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Specific Instructions

Table of Contents

Line 1

Complete columns (a) through (f) for all officers. A corporation determines who is an officer under the laws of the state/country where it is incorporated.

If a consolidated return is filed, this information must be furnished for each officer of the affiliated group. However, the common parent of a consolidated group may file, as part of its consolidated return, one Form 1125-E on behalf of the members of the affiliated group.

Column (b).   Enter each officer's SSN in column (b). Filers may elect to provide only the last four digits of the officer's SSN.

Column (f).   Enter each officer's total deductible compensation (such as salaries, commissions, bonuses, taxable fringe benefits, etc.). For officers of an S corporation, include fringe benefits and expenditures made on behalf of officers owning more than 2% of the corporation's stock. Do not include amounts paid or incurred for fringe benefits of officers owning 2% or less of an S corporation's stock. These amounts are reported elsewhere on the corporation's return. See the Instructions for Form 1120S for more information on deductible officers’ compensation.

Line 3

Enter compensation of officers 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 corporation claims a credit for any wages paid or incurred, it may need to reduce its deduction for officers’ compensation. See section 280C. If the corporation provided taxable fringe benefits to its officers, such as personal use of a car, do not deduct as wages the amount allocated for depreciation and other expenses claimed elsewhere on the return.

Line 4

Enter the amount from line 4 on Form 1120, page 1, line 12, or the appropriate line of the applicable return. See the instructions for the applicable entity's return.

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