Family Clothing Stores
448150 - Clothing Accessories Stores
448190 - Other Clothing Stores
448210 - Shoe Stores
448310 - Jewelry Stores
448320 - Luggage & Leather Goods Stores
451120 - Hobby, Toy, & Game Stores
451130 - Sewing, Needlework, & Piece Goods Stores
451140 - Musical Instrument & Supplies Stores
451211 - Book Stores
451212 - News Dealers & Newsstands
452300 - General Merchandise Stores, incl. Warehouse Clubs and Supercenters
453210 - Office Supplies & Stationery Stores
453220 - Gift, Novelty, & Souvenir Stores
453310 - Used Merchandise Stores
453910 - Pet & Pet Supplies Stores
453920 - Art Dealers
453930 - Manufactured (Mobile) Home Dealers
453990 - All Other Miscellaneous Store Retailers (including tobacco, candle, & trophy shops)
454210 - Vending Machine Operators
454310 - Fuel Dealers (including Heating Oil and Liquefied Petroleum)
454390 - Other Direct Selling Establishments (including door-to-door retailing, frozen food plan providers, party plan merchandisers, & coffee-break service providers)
482110 - Rail Transportation
483000 - Water Transportation
484120 - General Freight Trucking, Long-distance
484200 - Specialized Freight Trucking
485210 - Interurban & Rural Bus Transportation
485310 - Taxi and Ridesharing Services
485320 - Limousine Service
485410 - School & Employee Bus Transportation
485510 - Charter Bus Industry
485990 - Other Transit & Ground Passenger Transportation
488210 - Support Activities for Rail Transportation
488300 - Support Activities for Water Transportation
488410 - Motor Vehicle Towing
488490 - Other Support Activities for Road Transportation
488510 - Freight Transportation Arrangement
488990 - Other Support Activities for Transportation
511120 - Periodical Publishers
511130 - Book Publishers
511140 - Directory & Mailing List Publishers
511190 - Other Publishers
511210 - Software Publishers
512200 - Sound Recording Industries
515210 - Cable & Other Subscription Programming
522120 - Savings Institutions
522130 - Credit Unions
522190 - Other Depository Credit Intermediation
522220 - Sales Financing
522291 - Consumer Lending
522292 - Real Estate Credit (including mortgage bankers & originators)
522293 - International Trade Financing
522294 - Secondary Market Financing
522298 - All Other Nondepository Credit Intermediation
523120 - Securities Brokerage
523130 - Commodity Contracts Dealing
523140 - Commodity Contracts Brokerage
523210 - Securities & Commodity Exchanges
523900 - Other Financial Investment Activities (including portfolio management & investment advice)
524150 - Direct Insurance and Reinsurance (except life, health, and medical) Carriers
524210 - Insurance Agencies & Brokerages
524290 - Other Insurance Related Activities (including third-party administration of insurance and pension funds)
525910 - Form 1120-RIC, Open-End Investment Funds
525920 - Trusts, Estates, & Agency Accounts
525990 - Other Financial Vehicles (including mortgage REITs & closed-end investment funds)
531120 - Lessors of Nonresidential Buildings (except Miniwarehouses) (including equity REITs)
531130 - Lessors of Miniwarehouses & Self-Storage Units (including equity REITs)
531190 - Lessors of Other Real Estate Property (including equity REITs)
531210 - Offices of Real Estate Agents & Brokers
531310 - Real Estate Property Managers
531320 - Offices of Real Estate Appraisers
531390 - Other Activities Related to Real Estate
532210 - Consumer Electronics & Appliances Rental
532281 - Formal Wear & Costume Rental
532282 - Video Tape & Disc Rental
532283 - Home Health Equipment Rental
532284 - Recreational Goods Rental
532289 - All Other Consumer Goods Rental
532310 - General Rental Centers
532400 - Commercial & Industrial Machinery & Equipment Rental & Leasing
541213 - Tax Preparation Services
541214 - Payroll Services
541219 - Other Accounting Services
541320 - Landscape Architecture Services
541330 - Engineering Services
541340 - Drafting Services
541350 - Building Inspection Services
541360 - Geophysical Surveying & Mapping Services
541370 - Surveying & Mapping (except Geophysical) Services
541380 - Testing Laboratories
541512 - Computer Systems Design Services
541513 - Computer Facilities Management Services
541519 - Other Computer Related Services
541700 - Scientific Research & Development Services
541800 - Advertising & Related Services
541910 - Marketing Research & Public Opinion Polling
541920 - Photographic Services
541930 - Translation & Interpretation Services
541940 - Veterinary Services
541990 - All Other Professional, Scientific, & Technical Services
551112 - Offices of Other Holding Companies
561210 - Facilities Support Services
561300 - Employment Services
561410 - Document Preparation Services
561420 - Telephone Call Centers
561430 - Business Service Centers (including private mail centers & copy shops)
561440 - Collection Agencies
561450 - Credit Bureaus
561490 - Other Business Support Services (including repossession services, court reporting, & stenotype services)
561500 - Travel Arrangement & Reservation Services
561600 - Investigation & Security Services
561710 - Exterminating & Pest Control Services
561720 - Janitorial Services
561730 - Landscaping Services
561740 - Carpet & Upholstery Cleaning Services
561790 - Other Services to Buildings & Dwellings
561900 - Other Support Services (including packaging & labeling services, & convention & trade show organizers)
621112 - Offices of Physicians, Mental Health Specialists
621210 - Offices of Dentists
621320 - Offices of Optometrists
621330 - Offices of Mental Health Practitioners (except Physicians)
621340 - Offices of Physical, Occupational & Speech Therapists, & Audiologists
621391 - Offices of Podiatrists
621399 - Offices of All Other Miscellaneous Health Practitioners
621420 - Outpatient Mental Health & Substance Abuse Centers
621491 - HMO Medical Centers
621492 - Kidney Dialysis Centers
621493 - Freestanding Ambulatory Surgical & Emergency Centers
621498 - All Other Outpatient Care Centers
711210 - Spectator Sports (including sports clubs & racetracks)
711300 - Promoters of Performing Arts, Sports, & Similar Events
711410 - Agents & Managers for Artists, Athletes, Entertainers, & Other Public Figures
711510 - Independent Artists, Writers, & Performers
721120 - Casino Hotels
721191 - Bed & Breakfast Inns
721199 - All Other Traveler Accommodation
721210 - RV (Recreational Vehicle) Parks & Recreational Camps
721310 - Rooming & Boarding Houses, Dormitories & Workers’ Camps
722410 - Drinking Places (Alcoholic Beverages)
722511 - Full-Service Restaurants
722513 - Limited-Service Restaurants
722514 - Cafeterias and Buffets
722515 - Snack and Non-alcoholic Beverage Bars
811120 - Automotive Body, Paint, Interior, & Glass Repair
811190 - Other Automotive Repair & Maintenance (including oil change & lubrication shops & car washes)
811210 - Electronic & Precision Equipment Repair & Maintenance
811310 - Commercial & Industrial Machinery & Equipment (except Automotive & Electronic) Repair & Maintenance
811410 - Home & Garden Equipment & Appliance Repair & Maintenance
811420 - Reupholstery & Furniture Repair
811430 - Footwear & Leather Goods Repair
811490 - Other Personal & Household Goods Repair & Maintenance
812112 - Beauty Salons
812113 - Nail Salons
812190 - Other Personal Care Services (including diet & weight reducing centers)
812210 - Funeral Homes & Funeral Services
812220 - Cemeteries & Crematories
812310 - Coin-Operated Laundries & Drycleaners
812320 - Drycleaning & Laundry Services (except Coin-Operated)
812330 - Linen & Uniform Supply
812910 - Pet Care (except Veterinary) Services
812920 - Photofinishing
812930 - Parking Lots & Garages
812990 - All Other Personal Services
- Accounting methods, Accounting Methods
- Accounting period, Accounting Period
- Address change, Item D. Initial Return, Final Return, Name Change, Address Change, or Amended Return
- Advance payments, Advance payments.
- Affiliated group, Affiliated group.
- Allocation of patronage and nonpatronage income and deductions, Schedule G. Allocation of Patronage and Nonpatronage Income and Deductions
- Allocations to patrons
- Elective, Elective allocations to patrons of subchapter T cooperatives.
- Recapture of elective allocation of credit to patrons, Recapture of elective allocation of credit to patrons.
- Recapture of required excess credit allocated to patrons, Recapture of required excess credit allocated to patrons.
- Required, Required allocations to patrons of subchapter T cooperatives.
- Amended return, Item D. Initial Return, Final Return, Name Change, Address Change, or Amended Return
- Amortization, Election to deduct business start-up and organizational costs.
- Assembling the return, Assembling the Return
- At-risk rules, At-risk rules.
- Backup withholding, Backup withholding.
- Bad debts, Line 13. Bad Debts
- Balance sheets per books, Schedule L. Balance Sheets per Books
- Bond credits, Line 5e. Bond Credits
- Business start-up expenses, Election to deduct business start-up and organizational costs.
- Capital construction fund, Merchant Marine capital construction fund.
- Charitable contributions, Line 17. Charitable Contributions
- Closely held cooperatives, Closely held cooperatives.
- Compensation of officers, Line 11. Compensation of Officers
- Consolidated return, Item 12
- Contributions to reduce debt held by the public, How To Make a Contribution To Reduce Debt Held by the Public
- Contributions, charitable, Line 17. Charitable Contributions
- Controlled group
- Member of, Line 1. Members of a Controlled Group
- Cost of goods sold, Line 2. Cost of Goods Sold
- Deductions, Deductions
- Deductions and adjustments under section 1382, Schedule H. Deductions and Adjustments Under Section 1382
- Depletion, Line 23. Other Deductions
- Depository methods of tax payment, Tax Payments
- Depreciation, Line 18. Depreciation
- Disclosure statement, reportable transaction, Reportable transaction disclosure statement.
- Dividends, Line 4. Dividends and Inclusions
- Dividends and special deductions, Schedule C. Dividends, Inclusions, and Special Deductions
- Dividends-received deduction, Line 21, Column (c)
- Domestic production activities deduction allocation, Line 4. Domestic production activities deduction allocation (section 199 or 199A(g)).
- Dues, membership and other, Membership dues.
- Electronic Federal Tax Payment System (EFTPS), Electronic Deposit Requirement
- Employee benefit programs, Line 21. Employee Benefit Programs
- Employer identification number (EIN), Item B. Employer Identification Number (EIN)
- Estimated tax, Estimated Tax Payments
- Extension of time to file, Extension of Time To File
- Final return, Item D. Initial Return, Final Return, Name Change, Address Change, or Amended Return
- Foreign person (defined), Foreign person.
- Foreign tax credit, Line 5a. Foreign Tax Credit
- Forms and publications, how to get, How To Get Forms and Publications
- Identifying information, Item A. Identifying Information
- Income, Income
- Income from qualifying shipping activities, Exception for income from qualifying shipping activities.
- Initial return, Item D. Initial Return, Final Return, Name Change, Address Change, or Amended Return
- Installment sales, Installment sales.
- Income, Line 5. Interest
- Interest and penalties, Interest and Penalties
- Interest due
- Late payment of tax, Late payment of tax.
- Interest expense, Line 16. Interest
- Interest expense (relating to section 263A), Section 263A uniform capitalization rules.
- Interest income
- Section 263A uniform capitalization rules, Section 263A uniform capitalization rules.
- Name and address, Name and Address
- Name change, Item D. Initial Return, Final Return, Name Change, Address Change, or Amended Return
- Net operating loss, Line 26a. Net Operating Loss Deduction, Item 12, Item 13
- Nonaccrual experience method, Nonaccrual experience method for service providers.
- Nonpatronage income, Nonpatronage income.
- Other deductions
- Amortization, Line 23. Other Deductions
- Depletion, Line 23. Other Deductions
- Entertainment expenses, Line 23. Other Deductions
- Insurance premiums, Line 23. Other Deductions
- Legal and professional fees, Line 23. Other Deductions
- Organizational costs, Line 23. Other Deductions
- Reforestations costs, Line 23. Other Deductions
- Repairs and maintenance, Line 23. Other Deductions
- Start-up costs, Line 23. Other Deductions
- Supplies, Line 23. Other Deductions
- Travel expenses, Line 23. Other Deductions
- Utilities, Line 23. Other Deductions
- Other income, Line 9. Other Income
- Other information, Schedule K. Other Information
- Other taxes
- Recapture, Line 8. Other Taxes
- Overpaid estimated tax, Line 30c. Overpaid Estimated Tax
- Paid preparer authorization, Paid Preparer Authorization
- Partnership income (loss), Line 23. Other Deductions
- Passive activity limitations, Passive activity limitations.
- Patronage dividends, Line 9. Other Income, Line 3. Patronage Dividends
- Payment, depository methods of, Tax Payments
- Penalties, Line 31. Estimated Tax Penalty
- Pension, profit-sharing, etc., plans, Line 20. Pension, Profit-Sharing, etc., Plans
- Per-unit retain allocations, Line 9. Other Income
- Preparer, tax return, Who Must Sign
- Principal business activity codes, Form 1120-C
- Private delivery services, Private Delivery Services
- Qualified written notice of allocation, Line 3b. Qualified written notices of allocation.
- Qualifying shipping activities, Income from, Exception for income from qualifying shipping activities.
- Reconciliation of income (Sch M-1), Schedule M-1. Reconciliation of Income (Loss) per Books With Income per Return
- Recordkeeping, Recordkeeping
- Refund, Line 34. Refund
- Refundable credits, Line 30g. Refundable Credits From Form 8827
- Related taxpayer transactions, Transactions between related taxpayers.
- Rents (expense), Line 14. Rents
- Salaries and wages, Line 12. Salaries and Wages
- C, Schedule C. Dividends, Inclusions, and Special Deductions
- G, Schedule G. Allocation of Patronage and Nonpatronage Income and Deductions
- H, Schedule H. Deductions and Adjustments Under Section 1382
- J, Schedule J. Tax Computation
- K, Schedule K. Other Information
- L, Schedule L. Balance Sheets per Books
- M-1, Schedule M-1. Reconciliation of Income (Loss) per Books With Income per Return
- M-3 (Form 1120), Schedule M-3 (Form 1120).
- O, Line 1. Members of a Controlled Group
- Section 1382, deductions and adjustments, Line 25b. Deductions and Adjustments From Schedule H
- Section 1383 adjustment, Line 30h. Section 1383 Adjustment
- Section 263A costs, Section 263A uniform capitalization rules.
- Shareholders' equity adjustments, Line 26. Adjustments to Shareholders' Equity
- Signature, Who Must Sign
- Specific instructions, Specific Instructions
- Tax computation, Schedule J. Tax Computation
- Tax issues, unresolved, The Taxpayer Advocate Service
- Tax-exempt securities, Line 5. Investments
- Taxes and licenses, Line 15. Taxes and Licenses
- Taxpayer Advocate, The Taxpayer Advocate Service
- Travel and entertainment, Line 5c. Travel and Entertainment
- Travel, meals, and entertainment, Travel, meals, and entertainment.
- Trust fund recovery penalty, Interest and Penalties
- Type of cooperative, Item C. Type of Cooperative