1.13.8 Statistical Editing of Corporation Tax Returns

Introduction

  1. This section provides instructions for editing and perfecting data from selected corporation income tax returns for use in the Corporation Statistics of Income (SOI) program. Special instructions are provided when line references differ between the current and prior year.

  2. The statistical editing process takes place in an on-line computer environment. Data is entered by the editors directly into the corporation database via terminals connected to a minicomputer in the Ogden Service Center. The term ‘editing’ refers to the combined interactive processes of editing, consistency testing and test resolution.

  3. Numerous processes in the on-line system are triggered by special function keys on the keyboard. They are addressed in detail throughout this section and the keys are listed with their associated functions in Exhibit 1.13.8-17. In addition, a special screen lists all function keys available (see Section 8.5.5). Whenever possible, the system displays a message stating which function keys are of use on particular fields. This eliminates the need to remember many of the keys.

Background

  1. Each cycle, corporation returns are selected off the Martinsburg Computing center (MCC) Returns Transaction File (RTF) for inclusion in the Corporation SOI program. Ogden Service Center receives the files directly from MCC for pre-edit processing. All the Business Master File (BMF) data items are stored in the database for use in editing.

  2. Statistical editors in two service centers access the database through terminals connected to OSC via the Consolidated Data Network (CDN) telecommunications lines. Each selected and reformatted record contains some pre-loaded items from the RTF as well as some prior year SOI data. The editors then complete the editing. They correct any tests which may fire during the edit process.

General Procedures

  1. The following general procedures will be used while editing corporation returns.

Editors

  1. Editor ID — Each editor has assigned a unique editor number which allows access to the system and provides anonymity.

  2. Lead Editors — Each service center designates one or more lead editors identified as such through their editor ID. These lead editors have special system privileges and responsibilities that are described in detail in Section 8.7. The quality reviewers are also designated as lead editors.

Entering Data

  1. All entries are keyed through the terminals.

  2. Entries are right justified after pressing [ENTER]. In addition, commas appear in money amount fields once [ENTER] is pressed.

  3. Do not enter leading zeros except when instructed.

  4. Key negative amounts with a negative sign preceding the number. For example, a taxpayer entry of (742) would be keyed as -742.

    1. Each negative entry on a tax return must be evaluated to determine whether it should be edited as a positive or a negative. For example, if all entries on the deduction side of the income statement are shown in parentheses, do not edit them as negative numbers because the taxpayer is just indicating that they are all subtracted. If only one amount is shown as a negative, however, edit it as a negative.

    2. Some fields may be designated on the system as positive only. If a negative is entered, the message "Must be Positive" will appear. If the taxpayer has reported the item as a negative check the edit manual in the appropriate section. If still unresolved, contact the National Office.

  5. Enter all money amounts in whole dollars, dropping any cents shown. The following are examples:

    1. 473.06 is keyed as 473

    2. -731.74 is keyed as -731

    3. .03 is left blank

    4. -.85 is left blank

Navigation

  1. Edit Order - The forms and schedules selected display for editing are in a specific order. Generally, the editing order follows the order in which the taxpayer filled out the forms - attachments edited first. In many cases the bottom line of a form displays in the screen for a later form. For example, the bottom line amount edited from the Form 3800, General Business Credit, displays on Schedule J, Tax Computation, Form 1120, U.S. Corporation Income Tax Return.

  2. Restrictions — Users may navigate back and forth as needed. All tests are fired as you [ENTER] forward through a screen, regardless of the number of passes taken.

    1. If [F12] is pressed on line 1 of a form, it will go to the last line of the previous form/schedule.

    2. Occasionally, the editor may find it necessary to go back further than usual. In these cases, the navigation restrictions on a particular record may be released so the editor may go back as far as needed. However, the system will take the editor through all screens from the point of return and all tests must be re-fired regardless of having passed previously. See Section 8.8 for release procedures. The editor must cursor through all released form/schedules. The fast forward key can be used to move the cursor forward to the last field on the screen unless it hits a null field or a failed test. See Section 8.5.6 for further information.

Screens

  1. Screen Design — To the extent possible, screens look like the pages of the tax return. Where only a few items are edited off of a form, the items not edited are generally not on the screen. For these forms, you must be extremely careful to edit the amount from the correct line.

  2. Symbols — The following symbols or letters may be present to the right of a screen field:

    SYMBOL MEANING
    * This item is available from the RTF.
    C This is the field from which you may access the Calcscreens associated with the related schedule. (See Section 8.5.2).
    D This item is DISPLAY ONLY on this screen. The cursor will not land here.
    B This item is display only on this screen, but may be changed by backing up to a previously edited screen. (See Section 8.2.4:(4) for instructions).
    Q There is a query (lookup) table available for this field. (See Section 8.2.4:(5) for instructions).
    W There is a workscreen available for this field. (See Section 8.5.1 for instructions.)
    E This is a double entry field.
    G This item is computer generated. (See Section 8.2.4:(3) for Instructions).
    ME This is a must enter entry field.
    P This field allows for a decimal.
    When the fast forward (down arrow) key is pressed on an Unedited form or schedule, the cursor will zero-fill all numeric Fields up to but not including this field. (See Section 8.5.6 for Instructions.
    S When the fast forward (down arrow) key is pressed on an unedited form or schedule, the cursor will zero-fill all numeric fields up to but not including this field. (See Section 8.5.6 for instructions.)

  3. Generated Items — Some items are not edited, but are system computed. They appear on the screen, but the cursor bypasses them. They are display only, and cannot be changed. However, the components that created them may be changed. These items are designated by a ‘G’ margin entry on the editing screen.

  4. The Back Navigate Process — If an item is displayed which was originally edited from another form or schedule, it may not be changed on the display screen. You must navigate back to the originating form to make any changes. A ‘B’ in the right margin identifies these items.

    1. With the cursor on the correct item, press [PAGE UP]. The system will take you back to the originating form and the cursor will be on the first field of that form.

    2. Proceed through the form using the [ENTER] key when you do not want to make changes and the [BACKSPACE] key or [CTRL+U] keys when you want to clear a field to make a change. All tests will fire as you pass through the form.

    3. When all tests have been passed or accepted and you press [ENTER] on the last field, then you must fast forward through the forms/schedules until you arrive back at the screen from which you exited. The new amount displays.

  5. Query (Lookup) Tables — Three edit fields, prior year corp name, industry codes, and country codes have query (lookup) tables. In addition, thirteen additional lookup tables are available: prior-year/bmf, tests fired, test numbers, Form 8825 codes, cost of goods codes, income codes, deduction codes, asset codes, liability codes, Moody's NAICS lookup, Indy Research, State Lookup, and TRR Calc. Browse.

    1. Access the lookup tables by left clicking the mouse on the lookup menu or pressing [ALT+L] during editing and selecting the desired table or pressing [F9] when the cursor is on the industry code or country code fields. The latter option results in the lookup table appearing automatically.

      Prior year / BMF prior-year data for the schedule currently being edited or browsed. Available for all schedules on the main form. See Section 8.5.10 for more specific instructions
      Prior Year Corp Name displays corp name for the twp priopr years
      Industry Codes all possible industry codes in numeric order and a description of the industry
      Tests Fired test number and the error status. The UP ARROW [↑], DOWN ARROW [↓], [PAGE UP], and [PAGE DOWN] keys are used while in the test lookup table
      Country Codes all possible country codes in alphabetic order and their alpha codes used in the corporation study. A complete list of possible values for that field is found in Exhibit 1.13.8-23
      Test Numbers page number reference for each test number in the editing manual. See Section 8.5.12 for more specific instructions
      Form 8825 Codes Form 1120S returns only
      Cost of Goods Lookup a list of valid Cost of Goods codes
      Income Codes on-line dictionary for the income statement. See Section 8.5.11 for more specific instructions.
      Deduction Code on-line dictionary fo rthe deduction statement. See Section 8.5.11 for more specific instructions.
      Asset Codes on-line dictionary for the asset items on the balance sheet. See Section 8.5.11 for more specific instructions
      Liability Codes on-line dictionary for the liability items on the balance sheet. See Section 8.5.11 for more specific instructions
      Moody's NAICS Lookup displays screen to search for Moody's NAICS code by corporation name
      Indy Research browse Indy Research screen results from anywhere within the return
      State Lookup Form 1120S returns only
      TRR Calc. Browse browse Total Receipts Calculator results from anywhere within the return

    2. The lookup tables use the following general keys:

      [ALT+L] accesses lookup
      [↓] scroll down one line
      [↑] scroll up one line
      [PAGE DOWN] scroll down a screen
      [PAGE UP] scroll up a screen
      [F9] accesses help screen (only for IC/CC)
      Mouse positions cursor at: FIND
      [F10] during editing-exits and enters code (only for IC/CC)
      [F10] during browse-exits without entering code (IC/CC)
      [ESC] cancels, exits and returns to edit screen
      [F6] accesses pop-up comments window (prior-year)

    3. SOI industry code or country code lookup tables have a string search capability which allows you to search by entering part of a word or term, (for example "electri" ) or numerically by allowing you to enter part of an industry code (for example entering "561" would retrieve 17 codes 561110 - 561900). It is advisable to search for at least 4 digits. When the cursor is in the FIND position. Enter the full name of the item or a string of selected characters/numbers . The [PAGE UP] and [PAGE DOWN] key search for other industries where the string of characters are present.

    4. To choose a code, position the cursor on that value and enter it in the field by pressing the [F10] key. The originating screen displays and the field (industry code or country code) now contains the value you selected. Press [ENTER] to fire tests and continue editing.

    5. If you are in the query table and do not wish to select a value, press [ESC]. The originating screen displays and the value of the field (SOI industry code or country code) remains unchanged.

  6. Query (Help) Tables - There are four help tables available for the editors, View Comments, View Moody's US, View Moody's Intl.and Keys, and five for the leads and managers, View Control (ON1- Check SCPL- Return ID Information), Display Error, Debug, .About, and Globals. The last four are used to help resolve programming problems.

    1. Access the help tables by left clicking the mouse on the help menu.

    2. Viewing all comments (including industry code comments are accessed by pressing [F6] while editing a form or schedule.

Editing Pre-loaded Data

  1. When a screen is displayed, any RTF amounts present for that return appear. If that field was not abstracted during revenue processing, it appears blank on the screen.

  2. All pre-loaded RTF amounts must be reviewed for acceptability. Compare the RTF amount on the screen with the taxpayer entry on the return. If there is a difference, try to determine why revenue processing made the change. If a legitimate reason for the change cannot be determined, clear the pre-loaded entry by pressing the [BACKSPACE] key or [CTRL+U] and enter the original taxpayer amount. If you accept the pre-loaded data, make sure the return balances to the bottom line in order to avoid a must test.

  3. Following are some revenue processing procedures which may help you to explain differences:

    1. A red bracket "( )" around an entry means the item should be negative. Remember that a negative in revenue processing may not be a negative for SOI.

    2. A red "X" to the left of the entry means that revenue processing ignored the entry and that a red-penciled entry to the left or above was transcribed.

    3. A red circle around an entry means that the entry should not be transcribed. Generally, "X" is used on tax data and a circle is used on non-tax data.

    4. An arrow may be used to designate the correct line for a misplaced entry.

  4. The following is a list of the most common errors detected during the error correction process that generate a taxpayer notice code (TPNC), which can be found on the return in the upper left of the entity section. Notices applicable for Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts and Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies only, are not included in this listing. Use this list to help you explain differences between taxpayer entries and the pre-loaded data:

    TPNC REASON FOR CHANGE
    01 Mistake in computing total income
    02 Mistake in computing total deductions
    04 Mistake in computing taxable income
    05 Mistake in computing total income tax
    06 Recomputed total income tax to taxpayer’s advantage using alternative tax computation
    08 Credit claimed exceeds maximum allowable
    10 Incorrect balance due/overpayment amount
    11 Foreign tax credit exceeds maximum allowable
    12 Mistake in computing investment credit
    13 Mistake in Work Incentive (WIN) credit
    14 Mistake in computing alternative tax
    15 Mistake in computing Schedule D, Capital Gains and Losses
    16 Mistake in computing Form 4797, Sales of Business Property
    18 Incorrect amount of surtax exemption shown on Schedule J or Form 1120-FY, Corporation Income Tax Return, Fiscal Year
    22 Deduction for additional first year depreciation was more than can be allowed
    23 Mistake was made when alternative minimum tax figured
    25 Mistake in computing alcohol fuel credit
    26 Mistake in computing research credit
    31 Mistake in computing the general business credit on Form 3800
    40 Tax was adjusted, no reply to request for additional information
    90 Blank notice (used for whatever statement is needed)

  5. Retrieving RTF Data — At any point you can retrieve an RTF entry that you changed, by placing the cursor on the field you want to retrieve and pressing the [F8] key. (Remember this will only work on a field with an asterisk next to it). A message appears indicating the BMF value for the field and whether the user wants to restore the original BMF amount. If you wish to move in the BMF value, press the [YES] key, if not press the [NO] key.

Consistency Test

  1. Validation Checks — Consistency tests run as data is entered. Most fields have simple validation checks run on them when [ENTER] is pressed, and messages display at the top of the screen describing the error(s). In addition to consistency tests, system messages appear at the bottom of the screen for invalid entries, such as negative characters, invalid codes, etc.

  2. Tests are performed when the last field involved in the test is keyed in and [ENTER] is pressed. A single field may have a number of tests run on it. Tests are run in a specific sequence and each failed test must be resolved before the next test is performed.

  3. When a test fails, the process stops and a message appears giving the test number reference page for the edit manual, and a brief description of the condition. Wherever it may be helpful, computed amounts, out-of-balance amounts and other useful items are displayed in the message area. For selected areas, a message displays indicating on-line help screens available. These screens give further instructions how to resolve the test.

  4. Test Types — There are five types of tests which appear in the error message:

    1. Must Correct Tests — These are numbered with an "M" prefix. The system does not allow you past that field until the error is resolved. However, the return may be exited at this point. (See Section 8.2.7:(5))

    2. Error Tests — These are numbered with an "E" prefix. An error of some kind may exist on the return. All resolution instructions should be followed before accepting the test. (See Section 8.2.7:(4) for test acceptance instructions.)

    3. Validation Tests — These are numbered with a "V" prefix. Unusual conditions, which are not as likely to be in error, exist and need to be double checked. They may be accepted according to instructions for the particular test. (See Section 8.2.7:(4) for test acceptance instructions.)

    4. Longitudinal Tests — These are numbered with an "L" prefix. These tests check increases in specified items on the record versus prior year data. " L" tests, if corrected, reduce further review at the National Office. These tests may be accepted according to instructions for the particular test. (See Section 8.2.7:(4) for test acceptance instructions.)

    5. Automatic Tests — These are numbered with an "A" prefix and change amounts based on certain criteria. A message displays stating "AXXX has been fired. Money amounts may change." For an explanation of the various auto adjusts see Exhibit 1.13.8-19.

    6. Warning Tests— These are numbered with a "W" prefix. These test fire only on Calc. Screens and are identical to M Tests that fire on the consolidated form, except they may be accepted. For correction instructions, see the corresponding M test (same test # with an M prefix).

Test Resolution

  1. Failed tests must be resolved as they fail. On each error or validation test type, you must use the editing instructions to decide whether to correct or accept the test.

  2. Use the following steps to Correct a Test:

    1. Use [F1] if on-line help is specified for a test.

    2. Press the [ENTER] key to correct the test. Use the backspace [F12] and the [ENTER] keys to position the cursor on the field you want to change.

    3. Key in the correct amount. This will automatically clear the field.

    4. Use [ENTER] to move forward through the form.

  3. Moving in the Computed Amount — Sometimes, the proper correction involves moving the computed amount shown on the message line to the field in error. Use the [TAB] key or mouse to choose to [USE COMPUTED] amounts to correct the test. The computed amount replaces whatever was in the field. Press [ENTER] to fire tests and continue editing.

  4. Accepting Tests — When you have decided an "E" , "V" or "L" test should be accepted, you may TEST RELEASE it using the [TAB] key or mouse to select [ACCEPT].

  5. Must Tests — Must tests may not be accepted. However, if a must test has failed, there may be times when you need to exit the system. Use the following procedures:

    1. Exiting a Record With a Failed Must Test — If a must test has failed and you need to exit the system to research the problem. Press [ESC] to exit the return. Continue the EXIT process as described in Section 8.6:(3)(a). The record is marked as an incomplete record with a must test on it and appears on reports generated for the lead editors. To access the record later, choose EDIT from the 1120 Main Menu, enter the SCPL, select the EDIT 1 2, and continue. You will go to the Return-ID screen where you can choose to edit where you left off. Either resolve the error or mark it for lead editor review (See Section 8:2:7:(5)(b))

    2. Marking a Failed Test Record for Lead Editor Review — If you cannot resolve a failed test and would like assistance from a lead editor, use the following procedures. (This will most often be done for unresolvable must tests). Press [ALT] and use the right arrow key to access the " EXIT" menu in the banner at the top of the screen. Use the down arrow key to access the drop down list and place the cursor on "MARK FOR LEAD EDITOR" and press [ENTER]. (You may also just use the mouse to select the menu and menu options). Continue the EXIT process as described in Section 8.6. The record is then marked as needing lead editor review. The return will appear on reports generated for the lead editor used to identify and resolve these tests. Follow your service center's procedures for submitting the return document tothe lead editor. After the must test is resolved, the lead editor returns the record to the original editor for completion.

    3. Exiting a Record to Re-Open — To resolve a test it may be necessary to re-edit a portion of the return. It is possible to re-open a return by using the following procedure: Press [ALT] and use the right arrow key to access the "EXIT" menu in the banner at the top of the screen. Use the down arrow key to access the drop down list and place cursor on "RE-OPEN THIS RETURN" and press [ENTER]. (You may also just use the mouse to select the menu and menu options). The Release Screen then displays. Follow the instructions in Section 8.8 for the release procedures.

Getting Started

  1. This section provides general editing instructions for all return types.

SOI Processing Main Menu

  1. There are three user tabs available to lead editors from the main 2003 Corporation Processing screen (Returns Processing, Utilities, and reports), and two user tabs available to all tax examiners (Returns Processing and Utilities). See Exhibit 1.13.8–31 for an example of the 2003 Corporation main screen design. Within each of these tabs, additional options are available based on the user type. For example, under the tab heading Returns Processing, the following user options are available:

    1. L,E Edit — Select this option when accessing a record on the database for editing, this includes non-selected critical case returns and non-selected possessions returns. You may also, re-enter a return through this option whenever the editing of a record is interrupted. You will be asked to enter ‘C’ to continue.

    2. L, E Quality Review — Select this option to run the quality review system.

    3. L Reconcile — Select this option to identify discrepancies in edited amounts between first and second edits.

    4. L,E Browse Returns — Editors and leads select this option to review either a selected schedule or the entire return. Details are provided in Section 8.9.

    5. L,E Re-Open Returns — Editors and leads select this option to release returns and make editing corrections. Details are provided in Section 8.8.

    6. L Drop — Select this option to edit non-selected records, multiple-form-type insurance returns, extract and short edit records.

    Note: Similar differences in user options will also be seen when either the Utilities or Reports tabs are accessed.

Return Identification Screen

  1. From the 1120 Main Menu, after selecting EDIT, enter SCPL picking an edit-1-2, and hitting [CONTINUE], the Return Identification Screen displays. A new option that has been programmed for the 2003 program is the Work group entry field. To use this feature, enter a six-digit STARTS assigned Work Group, press the [RETURN] key, and the system will place the cursor on the SCPL entry box. The mouse (or the down arrow) may then be used to access the SCPL drop-down box, which contains a listing of all available scpl's (and the corresponding edit status) within the entered work group. When entering the EDIT mode for the first time:

    1. SCPL — If the return is missing, the system displays the message "THIS RETURN HAS BEEN MARKED AS MISSING BY STARTS" . The Return ID screen clears and the cursor prompts for a new SCPL. Contact National Office to change the status of this return if it is not missing. When the return is later found, re-enter the record through INITIAL EDIT MODE. A new feature that has been programmed for the 2003 study is the automatic display of National office comments (when available). For example: any N.O. comments that are entered during the 2002 National Office Review period, will automatically be displayed for an editor working the 2003 return. This shopuld greatly assits editors in addressing unique reporting issues seen on some tax returns. To exit National Office comments, press the [ESC] key.

    2. RETURN-TYPE — Use the mouse to access the drop down list of return types. Select the return type that matches the return document.

    • A consolidated return is a single income tax return containing combined financial data for a parent corporation and one or more subsidiary or affiliated corporations. The parent corporation files the return and its name, which appears on the return, may include the words "and subsidiaries " or "and affiliated companies" or the like. Form 851, Affiliations Schedule, shows the name and address of each corporation included in the consolidation.

    • Supporting schedules show the following items in detail for each corporation included in the consolidation: income, deductions, and computations of taxable income; reconciliation of earned surplus; and assets and liabilities at the beginning and end of the taxable year. Each of these schedules is usually prepared in column showing the breakdown of reported items. The following format is one commonly used by corporations in preparing their schedules:

    Consolidated
    Total
    Elimination’s &
    Adjustments
    Combined
    Total XY
    X corp.
    (Parent)
    Y corp
    (Subsidiary)

    • Most non-life insurance companies file on Form 1120-PC. However, certain small Other Insurance Companies (most often title insurance companies) file on Form 1120, 1120-A or 1120S. These returns should be edited at their regular edit location (they do not need to be specially sent to Ogden). The editor should select the appropriate return type and assign industry code 524210 or 524290.

    • If you change the return type to an 1120-L or 1120-PC and are other than an Ogden Service Center (OSC) editor, press [ESC] to exit the return. Refer the return to the lead editor as it will need to be shipped to OSC. The return may need to be dropped and transferred to Ogden. See Section 8.7:(4) for further instructions.

    • Once you have left the Return ID Screen, the Return Type can only be changed by the lead editor. You will need to exit the return by pressing [ESC]. The return type can not be changed on the Return ID screen. When the return type is changed, all edited work is deleted. Therefore, it is necessary to be very sure of the return type edited.

    • If the return was consolidated last year and is coded as non-consolidated this year (or vice versa), a system message appears alerting you to verify the return type.

    (c) REVISION YEAR — You should examine the return to make sure all forms are the same revision year. If the return contains all forms and schedules for one year, then select that year by using the mouse. If the return contains a combination of years' forms, and if any of the following forms have a revision year of 2003, edit as revision year 2003:

    Form 4626, Alternative Minimum Tax Credit

    Note:

    Otherwise, code according to the Form 1120 type year (for all 1120 Return types.) Call N.O. Team Leaders with any questions.

    (d) TOTAL ASSETS — The cursor prompts for total assets. Enter total assets from page 1 of the return when it matches end of year total assets from Schedule L, line 15d. If assets from page 1 and Schedule L do not match, enter from Schedule L. If the Taxpayer did not file Schedule L, enter the Page 1 amount. Always pick up end of year total assets. For Form 1120-F, always enter total assets from page 6, Schedule L, end of year. This is a double entry field. If you enter an incorrect amount, you can re-access this field by exiting and restarting this return. This field determines whether any longitudinal tests will be performed. Longitudinal tests fire if total assets are greater than $250,000,000 (unless otherwise stated). Edit Total Assets as negative if reported by the taxpayer as a negative.

    (e) REJECT CODE SELECTION — Select the [REJECT] option using the mouse and refer to Section 8.4 for instructions.

    (f) While on the Return ID Screen, if you need to go back to the previous field to make a change, use the mouse. If the [ESC] key is used on the Return ID Screen, all previously entered fields will have to be re-entered the next time you enter the same SCPL.

    (g) If the return is a possessions corporation and you are not a Cincinnati editor, the system will display a message indicating that the return must be shipped to Cincinnati for editing.

  2. Re-entering EDIT mode to continue — After the SCPL, if you were not the initial editor of the return, the system will ask you if you wish to edit the return. Use [TAB] key (or mouse) to move between the [YES] / [NO] boxes and press [ENTER] to continue. You will be placed in the screen where you left off with the cursor at the first field on the screen.

Form/Schedule Selection Screens

  1. Original Selection of Forms/Schedules — A form/schedule selection screen unique to each return type displays. Carefully search through the return and use the mouse to select any form or schedule listed for which there are data to edit. Sometimes the corporation only provides information for a particular form on an attachment and does not file the form itself. Therefore, you must search attachments as well. Watch out for returns with Form 4626, Alternative Minimum Tax-Corporations that also include any of forms 1118, 4562, and/or 4797 stating "for alternative minimum tax purposes." Do not edit the Forms (1118, 4562, 4797) stating "for alternative minimum tax purposes" .

    1. Certain screens display for all returns and are not included as options on the selection screen. These include the entity information, other information, income/deduction, taxes/payments screens, and balance sheet.

    2. Special Instructions for Form 3800 - When any of the following general business credit component forms are selected, the Form 3800 will automatically be selected as well. The component forms are as follows:
      Form 3468, Investment Credit
      Form 5884, Work Opportunity Credit
      Form 8861, Welfare to Work Credit
      Form 6478, Credit for Alcohol Used as Fuel
      Form 6765, Credit for Increasing Research Activities
      Form 8586, Low-Income Housing Credit
      Form 8830, Enhanced Oil Recovery Credit
      Form 8826, Disabled Access Credit
      Form 8835, Renewable Electricity Production Credit
      Form 8845, Indian Employment Credit
      Form 8846, Credit for Employer Social Security Taxes Paid on Certain Employee Cash Tips
      Form 8820, Orphan Drug Credit
      Form 8864, Biodiesel Fuels Credit
      Form 8896, Low Sulfur Diesel Fuel Production Credit
      Form 8874, New Markets Credit
      Form 8881, Credit for Small Employer Pension Plan Startup Costs
      Form 8882, Credit for Employer-Provided Child Care Facilities and Services
      Form 8847, Credit for Contributions to Certain Community Development Corporations
      Form 8844, Empowerment Zone Employment Credit
      Form 8884, New York Liberty Zone Business Employee Credit

    3. Special instructions for selecting the Schedule P - select the Schedule P if all of the following conditions are met:
      Part II of the Schedule P's (Form 5735) has amounts present Line 8 of those Schedule P's is reported Other Income, Line 10, on Form 1120, is reported.

    4. After selecting all forms and schedules needed, press the [DO] key to go to the next screen.

    5. If you have not selected a form for which RTF data already exists, the system selects it for you. A message appears stating that the form must be selected.

  2. Corrections to Form/Schedule Selections — The form/schedule selection screen may be accessed at any point in the edit process to correct selections made on the first pass. Additional screens may be selected or previously selected screens may be de-selected. Press [ALT] and the right arrow key (or the mouse) to access the "EXIT" menu in the banner at the top of the screen. Use the down arrow key to access the drop down list and place cursor on "Exit to form selection screen. " Any form already completed is marked with a 'D'. Move the cursor to the point of correction and either clear the ✓ by using the mouse, or use the mouse to enter a ✓ depending on whether you are de-selecting or selecting a form, and press either the [F10] or [DO] key to conform your selection. Make as many changes as necessary. Note: You can only de-select a form/schedule that is not completed yet (i.e. marked with a ✓). If you want to de-select a form that has been completed, you must release the return at or before the appropriate schedule. In following this procedure, you may select a form that would normally have been edited before forms or schedules you have already completed. Since forms need to be edited in a specific order, the system places you where you indicate, but takes you through all subsequent (selected) forms even if they have already been edited. You will need to press [ENTER] through these forms to re-fire all tests. Use the Fast Forward [ ↓ ] key to get to bottom of the screen faster.

Return Completion Screen

  1. The system will display a screen with the buttons [FINISH], [EDIT],and [EXIT]. Use the mouse to select one of these options. If [FINISH] is selected, a checklist of several processes that will then execute is displayed on the right side of the screen. If the return needs to be scanned, the following message will display: "Please flag this return for scanning. Press [ENTER] to continue."

    1. If the return needs to be photocopied for the Form 5471, Form 1118, or Form 5735 studies, a message displays. See Exhibit 1.13.8-63 for specific editing instructions for these forms.

    2. Computed amounts are generated at return completion. If any computed amount becomes negative, a message instructs you to contact National Office. Acknowledge the message by pressing [ENTER] and you will automatically be taken to the Return ID screen. The edit status of the return will be set to 'I' (Incomplete) until National Office can resolve the problem. In the past, National Office had to resolve these problems without the use of the return. Through this procedure, the service centers will provide a vital role in the resolution process since the return is still in the unit.

    3. Returns meeting selected item sample criteria will be identified at return completion. Editors will receive the following message: "This returns has been selected for the Selected Item Sample:" (See QUASR IRM (26)12.3 or Exhibit 1.13.8-72).

Rejecting Records (See Exhibit 1.13.8-10)

  1. Rejecting from the Return ID Screen — See Exhibit 1.13.8-18 for a list of reasons a return may need to be rejected from the sample. Do not just use the reasons as listed on the reject code screen as they are too abbreviated to use alone. If you are on your initial pass through the RETURN ID SCREEN for a record and you can determine that the return needs to be rejected, select the [REJECT] button at the bottom of the Return-Id screen.

    1. The REJECT CODE SELECTION SCREEN displays containing a drop-down listing of valid reasons why a return may need to be rejected. Enter the number corresponding to the appropriate reason and press [ENTER].

    2. A screen with DATA ELEMENTS TO VERIFY ON REJECT CODED RETURNS displays. Edit corporation name, EIN, ending accounting period, date incorporated, prior year EIN, PBA code and SOI Industry code according to instructions for the entity and other information screens for the appropriate form type.

    3. When you have completed entering all necessary data, the return comment field automatically displays for you to document why the return was rejected. After entering any comments, click on the [DONE] button . A blank RETURN ID SCREEN displays for beginning your next return.

  2. Rejecting While in the Return — If you have begun editing the return and realize that it should have been rejected, press [ALT] and use the right arrow key to access the "EXIT" menu in the banner at the top of the screen. Use the down arrow key to access the drop down list.

    1. Select the option, EXIT TO REJECT SCREEN.

    2. The REJECT CODE SELECTION SCREEN displays. Follow steps 1(b) through (c) above to reject code the record.

  3. If you reject a return in error, the lead editor must drop the return. See Section 8.7 for resetting tables for a SCPL (deleting records).

Workscreens and Enhancements

  1. Several on-line editor aids simplify some of the more cumbersome and time-consuming editing processes. These include workscreens for industry coding, consolidating non-consolidated income statements and balance sheets and allocating amounts out of catch-all fields on the income statement and balance sheet. Some of the enhancements are the lookup screens, on-line general calculator, on-line comments field, fast forward/backward keys, on-line help screens and return information screen.

Industry Code Workscreen

  1. The industry code workscreen was designed for two reasons — to provide you with a screen of data items that may aid you in selecting an industry code and — to record the results of your research in the database for future use.

  2. This section only gives instructions related to accessing and using the INDUSTRY CODE RESEARCH SCREEN. Refer to IRM 1.13.7 for complete industry coding instructions.

    1. Position the cursor on the Industry Code field in the Entity or Other Information screen. Press the [ALT+F8] key.

    2. The INDUSTRY CODE RESEARCH SCREEN displays:


      Current SOI Industry Code
      PBA Code
      Total Assets (Stored)
      BMF Gross Receipts
      BMF (Total Dividends + Interest)
      Industry code from 2 prior year files
      PBA Code from 2 prior year files
      Total Assets from 2 prior year files
      Gross Receipts from 2 prior year files
      Prior Year Sources Used
      Moody's US and International
      Total Receipts Calculator

    3. The cursor will be positioned at a reference source field on the screen. Enter as many of the following codes as apply and press [ENTER]:

      Moody's (Listed)
      Moody's (Not Listed).
      Dun & Bradstreet
      Polk’s
      Best's
      Internet

    4. The cursor moves to the industry code comment field. Enter information about the results of your research according to the instructions in IRM 1.13.7. Use the [F6] key to display current year comments. The [VIEW ALL COMMENTS] button allows the user to access all comments, including industry code comments from prior years (when available). Use the [ESC] key to return to the research screen.

    5. The cursor moves to the SOI industry code field for you to enter the industry code you have selected or press [F9] key to access the Industry Code Lookup Screen. After pressing [F10], you will be placed back in the screen you exited to access this process and the new industry code will be displayed.

  3. You may use the industry code lookup table on the industry code field in the INDUSTRY CODE RESEARCH SCREEN . (See Section 8.2.4:(5) for instructions.)

  4. Changes to the SOI industry code must be made through the industry code research screen. Any time you research the industry code, whether you change the industry code or not, you must record your research on the industry code research screen. The system will automatically force any changes to be made on the research screen.

Calcscreens

  1. The Corporation SOI study requires consolidated data. On occasion, the taxpayer files returns for the individual corporations within the group without providing a consolidated return. In these cases, the editor adds amounts across all returns or attachments and edit the sums. Calcscreens aid in this process.

  2. Calcscreens are provided for the income statement, balance sheet, Schedule D, Schedule A, Schedule M-1, Form 1118, Foreign Tax Credit - Corporations and Forms 4562, and 4797. All return types will have calcscreens for their associated Forms 1118, 4562, and 4797. The 1120-A, 1120-RIC, and 1120-REIT will not have the calcscreens available for the income and balance sheet, Schedule A, or Schedule M-1, but do have the on-line general calculator available.

  3. To access the calcscreens:

    1. The field from which you may access the calcscreen for a particular schedule is identified with a ‘C’ to its right. Position the cursor on this field and press the [F4] key to access calcscreens.

    2. A calcscreen displays a list of all items that may be edited for that screen. The calcscreen covers the existing numerical fields on the screen so it appears that the original screen is being edited. An indicator shows the subsidiary number at the top. Edit these fields for the first return or attachment using the appropriate editing instructions in this manual. The calcscreens enforce positive only, numeric, etc. element constraints, i.e., the same constraints as the regular edit screens.

    3. You must enter an amount or press [ENTER] on each field of the calcscreen. A test will fire within each calculation screen of deductions, assets, and liabilities to ensure the sub items add to the bottom line. If the totals do not add up, a warning message "Out of balance by: [difference]" , will display. The [ENTER] key can be pressed to continue. If the [ESC] key is pressed on any item on the calculation screen the question "Do you want to exit the calculation process?" displays to confirm the exit.

    4. Items that came from previously edited schedules are not included on the calcscreens. By definition, they have already been edited. Income is an example of having items (Total Dividends) that were previously edited and therefore the totals for subs could not be tested. However, you may use the back navigate process described in Section 8.2.4:(4) if you need to return to them after the calcscreen process is complete.

    5. When you press [ENTER] on the last field of the first calcscreen, a blank calcscreen displays for entering the next subsidiary's information. The calcscreens for each subsidiary are numbered so you can keep track of them.

    6. Blank calcscreens continue to display until all subsidiaries’ information is edited. [PAGE UP] and [PAGE DOWN] keys can be used to go backward and forward between each SUB (calculation screen). A message displays when you are at the first or last sub group. When you have finished entering all data, press [F10]. Every field will be summed across all subsidiaries. The cursor will be positioned at the first field on the screen from which you exited and you must [ENTER] through the screen to fire all tests as in the regular edit process.

    7. To erase a whole subsidiary, press [F5] at any time within the calcscreen.

    8. To retrieve the calcscreens, press [F4]. Changes can be made and when you press [F10], all amounts will be re-calculated and displayed. You may retrieve the calcscreens and make changes as often as needed until you have exited the last screen associated with the schedule.

  4. If it is necessary to make changes to a field after all calculations have been totaled, you do not need to re-enter the calcscreens. Any changes can be made directly on the screen.

  5. On-line general calculator — When [F11] is pressed, a "mini" on-line general calculator in the form of a pop-up window displays on the edit screen. This calculator can be used on all money fields on any return, schedule, or attachment. The display shows the total amount entered. The general calculator operates like a standard adding machine.
    To move the calculator, use the mouse to click on the dark blue banner at the top of the calculator. Click and hold the left mouse button and drag the calculator to the desired location on the screen.
    After each amount, press [ENTER] to add or [-] to subtract. Pressing [F7] clears the last number displayed, [F8] clears the entire calculation, [F6] reverses the sign of the current entry and [F5] clears the current entry.

    1. When [F10] is pressed, the total amount from the calculator is entered on the screen for the line item entry from which the calculator was accessed, if it is a numeric field.

    2. To exit the calculator without bringing an amount forward, press [ESC].

    3. When [F9] is pressed, the entire contents of the general calculator tape are printed, even the entries and calculated values that are not currently displayed.

    4. Press [PAGE DOWN]or [PAGE UP] to scroll thru the history tape list. The Backspace key removes the last character from the display. [F3] will increase or decrease respectively the number of digits where the decimal point display is positioned. The default is set at zero.

Allocation Screens

  1. There are three fields on the income statement, two fields on Schedule A, Cost of Goods, and five fields on the Balance Sheet for which allocation screens may be used. They are Other Income, Other Deductions, Farm Income; Other Costs, Section 263A Costs; Other Current Assets, Other Investments, Other Assets, Other Current Liabilities and Other Liabilities. You can allocate from income to deductions, from deductions to income, from assets to liabilities, and from liabilities to assets with some restrictions.

  2. Use Exhibits 1.13.8-56 and 1.13.8-59 editing instructions for further information on moving amounts out of the "other schedule" attachments. The on-line dictionaries will help to determine the amounts that should be moved from each schedule and where they should go.

  3. After the income statement or balance sheet is in balance, the cursor moves to the ALLOCATION field. If you do not need to allocate any amounts out of any schedules, enter ‘C’ to bypass the allocation process and continue editing.

  4. If you need to allocate amounts from any "other" field, press [F3].

    1. If you are on the income statement, the ALLOCATION SCREENS for Other Costs, Section 263A Costs, Other Income and Other Deductions are available to you. Use the [PAGE DOWN] and [PAGE UP] keys to move back and forth between the four allocation screens. If the Schedule A has not been selected, the allocation screens for Other Costs and Section 263A Costs do not display.

    2. If you are on the balance sheet, the ALLOCATION SCREENS for Other Current Assets, Other Investments, Other Assets, Other Current Liabilities and Other Liabilities are available. Use the [PAGE DOWN] and [PAGE UP] keys to move back and forth between the five allocation screens.

  5. Each allocation screen "pops up" over the existing screen and has a list of fields on the left where amounts may be moved. Each field has a unique two letter code assigned to it. On the right side of the screen are blank money amount and code fields. Both positive and negative amounts may be allocated for the income statement and the balance sheet. See Exhibits 1.13.8-56 for income statement restrictions and 1.13.8-59 for balance sheet restrictions.

  6. Go through the appropriate taxpayer attachments and determine money amounts that need to be moved. Enter the code and money amount associated with the field where you want the money amount moved. For example, if 10,000 should be moved from Other Costs to Rents, on the Other Costs ALLOCATION SCREEN, enter "RT [ENTER] 10000 [ENTER]" . A highlight bar indicates where the cursor is positioned for allocation entries. At this point [ALT+L] can be used to access prior year info, and using the mouse to click on [ALLOCATION] will access prior year allocations.

  7. An amount in the income statement can be allocated from a field (source field) which is larger than the field itself (which would make the source field zero or less). A total box displays at the top of the allocation screen. When amounts are designated for movement, a running total displays how much is left for allocation in that source field. The ‘to field’ is referred to as the destination field.

  8. Enter as many items as you find to move. They may be entered in whatever order the taxpayer provides them, within each allocation screen. When you [ENTER] on the last field, more blank fields display. To change or correct an entry:

    1. The Backspace key or [CTRL+U] clears an individual field (either the money amount or code field).

    2. The [F5] key clears an entire line (both the money amount and code fields on the line)

  9. After you complete entering amounts for the first "other " field, press [PAGE DOWN] to display the next one. If the [ESC] key is pressed, on any items on the allocation screen the question "Do you want exit the allocation process? " , YES/NO displays to confirm the exit. You must answer either Yes or No. All allocations are deleted when ‘Yes’ is entered. When you enter all money amounts and codes for all of the allocation screens on that schedule, press [F10] to initiate the allocation calculations:

    1. All amounts for each code are summed. For example, all amounts associated with the GR (gross receipts) code are added together.

    2. All summed amounts are added to the appropriate field and subtracted from the related "other" field. For example, the summed gross receipts amount are added to Gross Receipts and subtracted from Other Income. However, for Intangible Drilling Cost allocation and Amortization the amounts are not subtracted out of Other Deductions. The amounts are only displayed in these fields to show how much of Intangible Drilling Costs and/or Amortization is included in Other Deductions.

    3. Next, the originating screen displays the cursor on Allocation field. All necessary tests run behind the scenes and failed tests must be test released or corrected.

    4. When the cursor is at the Allocation field, you can press [F12]. A message "Allocation may have changed money amounts. Re-editing amounts" , appears along with an "OK" . Press [ENTER]; the cursor automatically moves to the last field before the Allocation field and changes can be made directly to the screen for re-editing.

    5. Another alternative would be to press [ALT] and use the right arrow key to access the "EXIT" menu in the banner at the top of the screen. Use the down arrow key to access the drop down list and place the cursor on "Browse This Return," and press [ENTER] in order to browse the forms and schedules that you wish. To exit out of Browse mode, select [EXIT] using the mouse.

    6. If further items need to be allocated, then press [F3] to re-enter the Allocation screens.

  10. Movement from other categories should always be made in allocation. The screens can be accessed as many times as you need. Changes must be made by re-accessing the ALLOCATION SCREENS using the [F3] key. For this reason, be very careful about perfecting the schedule before any allocation processes are run.

  11. When you are satisfied with the allocation results, position the cursor at the Allocation field and enter ‘C’. At this point, the change field amounts for any income statement allocation are stored in the database for use in the future development of an automated imputation system.

  12. After you have pressed ‘C’ for the Income Statement allocation process, there are several options for re-entry.

    1. If a return is released or re-edited at cost of goods, income statement, deduction statement or balance sheet, a message appears at the bottom of the screen stating "Allocation may have changed money amounts. Re-editing amounts." Stored allocation amounts may be re-accessed or browsed. See (10) and (11) above for procedures.

    2. If [F3] is pressed, the allocation screens re-displays and any changes can be made. The allocation screens can also be viewed while in BROWSE mode by pressing [F3].

  13. Certain tests only fire after allocation has been completed. See specific editing instructions for the associated tests.

On-Line Comments

  1. Note any peculiar taxpayer entries or confusing situations in comment windows accessed from any point in the return by pressing [F6]. Access the prior year’s comments by pressing [F6]. Using the mouse to select the [VIEW ALL COMMENTS] button allows the user to access on-line comments from prior years when available.

  2. The comment screen is 780 characters long and can be accessed at any time. After entering all comments, press [F10] to save them. [ESC] exits the screen without saving comments. Use the Backspace key or [CTRL+U] to erase all comments.

  3. This screen displays automatically before the completion of a return. The comment screens can also be viewed in the browse mode.

Key Definitions

  1. At any time a list of function keys can be displayed by clicking the mouse on HELP and clicking on KEYS. A list of keys and their associated functions will be displayed. See Exhibit 1.13.8-17 for the main function keys.

Fast Forward Key

  1. When the fast forward (down arrow) key [] is pressed on an unedited form or schedule, the program will zero-fill all numeric fields up to but not including the next stop point, defined on the screen as a red stop sign engraved with an ‘S’ in the right margin. The down arrow process will stop when a character field is encountered or a test reads out. At this point the editor must make the necessary change to [CORRECT], [ACCEPT], or [USE COMPUTED AMOUNT] by using the mouse or pressing the [TAB] key to select a choice and then pressing [ENTER]. Use this option with caution as it could cause tests to read out if you zero-fill too far. On some schedules, notably the Form 4797, Schedule D, Income/Deduction, Schedule J, and Balance Sheet, the down-arrow will not zero-fill when editing.

  2. When a form or schedule has already been edited, this key moves the cursor forward to the last field on the screen unless it hits a null field or a failed test.

  3. The [ENTER] key must be hit before the [] key can be used again. The [ENTER] key must be pressed at the end of the screen to make the cursor continue to the next screen.

Fast Backward Key

  1. The fast backward key [] moves the cursor back to the top of a form allowing you to move back through portions of a return previously edited. Once at the top of a form, use the [F12] key to move the cursor back to the bottom line of the previous form. The key works on regular editing screens only.

  2. To move back several screens, it is faster to release the return at the designated schedule and re-edit from there.

On-Line Help Screens

  1. On-line help screens are available for industry codes; country codes; class/method and convention on Form 4562; general calculator; and on releasing a return by pressing the [F1] key.

Return Information Screen

  1. During editing, some return information might be helpful. When HELP, then View Control is selected by the mouse during the editing process, the return information will be displayed on top of the editing screen. Click on the [EXIT ICON] to return to the regular editing screen. Pressing the [PAGE DOWN] key displays a pop-up box allowing the user to query for a different scpl / edit_1_2. This information is available to lead editors and N.O. analysts only.

Prior Year Lookup/BMF

  1. The Prior Year Lookup/BMF function displays current year BMF data for all fields as well as data on any 1120 schedule from the two prior years.

  2. In order to access the prior year lookup, press [ALT+L] on any schedule and then select "Prior Year Lookup/BMF" and the [ENTER] key. The prior year data as well as any edited current year data displays. The prior year data for a specific schedule can only be accessed when the cursor is on that schedule. For example, the prior year data for the Schedule A can only be accessed from the Schedule A screen. For any schedules with allocation screens, the prior year allocations can be accessed by pressing the [ALLOCATION] button.

  3. While in the Prior Year Lookup, press the [VIEW BMF] button at the bottom of the screen to access the BMF information for the current year.

  4. Also, while in the Prior Year Lookup for the balance sheet, income and deductions and Schedule A by pressing the [Allocation] button at the bottom of the screen, you may access the lookups for the allocation screens.

  5. Some of the function keys operate differently than they do for the other lookup schedules. [ENTER] and [F12] scroll up/down one screen at a time; [], [] scroll up/down one line at a time.

Asset, Liability, Income, Deduction and Other Costs Code Lookups

  1. The asset and liability code lookups display all dictionary items for their respective sides of the balance sheet. The columns are arranged in the order of current asset/liab, non-current asset/liab, and running schedule. The income and deduction code lookups display all dictionary items for their respective sides of the income statement. The other costs code lookup display all dictionary items that may be allocated within Schedule A. The two letter code shows where to move the specific term.

  2. The [F12] places you in the FIND mode to enter a specific term. After entering a specific term, press [F10].

  3. If the lookups were entered from the allocation screens, pressing [F10] next to a term enters the code into the code field. For the balance sheet, pressing [ENTER] toggles between current/non-current/ and running schedule codes.

Test Number Lookup

  1. The test number lookup is an on-line page reference for all tests in the editing manual. When you press [ALT+L] and select "Test Number Lookup" and the [ENTER] key, all test numbers will display in alpha-numerical order. You may search for a specific test number reference by pressing [F12], entering the test number and then pressing the [F10] key.

  2. If more than one page number is listed for a specific test, it means that there are form types which have separate editing instructions for that test. The page numbers are listed in numeric order and correspond to the order the form types are listed in the manual.

Test Fired, Industry Code, Country Code, Cost of Goods Code, Form 8825 Code

  1. When in the Lookup menu and "Tests Fired Lookup" is selected followed by the [ENTER] key, you will see the test number and the error code for any test that have fired at that point when in editing and you will see all test that have fired when the return has been completed.

  2. Also, when in the Lookup menu and "Industry Code Lookup " is selected followed by the [ENTER] key, you will get all possible industry codes. See Section 8.2.4(5) for more detailed information.

  3. If "Country Code Lookup" is selected followed by the [ENTER] key, you will get all possible country codes. See Section 8.2.4(5) for more detailed information.

  4. If "Cost of Goods Code Lookup" is selected followed by the [ENTER] key, you will get all possible Schedule A allocation codes. See Exhibit 1.13.8-53(5) for more detailed information.

  5. If "Form 8825 Code Lookup" is selected followed by the [ENTER] key, you will get all possible codes. See the S corporation editing instructions for more detailed information.

Help Keys Lookup

  1. Press [ALT+H, then K] or click on Help and then Keys, and a listing of all available keys and their functions will be displayed. Listed below are some examples of the more common functions / keys used during editing.

    Function Key
    Clear Field / Item Ctrl+U
    Delete F5
    Delete Backwards Backspace
    Enter Comments F6
    Exit Esc or Ctrl+Q
    Pop-Up-Calculator F11
    Previous Record (Backnavigate) Page Up

Exiting the Return (See Exhibit 1.13.8-9)

  1. After completing all mandatory and selected forms and schedules for any return type, a return exit screen displays. On this screen, you see [FINISH], [EDIT], and [EXIT] buttons.

    1. If you need to get back into the return, click on the [EDIT] button with the mouse. From here the editor can follow the usual procedures for re-accessing an already completed form or schedule. (See Section 8.8:(2)).

    2. If the return is complete, click on the [FINISH] button as instructed. It is at this point that the record is marked on the system with an edit status code of 'C' for complete. When finished editing, mark the top of the return with a red "E" .

  2. Pressing [ALT] and using the right arrow key accesses the " EXIT" menu in the banner at the top of the screens.
    (You may also use the mouse to select the menu and menu options.)

    Note:

    There are some screens from which you are denied the ability to exit. For example, you may not [EXIT] out of the Forms Selection Screen. In these cases, a message displays preventing your exit.

  3. The EXIT MENU SCREEN allows you options for exiting the return. To choose an option, use the down arrow key to access the drop-down list and place cursor on your choice and press [ENTER]. (You may also use the mouse to select the menu and menu options).

    1. EXIT THIS RETURN — This is the option you will most often choose. If you are in the middle of a return and you exit through this option, the editing status code is set to ‘I’ for incomplete. You will use the EDIT MODE to continue editing this record. The MAIN MENU displays. Follow your service center's procedures for logging out.

    2. MARK FOR LEAD EDITOR — This is to mark a problem return for lead editor review. One case would be the presence of an unresolvable Must Test. The MAIN MENU displays. Follow your service center’s procedures for logging out.

    3. EXIT TO FORM SELECTION SCREEN — See Section 8.3.3:(2) for instructions for making changes to the form selection while in the edit process.

    4. EXIT TO REJECT SCREEN — See Section 8.4:(2) for instructions for rejecting a return after starting it.

    5. RE-OPEN THE RETURN — If you wish to re-edit a portion of the return, the re-open option is available without exiting to the main menu. See Section 8.8:(2) for release instructions.

    6. BROWSE THE RETURN — If you wish to browse the return, this option is available without exiting to the main menu.

    7. If you do not want to exit the return, press [ESC] to return to the point of the return from which you last were.

Lead Editor Options (See Exhibit 1.13.8-12)

  1. The lead editors have special system privileges and responsibilities on the system. Each service center defines program responsibilities for its senior editors which involves monitoring editing progress, answering editor questions, contacting National Office analysts when needed, etc. The utilities available under the "Utilities Menu" and include:

    • Reviewing records marked for leads

    • Resetting Busy code

    • Viewing prior year data

    • Using the Communication log


    The Communication and Suggestion logs are available under the "Utilities, Pick a Utility" Menu.

  2. Review Records Marked for Leads (" Utilities" Menu) — When an editor has trouble resolving an error on a record, she has the option to exit the return and designate it as needing lead editor review. The record is given an edit status of " L" — needing lead editor review. Each service center sets up a system for handling lead editor review records. This includes saving and filing returns until they have been reviewed, assigning priority to returns, and assuring the completion of the review.

    1. Choosing REVIEW RETURNS MARKED FOR LEADS displays a pop-up screen with SCPLs coded for review.

    2. Use Up and Down arrow keys to choose SCPL/EDIT-1-2, use the scroll bar on the right of the screen or [PAGE DOWN] / [PAGE UP] keys to scroll down or up a full screen, and use [F10] to select a SCPL or [ESC] to exit to LEAD EDITOR screen. Options to EDIT or BROWSE are located at the bottom of the screen and may be accessed using the mouse.

    3. If the return has been marked for lead editor review because of a Schedule P problem, [F5] may be used to delete all Schedule P data when the cursor is on the Schedule P. Please have editors check the Schedule A, income deduction items carefully as these cannot be restored to their original amounts.

    4. After a record is selected, the lead editor sees the form/schedule, which was last accessed by the editor and the return is edited like a regular edit.

    5. When the lead editor exits the return, the next screen is the screen of L coded returns so the remaining records can be queried.

  3. Reset Busy Code ("Utilities" Menu) — The busy code locks a return so only one person accesses it at a time. Occasionally an event occurs which causes the code to not change. Choosing RESET BUSY CODE takes you to a screen which prompts you for an SCPL and an edit-1-2. When finished entering the information, choose [RESET BUSY] to reset for the one particular return. There is no option to reset the busy code for multiplerecords; you must do each one individually.

  4. Reset Tables for an SCPL (Deleting Records) ("Utilities" Menu) — Lead editors have the responsibility of deleting any records which were edited erroneously. To reset tables for a given SCPL, select "DROP" from the Main Menu - Returns Processing. Enter an SCPL, edit-1-2 and press [CONTINUE], and the system will then prompt you for an EIN. The following are reasons for resetting tables for an SCPL.
    Presence of Insurance companies when not expected. When an editor begins a return and then realizes it has insurance subsidiaries and should be sent to Ogden, reset the record by choosing "DELETE 1504c OR 594 RECORDS" This deletes the record from the database and changes the return type. A report of these records keeps Ogden informed of the returns they should receive.
    Changing Return Type. Once the record is deleted from the database, the editor may re-access the return through EDIT mode and change the return type on the return ID screen. This option does not delete a record from the file. If a record needs deletion from the file, contact the National Office.

  5. Prior Year/BMF Lookup ("Utilities Menu" — The lead editor may access prior year and BMF information for all schedules on the 1120. This option shows all of the schedules in the order that they are edited while the prior year lookup option within a return shows only the information for the specific schedule being edited/browsed. Choosing PRIOR YEAR LOOKUP/BMF displays a screen prompting for an SCPL and EDIT-1-2. The SCPL must be entered. If there is not a match, "NO MATCHING RECORD ON THE DATABASE " is displayed. If there is a match, the EIN and Corporation name display on the appropriate lines. Use the mouse to select the form / schedule that you would like to see prior year information for. Use the [ENTER] and [F12] keys to scroll down and up respectively within the screens.

  6. Communication Log ("Utilities Menu " ) — To facilitate better communication between the processing service centers and the National Office, a two-way on-line communication log is available. Choosing COMMUNICATIONS LOG allows the lead editor to report a problem and review broadcast messages from the N.O. Please provide a solution when sending all commlogs to N.O. In addition, only send commlogs for QUASR mis-matches on returns with Total Assets greater than $50 million.
    Report problems and view messages from National Office with the top screen. Respond to problems reported with the bottom screen. An asterisk in the " in review" area means that the question or problem is currently being reviewed. Users can query problems based on different criteria.
    Communication log key chart:

    [F6] — Initiate or respond to problem
    [F10] — Commit problem or response
    [][] Navigate up and down log entries
    [PAGE DOWN]
    [PAGE UP] — Navigate between report and response
    [ESC] — Exit
    [F7] — Enters query mode
    [F12] — Backspace
    [CTRL+F3] — Save temporary answer


    Use the following codes to identify the problem type:

    0 broadcast message
    1 taxpayer reporting problem
    2 test problem
    3 system problem
    4 edit manual problem
    9 other problem

  7. Suggestion Log ("Utilities Menu " ) —To facilitate better communication between the processing service centers and the National Office, a two-way on-line suggestion log is available. A system generated e-mail message will be sent to the project lead and co-leads. Choosing the SUGGESTION LOG allows the editor to make a suggestion while editing the return. A suggestion can be viewed only by the editor who reported it and by any lead. Report a suggestion by pressing the [Create Log] button at the main screen. Next, enter a "Topic " and "Test Number" (if appropriate) then place the curser in the suggestion field and type in the suggestion. After typing the suggestion an scpl may be entered prior to pressing [Send[ to submit the suggestion. Suggestions and responses can be reviewed by pressing the [Review Log] button after highlighting the log. All suggestions can be sorted by pressing the appropriate button located at the top or bottom of the column you wish to sort by, while on the main screen. The following is a list of valid status codes: W – waiting (waiting to be reviewed), C – completed (review completed), F – forwarded (accepted, but will be implemented in the following program year).

    1. Suggestion log key chart:

      [F6] Report a suggestion
      [F10] Commit suggestion or response
      [F8] Query a reported suggestion
      [][] Navigate up and down log entries
      [PAGE DOWN]
      [PAGE UP] Navigate between report and responses
      [ESC] Exit / cancel
      [ENTER] To respond to a suggestion
      [CTRL+F3] Save temporary answer
      [F9] Pop-up lookup window
      [F5] Place return in browse mode
      [F7] Enters query mode

Releasing the Return (See Exhibits 1.13.8-13 and 1.13.8-14)

  1. When balancing is achieved on schedules users are restricted from routinely re-accessing and changing amounts. For example, the bottom line of Form 3800 is used in the Schedule J. When both the Form 3800 and the Schedule J are in balance, the system prevents the editor from changing amounts on Form 3800. In this way, navigation restrictions move forward through the return.

  2. The editor may release the schedules for re-edit two ways:

    1. To release a return that you are currently editing, press [ALT] and use the right arrow key to access the "EXIT" menu in the banner at the top of the screen. Use the down arrow to access the drop down list and place cursor on your choice and press [ENTER]. (You may also use the mouse to select the menu and menu options.)

    2. Choose "Re-open" in the 1120 Main menu under "Pick a Function" . Enter an SCPL and select an edit-1-2 and click on [CONTINUE] to release a return already completed. The release screen displays. A return which has been closed out (Release date has been set) cannot be released for re-edit. The release screen shows all forms and schedules in navigation order, and their respective edit status; "D" for done or "X" for not yet complete. Move the mouse to the earliest point on the return that re-access is needed and click on the box for release. The system responds with the question "Do you want to release from ....?" to verify that the correct schedule was released. If incorrect, use the mouse to click on the [CANCEL] box. If correct, use the mouse to select "OK."

    3. The designated schedule and all subsequent schedules are now coded "X" . The original editor may re-access the record through Edit Mode and will be placed on the newly released schedule. If the release process was entered from within the return (on the Exit Menu Screen) the system automatically navigates to the released form. It is not necessary to exit the return. All previously edited amounts appear on the screens and changes may be made as necessary. The editor must cursor through all previously edited screens so that tests will be re-fired. The fast forward key speeds up the process. Press [F1] to access the help screen for the release procedure.

  3. Controlling Re-access to Allocation — When navigating to a form from which allocation has been performed a message appears at the bottom of the screen indicating allocation has been completed. Allocation can be browsed or re-accessed. See Section 8.5.3:(10), for further instructions. Any new allocation entries made at this point will be changed in addition to what was previously done. The editor must be very careful not to duplicate previously entered data. If data was originally edited through allocation, it should be deleted through allocation mode as well.

Browse Mode (See Exhibits 1.13.8-13 and 1.13.8-15)

  1. Users may browse returns until they are released — two weeks after the return is completed or quality reviewed. Choosing BROWSE RETURN displays a screen prompting for an SCPL.
    After entering the SCPL, the user is prompted to choose first or second edit. The Return ID screen with the SCPL of the return you wish to review then displays. Press [ENTER]. A Browse Form Selection Screen then displays all form and schedules in navigation order.

    1. Forms which have not been selected (edited) cannot be browsed.

    2. If you wish to begin browse from a particular form schedule, position the cursor and press [ENTER]. The schedule then displays with the cursor in the upper left-hand corner. After the screen has been browsed, the remaining forms or schedules for this return follow.

    3. [ENTER] scrolls forward and [F12] scrolls backward. All workscreens can be accessed during Browse mode. (See (2) below.)

    4. To exit browse at any time, press [ESC]. This automatically returns you to the Browse Form Selection Screen.

  2. While in browse, the allocation and calculation screens can be accessed via the Allo / Calc buttons (will display only when allocation or calculation has been performed). To access any of the lookup screens(including Indy Research), press the [ALT + L] buttons. See (7) for some available keys.

  3. When browsing, it may be necessary to see any automatic processing that may have taken place on the record when it was initially edited. See Exhibit 1.13.8-19 for a list of automatic tests.

  4. After browsing is complete, [ESC] back to the main menu.

  5. Remember, no updating is allowed while in Browse Mode! If changes need to be made, exit browse mode with the [ESC] key and enter Release mode to release the return at the point where corrections need to be made. When you or the original editor re-accesses the record, any field you encounter can be changed, so be certain that only the appropriate fields are updated.

  6. Lead editors can browse any return for their service center. Lead editors may designate the editors as being able to browse only their own returns or any returns for their service center. The leads may change the browse code setting by accessing the "Automated Selection Information" menu under the Reports, QUASAR function. Then they must access the " Change Editor Review Status" in order to change the browse code.

  7. Operational keys in browse include:

    KEY FUNCTION
    [CTRL+F3] On farm schedule: allocation screen displays.
    [F4] Calcscreens display on income statement, balance sheet, 1118, 4562 and 4797.
    [F3] On income statement or balance sheet: allocation screens display.
    [PAGE UP] The previous screen displays.
    [ESC] In allocation or calcscreens: exits the workscreens and returns tot he form. Anywhere else: displays the browse exit screen.
    [F10] Start Browse at a selected form.
    [] Scroll down. Valid only for the multi-year browse schedules.
    [F6] Displays pop-up comments window
    [] Scroll up. Valid only for the multi-year browse schedules.
    [PAGE DOWN] The next screen displays.
    [F7] Display pop-up window containing unique Forms L and/or PC subgroup amounts.
    [ALT + L] When pressed from anywhere within browse, the listing of lookup options will be displayed.

SOI Corporations Processing Menu

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Please click here for the text description of the image.

2000 Corporations Return Identification

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Return-Types

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1120 Form/Schedule Selection

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Please click here for the text description of the image.

1120-A Form/Schedule Selection

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Please click here for the text description of the image.

1120-F Form/Schedule Selection

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Please click here for the text description of the image.

1120-REIT Form/Schedule Selection

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Please click here for the text description of the image.

1120-RIC Form/Schedule Selection

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Please click here for the text description of the image.

Exit Menu

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Reject Code Selection

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Data Elements to Verify on Reject Coded Returns

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Utilities Menu

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Please click here for the text description of the image.

Browse/Re-Open Selection

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Please click here for the text description of the image.

Re-Open Return-- Form/Schedule Release Selection

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** The release screen only shows forms edited or selected to be edited

Browse Form Selection

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** Edit status appears at the bottom of the screen.

Communication Log

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Special Function Key List

KEY LOCATION FUNCTION
[Alt + 3] Farm Income
Allocation screen
Accesses allocation screen for farm
Allocation screens Accesses prior year and BMF lookup
[F4] Calculation screens Accesses calcscreens associated with the screen on which [F4] is pressed
[F3] Allocation screens Accesses allocation screens associated with the screen on which [F3] is pressed
[Ctrl+P] All screens Print the screen
[F12] All screens Go to the previous field
Industry Code,
Country Code,
Test Number Lookup
Screens
Goes to Find Field
[F9] Country and Industry
Code Fields
Accesses Country and Industry Code lookup screens
Allocation Screens Accesses balance sheet, income statement lookups
Prior year/BMF Lookup Accesses prior year allocation (if available)
Field with failed
"E" , "V" , or "L" test
Test Release Key: accepts the test condition and stores the test number to the database
[ALT+F8] Industry Code field Access Industry Code Research screen
[Help/View Control on the Menu Bbar] Editing screens Return ID information screen
[F5] Allocation, Calcscreens, General Calculator and Forms 8594, 8824 and 8869 Remove a record
Indyustry Code Research Access Total Receipts Calculator
[F6] All screens Enter comments screen
[F7] Industry Code Research Access Moody's US
[F8] Fields with "*" attribute Displays original BMF value
Industry Code Research Access Moody's Int'l
[CTRL+U] Editing screens Clears the current field
[Help/Keys on the menu bar] All fields Displays function key screen
[F11] All fields except those associated with calcscreens Displays on-line general calculator
[F12] Editing screens Returns cursor to previous field
[ESC] All fields except in screens listed below Displays exit menu screen
First page of Reject Screen Cancels selection and returns to previous screen
Return ID screen, Lead editor menu, Displays previous menu
Query Tables Returns to the field without entering a value
Asset/Liability Code, Income/Deduction Code From the Find Field, moves cursor to main body of the dictionaries. From the main body of the dictionaries, returns to previous screen.
[F10] Allocation screens Runs allocation calculations
Calcscreens Runs calcscreen calculations
Exit Menu Screen Selects exit option
Query Tables Selects code from query table and brings value to appropriate screen
On-line General Calculator Enters the total amount, from calculator, onto edit screen
[USE COMPUTED] Field with failed test Moves the computed amount from the message line into the field

Reject Codes

Use this exhibit to select the appropriate codes as listed on the Reject Code Screen:

Reason
Code
Description
01 Inactive returns with no items of income or deductions, including tax-exempt interest. If IR Code 501c or Code 115(1) (with tax-exempt interest on Sch.M-1) is referenced and no tax is reported, then indy code as 525990 and reject the return using code 1. Tax-exempt returns which are not RICs or REITs should be edited as 525990. Exceptions to no items of income or deductions, or tax exempt interest:: (1) 1120S returns when there are Schedule K items of income, deduction, or tax exempt interest present; (2) 1120F returns with any items on Section III, Branch Profits Tax, and (3) 1120RIC with an amount for Schedule B, Line 5, Exempt-interest dividends.
02 Returns previously processed for SOI.
03 Unsigned returns. Typically, these are tax returns that were originally filed as part of a consolidated return and have become separated.
04 Returns on other than Forms 1120, 1120-A, 1120-F, 1120-L, 1120-PC, 1120-REIT, 1120-RIC and 1120S
05 Fraudulent Returns
06 Amended returns not attached to the original returns or to a complete duplicate
07 Tentative returns that are not attached to the final return
08 Information return of certain joint undertakings. These corporations may file an "information" return stating that the data shown on the return is also included in the return of the owners. The taxpayer may refer to themselves as a "Cost Corporation " or may cite Revenue Ruling 52-542.
09 Returns of corporations exempt under Section 934 of the IR Code. These are companies incorporated in the U.S. that conducted all of their business in the U.S. Virgin Islands and received no income from within the U.S.
10 Returns filed by political organizations that should have filed an 1120-POL return. Also include in this code educational, charitable and similar non-profit corporations.
11 Returns filed by General Stock Ownership Corporations that should have filed an 1120-GSOC return.
12 Returns filed by homeowners' associations that should have filed an 1120-H. Section 528 should be referenced.
13 Returns of foreign corporations exempt under Section 883 of the IR Code. These are companies incorporated in a foreign country whose earnings include aircraft, ships or communication satellite systems as specified in Section 883. The company must cite Section 883 or write that its earning are tax-exempt. Just indicating that earnings are from aircraft, ships, etc. is not enough.
14 Information returns reporting no tax due to treaty or convention. These are companies incorporated in a foreign country where no tax is due the US according to Section 894 of the lR Code. Use this code if the 1120-F return reports a F.8833 or makes reference to a treaty-based return position under section 6114 or 7701(b).
15 Information returns of foreign investment companies. These companies are incorporated in a foreign country and are exempt under Section 1247 of the IR Code.
16 Corporations incorporated in the U.S. which conducted all of their business in Puerto Rico, Guam, American Samoa or the Northern Mariana Islands and received no income from within the U.S. These corporations are tax exempt under Section 931 of the IR Code.
17 Use this code for rejected 1120-F returns if code 13 (10) or 14 (11) do not apply. Returns of (nonresident) foreign corporations having no income effectively connected with a trade or business within the U.S. These are incorporated in a foreign country (including Puerto Rico and the Virgin Islands) and show no effectively connected income on pages 3 through 6 of Form 1120-F.
18 Delinquent returns whose accounting period endings are before 07/2003, and who are non-giant returns (assets of less than $250,000,000). Call National Office to see if delinquent Giant returns should be edited. If you have two full year returns of the same ein that are exactly one year apart from each other, you may reject the earlier return. For example if you have a 12/2004 and a 12/2003, you would reject the 12/2003.
Returns having an invalid accounting period (see page 21-4), and taxpayer indicates the return is merging or final.
Returns having invalid accounting periods often will arrive in the same workgroup as a return with a valid accounting period. After identifying that the EIN is the same, the older return may be rejected.
19 Other — Consult National Office.
20 Return (should be) edited in another year.
If the reason code is other than those given , then call National Office. Also, enter the specific reason in the comments field for reason code 19 - Other.
When rejecting 2003 returns from the 2004 file during the time when the 2003 file is still open, please verify that the return has been edited for the 2003 file. If it has not been edited and it has Total Assets over $100,000,000, please contact National Office to determine if it should be edited for 2003.

Automatic Tests

MOVEMENT OF NEGATIVE AMOUNTS
Most negative amounts in the income statement and balance sheet are removed and the schedules are rebalanced through processes run automatically. All negative automatic tests are run at the completion of a return, and all negative balance sheet automatics, A160 through A295, are run after allocation of the balance sheet items. The following table shows what happens in automatic processing when the item in the field column is negative. The items are listed in the order in which they appear on the Form 1120.
TEST NO FIELD RESULT
A055 Gross receipts If Cost of Goods < 0,
Gross receipts = 0,
Amount added to Cost of Goods
Amount added to Other Costs on
Schedule A.
Amount added to Total on Sch A.
Amount minus Cost of Good added
to Generated Gross Profits
If Cost of Good > 0,
Gross Receipts = 0,
Amount added to Income Adjustment
Amount minus Cost of Goods
added to Generated Gross Profits.
A065 Interest Interest = 0,
Amount added to interest paid,
total income and total deductions.
A070 Gross rents Gross rents = 0,
Amount added to income adjustment
A075 Gross royalties Gross royalties = 0,
Amount added to income adjustment
A080 Other Income Other Income = 0,
Amount added to income adjustment
A085 Compensation of Officers Compensation of officers = 0,
Amount added to deduction adjustment
A090 Salaries and Wages Salaries and Wages = 0,
Amount added to deduction adjustment
A095 Repairs Repairs = 0,
Amount added to deduction adjustment
A100 Bad Debt Deduction Bad Debt Deduction = 0,
Amount added to deduction adjustment
A105 Rents Paid Rents Paid = 0,
Amount added to deduction adjustment
A110 Taxes Paid Taxes Paid = 0,
Amount added to deduction adjustment
A115 Interest Paid Interest Paid = 0,
Amount added to interest,
total income and total deductions
A120 Contributions Contributions = 0,
Amount added to deduction adjustment
A125 Net Depreciation Net Depreciation = 0,
Amount added to deduction adjustment
A130 Depletion Depletion = 0,
Amount added to deduction adjustment
A135 Advertising Advertising = 0,
Amount added to deduction adjustment
A140 Pension, Profit
Sharing Plans
Pension, profit sharing plans = 0,
Amount added to deduction adjustment
A145 Employee Benefit
Program
Employee benefit program = 0,
Amount added to deduction adjustment
A150 Other Deductions Other deductions = 0,
Amount added to deduction adjustment
A160 Cash Cash = 0, Amount added to asset adjustment
A165 Trade Notes and
Accts Receivable
Trade notes and accts receivable = 0
Allowable for bad debts = 0,
Trade notes minus bad debts
added to asset adjustment
A170 Beginning Inventories
(and Ending Inventories GT 0)
The absolute value of beginning inventories is kept in field.
A175 Beginning Inventories
(and Ending Inventories LE 0)
Beginning Inventories = 0
A180 Ending Inventories Ending Inventories = 0,
Amount added to asset adjustment
A185 Government Obligations Government Obligations = 0,
Amount added to asset adjustment
A190 Tax Exempt
Securities
Tax exempt securities = 0,
Amount added to asset adjustment
A195 Other Current
Assets
Other current assets = 0,
Amount added to asset adjustment
A200 Loans to
Stockholders
Loans to stockholders = 0,
Amount added to asset adjustment
A205 Mortgage and
Real Estate Loans
Mortgage and real estate loans = 0,
Amount added to asset adjustment
A210 Other Investments Other investments = 0,
Amount added to asset adjustment
A215 Depreciable Assets Depreciable assets = 0,
Accumulated depreciation = 0,
Depreciable assets minus accumulated
depreciation added to asset adjustment
A220 Depletable Assets Depletable assets = 0,
Accumulated depletion = 0,
Depletable assets minus accumulated depletion
added to asset adjustment
A225 Land Land = 0,
Amount added to asset adjustment
A230 Intangible
Assets
Intangible assets = 0,
Accumulated amortization = 0,
Intangible assets minus accumulated amortization
added to asset adjustment
A235 Other Assets Other assets = 0,
Amount added to asset adjustment
A245 Accounts
Payable
Accounts payable = 0,
Amount added to liability adjustment
A250 Mortgages Less
Than One Year
Mortgages less = 0,
Amount added to liability adjustment
A255 Other Current
Liabilities
Other current liabilities = 0,
Amount added to liability adjustment
A260 Loans From
Stockholders
Loans from stockholders = 0,
Amount added to liability adjustment
A265 Mortgages One
Year or More
Mortgages More = 0,
Amount added to liability adjustment
A270 Other
Liabilities
Other liabilities = 0,
Amount added to liability adjustment
A275 Capital Stock Capital Stock = 0
Preferred Stock = 0
Common Stock = 0,
Amount of capital stock added to
paid-in capital surplus
A295 Ending Retained
Earnings Appropriated
Retained earnings appropriated = 0
Amount added to retained earnings unappropriated
OTHER AUTOMATIC CHANGES
Listed below are other changes that are made automatically throughout the return. If the condition in the second column exits, the changes described in the third column will automatically occur.
Tests A005-A020: NOLD is Net Operating Loss Deduction. The original value of NOLD is stored on the database. "Special Deductions" means "Special deductions " for Forms 1120, 1120-A, and 1120-F, and the sum of " Deduction for dividends paid" and "Section 857(b)(2)(E) deduction" for the Form 1120-REIT.
TEST NO CONDITION RESULT
A005 Net Income is negative or zero and NOLD is present NOLD = 0
A010/T Net Income is positive but "Special Deductions " are 0 and NOLD is greater than Net Income NOLD is reduced to Net Income.
A015/T Net Income is positive and "Special Deductions " are greater than or equal to Net Income and NOLD is present NOLD = 0
A020/T Net Income is positive and "Special Deductions " are positive but less than Net Income and NOLD is greater than (Net Income minus "Special Deductions" ) Net Income minus "Special Deductions" is moved into NOLD
A022 When SOI Industry Code 522110, 551111 and the return is not consolidated and Cost of Goods Sold is greater than 0 If COGS is less than Gross Receipts (GR), the net amount is moved to GR. If greater, add GR minus COGS to income adjustment and GR is set to 0. Schedule A is nulled.
A025 LIFO Inventory amount is Between 0 and 100 LIFO Inventory percent is set equal to
LIFO Inventory amount.
LIFO Inventory amount is set to 0.
A028 Form 4562, Line 5 is not the correct amount based on Line 2 entry. Line 5 should equal Line 1 minus Line 4 Line 5 is automatically updated to the correct amount, per taxpayer instructions.
A030/A Ending or Beginning inventories greater than 0 for industry codes 523110 - 523900 If return type = ’01', or Total Assets LE 500,000,000. Return is not consolidated. Beginning and Ending Inventories and all cost of goods fields = 0. Ending inventories added to other investments.

COGS is subtracted from GR, if greater than 0, the net amount is moved to gross receipts. If less, the net amount is added to income adjustment and GR is set to 0. Sch. A is nulled.
A035 Ending or Beginning Inventories greater than 0 for industry codes 522110, 522120, 522130, 522210, 522220, 522291, 522293, 522298, 524159, 524210, 524290, 531190, 531210, 531310, 531320,531390 551111. If return type = ’01,' or Total Assets LE 500,000,000. Return is not consolidated. Beginning and Ending inventories and all cost of goods fields = 0. Ending inventories added to other current assets. COGS is subtracted from GR. If greater than 0, the net amount is moved to gross receipts. If less, the net amount is added to income adjustment and GR is set to 0.
Sch.A is nulled.
A036 Ending or Beginning Inventories greater than 0 for industry codes 522292,522294 522300. if return type = ’01’, Total Assets less than or equal to 500,000,000.
Return is not consolidated.
Ending inventories added to mortgage and real estate loans and beginning and ending inventories = 0
COGS is subtracted from GR,
or if greater than 0, the net amount is moved to GR.
If less than zero, the net amount is added to income adjustment and GR is made 0.
Sch.A is nulled.
A040 Ending or Beginning Inventories greater than 0 for industry codes 531110, 531120, 531190. Total Assets LE 500,000,000, and return is not consolidated. Ending inventories added to other current assets and Beginning and Ending inventories = 0.
A050 Net income per books on M-1 and Net income from the front page equal each other, but one is positive and the other is negative. Net income per books is made to equal Net income.
A315 Total Amortization is greater than Other Deductions and Other Deductions = 0 Total Amortization = 0.
A320 Total Amortization is greater than Other Deductions and Other Deductions is greater than 0 Total Amortization = Other Deductions.
A335 Total Assets less than 250,000 and total receipts less than 250,000 and distributions are edited on Schedule M-2 Cash and Property distributions on Schedule K = 0.
A345 Return Type = ‘08’,’10’,‘14’,’20’and total assets GE 250,000 Cash and Property distributions on Schedule K = 0

Rebalancing Process and Return Status Codes

Rebalancing Process
The balance sheet will go through rebalancing automatics at the end of the editing process to handle any minor discrepancies. These automatic tests will add or subtract the discrepancy to or from an 'other' field on the schedule. The Income Statement rebalances at the total income/total deduction and net income fields. In addition, the Income Statement rebalances at the Return Completion Screen when the automatic adds or subtracts the discrepancy to or from the income or deduction adjustment field. If Amortization is greater than other deductions, then it will be reduced during the rebalancing process by either one of two tests.
Editing Status Code
The editing status will be system assigned to flag the record as to its status in the edit process. The code will be set to the following values:
Value Description
U Unedited — The record exists on the database because it was selected and transmitted from the Detroit Data Center/Martinsburg Communication Center, but it has never been accessed for editing.
2 Missing return — The return was selected and a record exists in the database, but the selection files unit has designated the actual hardcopy return as missing.
I Incomplete — The record has been accessed for editing, but the editor exited the return before completing it.
L Lead Editor Review — The record has been designated as needing lead editor review for an unresolvable error condition. The record will be considered incomplete when the editing status code is "L" .
C Completed Record — The last screen selected either by the editor or the system has been committed and there are no must tests existing on the record. The record is now available for quality review.
R Rejected Record — The editor has rejected the record according to the reject process described in Section 8.4.
Or the system has rejected the record because it was a duplicate.
D Done (Service Center Complete) — All service center processing of the record is complete, including editing and review. The record is now available for National Office processing.

Form 1120 Entity Information

Introduction

(1) This exhibit provides specific instruction for the editing of the Entity Information items and resolution of the associated tests. Please make use of the prior year browse for this section by pressing [ALT+L] and choosing Prior Year Lookup. This function is not available when the cursor is on the Corporation Name field.

(2) A system message will read out for a merging or final non-giant returns (TA >$250 million) if the accounting period ends before 7/2003. You will not be able to bypass this message and must reject the record. This should not be confused with test E008 that reads out on non-giants (that are not merging or final) ending before 7/2002.

Data Item Form Line Reference
Corporation Name Page 1
Editing Instructions:
(1) This is a must enter field.
(2) Please consult the taxpayer amount from the proper line on the form.
(a) The following are among several symbols used by corporations and should be edited as shown: slash (/), dash (-), ampersand (&), pound sign (#), percent (%), parenthesis (()), or asterisk (*). Do not use periods or commas. Use periods ONLY when the company is an Internet ".com" company.
(b) Edit all alpha information in capital letters. Delete the definite article "the" when it is the first word in the name.
(c) Use the following abbreviations in all cases: CO for Company, CORP for Corporation, INC for Incorporated, ACS for "and consolidated subsidiaries" and "and subs " , AAFIL for "and affiliates" , FSLA for Federal Savings and Loan Association, SLA for Savings and Loan Association (for corporations not specified as federal).
(d) When the name contains a number, use the following instructions.
1. When the number is to be edited as the first word, write out the number. Some examples are: 1 is one, 120 is one twenty, and 2150 is twenty-one fifty.
2. When the number is edited as other than the first word, edit the number as shown by the corporation, whether it be alpha or numeric.
(e) If the name, including punctuation, exceeds 50 characters, enter the name using standard abbreviations, such as LTD for Limited, and NAT BK TR CO for National Bank and Trust Company. The names of cities and states should not be abbreviated.
(3) If the Prior Year File entry violates any of the rules listed above, enter the correct Corporation Name according to the instructions above.
(4) If the corporation name has any added info (i.e. "a.k.a" , "d.b.a" , "formerly" , etc.), note this information in the comment field.
Employer Identification
Number (EIN)
Page 1, Line B
Editing Instructions:
(1) This is a display field only.
(2) Verify that the nine digit number on the screen matches the number on the return.
(3) If the EINs do not match, call National Office.
Name Change
Code
1120
1120-A
1120-F
1120-REIT
1120-RIC
Page 1, Line E
Page 1, Line E
Page 1, Top Right
Page 1, Line F
Page 1, Line E
Editing Instructions:
(1) Allowable entries for this field are "Y" and [ENTER].
(2) Enter "Y" if the taxpayer has checked this box.
(3) If the box is not checked but the corporation name has changed, enter a ″Y″ in this field.
Test Description
E009 There is a discrepancy between the name change code and the corporation name.
Correction Procedure:
(1) This test will read out under two different conditions. The firs is if the editor changed the corporation name, but the name change box was not checked. The second is if the name change box was checked, but the editor did not change the corporation name.
(2) In either case, please verify and make necessary updates to the code or corporation name.
Accounting Period Indicator 1120
1120-A
1120-F
1120-REIT
1120-RIC
Page 1, Line E
Page 1, Line E
Page 1, Top Right
Page 1, Line F
Page 1, Line E
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) This item is a one character letter indicating the following type of accounting periods:
(a) Enter "I" if the taxpayer checked the box indicating initial return.
1. If this box is checked but the date of incorporation indicates that the corporation has existed in prior years, use the prior year browse mode [ALT+L] to determine whether the return existed in prior years. If the return was in the file previously do not edit as ‘I', even if it was a different return type. If the return has not been in the file, edit based on the information on the return. Do not use the presence of a label as an indicator that the return is not initial.
2. Returns that are part-year because the corporation has left a consolidated group should also be coded ‘I' (even if Form 1128 is attached). Information regarding the former parent etc. should be noted in the comment field. (See f(2) pg. 21-3 for cases when a corporation becomes a consolidated group.)
3. If the date of Incorporation indicates the return is initial — i.e., Date of Incorporation of 8-15-2003.
(b) Enter "F" if the taxpayer checked the box indicating final return and it is liquidating or final for any reason other than a merger. Revenue processing assigns a "F" on the top of the first page to returns of this type. Do not code as final if an attached schedule indicates that the EIN will continue to file as a different return type. If the taxpayer checks both the initial and final box, edit the return as a final return, and put a comment in the comment field.
(c) Enter "M" if the corporation is merging into another. Enter the new parent’s name into the comment field. Returns that are merging may indicate: "acquisition" or "acquired" on a statement within the return. Returns that state "reorganizing" or "survivor" should be coded as "M" if their EIN changed, otherwise, code as "X."
(d) Enter "C" if the taxpayer indicates they have changed their accounting period. The following are indicators of a change in accounting period:
(1) Form 1128 "Change of Accounting Period Form attached."
(2) "Section 443 or 444 Election Terminated" indicated on form.
(3) Form 8716 "Election to have a Tax Year other than a Required Tax Year."
(4) Form 7004 "Application for Automatic Extension of Time to File Corporation Income Tax Return" with change of accounting period checked.
(e) If revenue processing has assigned computer condition code "Y" (located in the middle top of the income section), use this as an indication to look throughout the return to see if this return has a change in accounting period.
(f) Enter "X" if the taxpayer did not check any of the above listed boxes.
1. If the return is a full year with beginning and ending balance sheet amounts and the date of incorporation indicates the return is not initial, code as ‘X’ even if the return was not in the prior year.
2. If the company became a consolidated group and the EIN has NOT changed, code as ‘X’ even if the taxpayer codes themselves as ‘I’.
(g) The taxpayer may not check the appropriate box, but may give the information elsewhere. If so, use that information to assign a code as above.
(h) If the accounting period ends in the last six days of the twelfth month, the return should still be coded as a full year return.
(i) If the accounting period begins after the 3rd day of the month and the return would otherwise be a full year return, code as a part year return (i.e. accounting period is 01/04/2003 – 12/31/2003).
(j) If the accounting period is longer than 12 months, please contact national Office.
Month Accounting Period Ends Page 1
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) The accounting period may be shown on Page 1 of the return directly beneath the title, on a label attached to the return, or on the balance sheet or on attached schedules. If the corporation does not indicate its accounting period, assume that the return is for a full calendar year — i.e., ending in December, unless the date of Incorporation indicates the return is for a part-year — i.e., Date of Incorporation of 8-15-2002. Also make sure the Accounting Period Indicator is edited as ‘I’.
(3) For full-year returns, enter the number of the month that the accounting period ends. For example, for an accounting period ending in January, enter "1" ending in June, enter "6" ; ending in December, enter "12" , etc.
(4) For a part-year (including final returns), enter the code according to the following instructions:
If the accounting period ends in:
January, enter "31" .
February, enter "32" .
March, enter "33" .
April, enter "34" .
May, enter "35" .
June, enter "36" .
July, enter "37" .
August, enter "38" .
September, enter "39" .
October, enter "40" .
November, enter "41" .
December, enter "42" .
(5) For both full and part-year returns, if the corporation’s accounting period ends on the first, second, or third day of a month, code for the preceding month. If the accounting period is only a few days long, code for the month in which it begins. If it ends on any other day, code for the month in which it ends.
Year Accounting Period Ends Page 1
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) The accounting period may be shown on Page 1 of the return directly beneath the title, on an attached label, on the balance sheet or on attached schedules. If the corporation does not indicate its accounting period, assume that the return is for a full calendar year — i.e., ending in December 2003, unless the Date Incorporated indicates the return is for a part year — i.e. Date of Incorporation 8-15-2003.
(3) For a part-year or final return, enter the four-digit calendar year in which the accounting period ends.
(4) If the return has an invalid accounting period, and the taxpayer indicates the return is merging or final, the following message appears, "Merging or final record with invalid accounting period. Please reject!" Use Reject Code #3, Reason Code #18, " Invalid Accounting Period."
Test Description
V004 This is a giant record with an accounting period ending before 7/2003.
Correction Procedure:
(1) Because this record is a giant, please consult with National Office before rejecting it.
(2) If National Office agrees, the Accept button may be used.
(3) Quite often, a return with an invalid accounting period will arrive in the same workgroup as a return with a valid accounting period. After identifying that the EIN is the same, reject the older Return (reason code 18) and edit the Current one. This can be done without calling National Office.
E008 This is a non-giant return with an accounting period ending before 7/2002.
Correction Procedure:
(1) Non-giant returns with invalid accounting periods should be rejected.
(2) Reject this return using Reason Code #18, "Invalid Accounting Period."
V005 Possible invalid accounting period.
Correction Procedure:
(1) This test will fail when the Year Accounting Period Ends is 2004 and the Month Accounting Period Ends is greater than 6 (for a full-year return) or greater than 36 (for a part-year return).
(2) Check the return to determine the correct Month Accounting Period Ends and code according to the instructions above.
(3) If this test cannot be corrected, the Accept button can be used.
Month Accounting Period Begins Page 1
Editing Instructions:
(1) This item is edited for part-year returns only. Part-year returns have Month Accounting Period Ends of 31 through 42. Once the cursor lands on this field a value must be entered.
(2) The beginning accounting period should be shown on Page 1 of the return, directly beneath the title. It will not be on the label attached to the return.
(3) Enter the code indicating the month in which the corporation's accounting period begins. Use the same number as the number of the month in the year (1 through 12). For example, for an accounting period beginning in July — enter "07" ; beginning in December — enter "12" , etc.
(4) If the Date Incorporated was used to determine that the return is a part-year return, use the month incorporated to edit the Month Accounting Period Begins.
Year Accounting Period Begins Page 1
Editing Instructions:
(1) This item is edited for part-year returns only. Part-year returns have Month Accounting Period Ends of 31 through 42. Once the cursor lands on this field a value must be entered.
(2) The beginning accounting period should be shown on Page 1 of the return, directly beneath the title. It will not be on the label attached to the return.
(3) Enter the four digit calendar year in which the accounting period begins.
(4) Valid entries are 1998 and greater. Non-giant returns with earlier beginning accounting periods should be rejected using Reason Code #18, "Invalid Accounting Period." Notify National Office of any giants with beginning accounting years less than 1998.
Test Description
E020 Possible invalid accounting period.
Correction Procedure:
(1) This test will fail when the beginning and ending accounting period years are more than one year apart. Check the return to determine the correct beginning and ending accounting period years according to the instructions above.
(2) If this test cannot be corrected, contact the National Office.
Date Incorporated 1120
1120-A
1120-F
1120-REIT
1120-RIC
Page 1, Line C
Page 1, Line C
Page 1, Line C
Page 1, Line D
Page 1, Line B
Editing Instructions:
(1) Enter the four digit year of the incorporation date.
(2) Please use the prior year browse date if available, even if taxpayer reports ‘9999’.
(3) If the corporation only gives a two digit date of incorporation (i.e.’88), assume that the year is 1988.
(4) If more than one date of incorporation is given for the consolidated return, edit the earliest date given.
(5) If different dates are given for the parent and subs, edit the date of the parent.
(6) If the Date Incorporated cannot be determined or is less than 1800, enter 9999.
(7) If the date of incorporation is greater than the beginning (part-year returns) or ending (full-year returns) accounting period year, a system message will indicate that, "Date incorporated can not be larger than accounting period year." Please check the accounting period and the reported date of incorporation to verify, You may also make use of the prior year browse to correct any discrepancies. Contact National Office if you can not correct this test.
Prior Year EIN
Editing Instructions:
(1) This field must be between 010000000 and 999999999.
(2) If a corporation indicates in its return that its EIN has changed and provides the prior year EIN, enter this number. Otherwise, leave this field blank.
(3) Do not use revenue processing prior year EIN if it was changed by revenue processing, only use taxpayer provided information.
FDIC Code
Editing Instructions:
(1) Allowable entries are ‘Y’ and [RETURN].
(2) Examine the return for an indication that the corporation has been taken over by the FDIC and is listed as RTC/FDIC or FDIC.
(3) Please annotate in the comment field if the corporation is bankrupt.

Form 1120 Other Information and Schedule N

Introduction

(1) When Other Information questions are incomplete or in question, refer to attachments — otherwise use Other Information data. If through the course of editing, attachments are found, use them to make any necessary changes to entries (including ones already edited) for more accurate data.

(2) When page three is left blank and no consolidated schedules are attached, edit the information for the parent.

(3) For money amount fields on consolidated returns, if the line is blank, edit the total of the parent and subsidiary amounts, unless instructed otherwise in specific field instructions.

(4) Please make use of the prior year browse for this section by pressing [F9] and choosing Prior Year Lookup.

(5) This exhibit provides specific instructions for the editing of the Other Information items and resolution of the associated tests.

(6) If the Schedule N is not filed, but there are Forms 8865 or Forms 5471 found within the return during editing, please go back and edit the number of Forms 8865 or Forms 5471 attached on line 2 of the Schedule N.

(7) If there are multiple Schedule N's filed and none are for the consolidated group, please edit the information from the Schedule N of the parent.

Data Item Form Line Reference
Accounting Method Code 1120
1120-A
1120-F
1120-REIT
1120-RIC
Page 3, Line 1
Page 1, Line F
Page 1, Line G
Page 3, Line 1
Page 3, Line 1
Editing Instructions:
(1) This item is a one character alpha code indicating the type of accounting method as shown below:
a. Enter "C" if the taxpayer checked the box indicating cash.
b. Enter "A" if the taxpayer checked the box indicating accrual.
c. Enter "O" if the taxpayer checked the box indicating other.
d. Enter [ENTER] if the taxpayer did not check any of the above listed boxes or checked two or more boxes.
(2) Please consult the taxpayer amount from the proper line on the form.
Business Activity 1120
1120-A
1120-F
Page 3, Line 2(b)
Page 2, Part II, Line 1(B)
Page 1, Line F(1)
Editing Instructions:
(1) This is a must enter field.
(2) Edit as reported by the taxpayer (maximum 30 characters). If no business activity has been provided, enter N/A.
(3) If the Return is consolidated, edit the Consolidated page as reported by the taxpayer. If the consolidated RETURN leaves this field blank, edit from the sub with the largest total receipts (if available) and annotate the name of the sub in the comment field, otherwise, edit N/A.
Product or Service 1120
1120-A
1120-F
Page 3, Line 2(c)
Page 2, Part II Line(c)
Page 1, Line F(2)
Editing Instructions:
(1) This is a must enter field.
(2) Edit as reported by the taxpayer (maximum 30 characters). If no product or service has been provided, enter N/A.
(3) If the Return is consolidated, edit the Consolidated page as reported by the taxpayer. If the consolidated RETURN leaves this field blank, edit from the sub with the largest total receipts and annotate the name of the sub in the comments field, otherwise, edit N/A.
SOI Industry Code 1120
1120-A
1120-F
Page 3, Line 2(a)
Page 2, Part 2, Line 1(a)
Page 1, Line F(2)
Editing Instructions:
(1) This is a must enter field.
(2) This is a double entry field.
(3) Please consult the taxpayer amount from the proper line on the form.
(4) When SOI Industry Code is blank or a change in industry code is required, access the INDUSTRY CODE WORKSCREEN by pressing ALT+F8]. Follow instructions in Section 8.5.1 of this manual and IRM 1.13.7.
(5) A query table is available listing all possible values for this field. See Section 8.5.1 for instructions to access and select values from the table.
(6) If industry code is not in the following list (522110-522190, 551111, 522220, 522291, 522298, 522210), the System disables the FDIC code on the previous screen and displays the following message, "FDIC code has been deleted (set to null) based on the edited industry code."
(7) If industry code is in 524142 or 524143 and the return is filed on form 1120-F, please send to Ogden for editing.
(8) This field is edited on the entity section for the 1120-RIC and 1120-REIT.
Test Description
E604 Gross Receipts are unusually large for Holding Company, 551112.
Correction Procedure:
(1) For industry code 551112 (Other Holding Companies) dividends and/or interest should make up the majority of income. Gross receipts for consolidated returns should make up less than half of Total Receipts and should not make up more than a very small percentage of income for non-consolidated returns.
(2) Refer to pages 1.13.7-13 – 14 of the industry coding manual for the proper coding of 551112.
(3) Refer to pages 1.13.7-23 and following of the Industry Coding Manual for the Total Receipts Rule in order to properly code consolidated returns.
(4) Use all tools at your disposal to properly industry code this return including the PBA description, the Product or Service description, the 851 especially the PBA of the largest Sub, and other resources including Moodys.
(5) If you still feel that a consolidated return, whose largest income item is gross receipts and has a large amount of cost of goods, should be 551112, please contact Will Jauquet or Bill Rush at National Office.
(6) If after reviewing the industry code you determine that it is in fact correct, the Accept Test button may be used.
L005 The SOI Industry Code is different from the Prior Year File Industry Code.
Correction Procedure:
(1) This test compares prior year industry code to current year code.
(2) This test will read out for industries 221110, 522130–522291, 523110, 523120, 523900, 524159, 551112 when total assets are greater than or equal to 250,000,000.
(3) Check the return to verify the taxpayer’s entry and the edited item for SOI Industry Code.
(4) Check the edited SOI Industry Code against the INDUSTRY CODE SCREEN by pressing [ALT+F8] and follow instructions in Section 8.5.1 of this manual and IRM 1.13.7, Industry Coding.
(5) If after researching, the industry code is still different from that in the Prior Year File, it is particularly important that you document the reasons for the change in the Industry Code Comment Field. In this case, use the Accept button to accept the condition.
L010 The SOI Industry Code is different from the Prior Year File Industry Code.
Correction Procedure:
(1) This test compares prior year industry code to current year industry code.
(2) This test will read out for industries 551111, 522110, 522120, 524142 and 524143 when total assets are greater than or equal to 500,000,000.
(3) Check the return to verify the taxpayer’s entry and the edited item for SOI Industry Code.
(4) Check the edited SOI Industry Code against the INDUSTRY CODE SCREEN by pressing [ALT+F8] and follow instructions in Section 8.5.1 of this manual and IRM 1.13.7, Industry Coding.
(5) If after researching, the industry code is still different from that in the Prior Year File. It is particularly important that you document the reasons for the change in the Industry Code Comment Field. In this case, use the [Accept] button to accept the condition.
L015 The SOI Industry Code is different from the Prior Year File Industry Code.
Correction Procedure:
(1) This test compares prior year industry code to current year industry code.
(2) This test will read out for all industries (except, 221100, 522110, 522120, 522130–522291, 523110, 523120, 523900, 524159, 551111, 551112) when total assets are greater than or equal to 100,000,000.
(3) Check the return to verify the taxpayer’s entry and the edited item for SOI Industry Code.
(4) Check the edited SOI Industry Code against the INDUSTRY CODE WORKSCREEN by pressing [ALT+F8] and follow instructions in Section 8.5.1 of this manual and IRM 1.13.7, Industry Coding.
(5) If after researching, the industry code is still different from that in the Prior Year File, it is particularly important that you document the reasons for the change in the Industry Code Comment Field. In this case, use the [Accept] button to accept the condition.
L016 The assets of this corporation have changed by more than 50% from the prior year.
Correction Procedure:
(1) This test will read out for industries 221110, 522130–522291, 523110, 523120, 524159, 551112 when total assets are greater than or equal to 250,000,000 and assets have increased or decreased by more than 50%.
(2) Look for changes in the subsidiaries of consolidated returns that might have changed the make up of the consolidated return’s total receipts.
(3) Check the return to verify the taxpayer's entry and the edited item for SOI Industry Code.
(4) Check the edited SOI Industry Code against the INDUSTRY CODE WORKSCREEN by pressing [ALT+F8] and follow instructions in Section 8.5.1 of this manual and IRM 1.13.7, Industry Coding.
(5) It after researching, the industry code is determined to be different from that in the Prior Year File, it is particularly important that you document the reasons for the change in the Industry Code Comment Field. After you have completed your research, use the [Accept] button to accept the condition.
L017 The assets of this corporation have changed by more than 50% from the prior year.
Correction Procedure:
(1) This test will read out for industries 522110, 522120, 524142, 524143, 551111. When total assets are greater than or equal to 500,000,000 and assets have increased or decreased by more than 50%.
(2) Follow procedures 2–5 in Test L016 to verify the industry code.
L018 The assets of this corporation have changed by more than 50% from the prior year.
Correction Procedure:
(1) This test will read out for all industries (except 221110, 522110, 522120, 522130–522291, 523110, 523120, 523900, 524159, 525910, 525930, 551111) when total assets are greater than or equal to 100,000,000 and assets have increased or decreased by more than 50%.
(2) Follow procedures 2–5 in Test L016 to verify the industry code.
L019 The SOI Industry Code is different from the Prior Year File though the PBA has remained the same.
Correction Procedure:
(1) This test compares prior year industry code to current year industry code.
(2) Follow procedures 1 and 3–5 in Test L015 to verify the industry code.
Corp. Name of Largest Company
Editing Instructions:
(1) This field exist only for consolidated returns. This is a must enter field.
(2) Edit as reported by the taxpayer using the Total Receipts Rule (TRR) (see section 7.28 beginning on page 1.13.7-24 of the industry coding manual). The corporation name of the largest company can be found on the Form 851 or attached schedules to the 851. If enough information is not provided by the taxpayer to use the TRR (i.e.; form 851 or receipts schedule is missing), then edit parent company as largest and comment accordingly.
(3) If while using the TRR there are multiple companies with the same PBA code that sum to the largest group of companies, please enter the name of the largest company from that group of companies in this field.
(4) If an exception to the Total Receipts Rule is used to code the return, the largest company should be edited here and the exception used should be noted in the indy code comments field.
Business Activity of Largest Company
Editing Instructions:
(1) This field exist only for consolidated returns. This is a must enter field.
(2) Edit as reported by the taxpayer using the Total Receipts Rule (TRR). The business activity of the largest company can be found on the Form 851 or attached schedules to the 851.
PBA Code of Largest Company
Editing Instructions:
(1) This field exist only for consolidated returns. This is a must enter field.
(2) Edit as reported by the taxpayer using the Total Receipts Rule (TRR). The pba code of the largest company can be found on the Form 851 or attached schedules to the 851. (Note: if this pba code is incorrect and should be the basis for coding the return, the correct code should have been entered in the SOI indy code field).
(3) If an invalid pba code is reported by the largest company, enter a valid pba code that corresponds to the description.
Parent EIN 1120
1120-F
1120-REIT
1120-RIC
Page 3, Line 4i
Page 2, Line T (1)
Page 3, Line 3(i)
Page 3, Line 3(i)
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) Do not edit this line if the name and EIN match the name and EIN on page 1.
(3) If Revenue Processing has inserted 129999999 on this line and there are not attachments provided to show parent EIN, do not edit this field.
Parent Name 1120
1120-F
1120-REIT
1120-RIC
Page 3, Line 4ii
Page 2, Line T(2)
Page 3, Line 3(ii)
Page 3, Line 3(ii)
Editing Instructions:
(1) If a name is available for the EIN previously entered, the name will be displayed in this field. If the displayed name differs (in a substantive way) from the name on the return, edit the name on the return.
(2) If no name is displayed on the screen for line 4ii, edit the name on line 4ii following the instructions given for editing Corporation Name on page 1.
(3) Do not edit this field if only a person's name and SSN are provided.
(4) If a name of a trust is given, do not edit this field.
Test Description
V006 There is no corresponding parent name for the parent EIN.
Correction Procedure:
(1) If a parent EIN is provided by the taxpayer, a corresponding parent name should be provided.
If parent name is provided, edit as described above.
(2) If no parent name is provided, this test may be accepted using the Accept button.
V007 There is no corresponding parent EIN for the parent name.
Correction Procedure:
(1) If a parent name is provided by the taxpayer, a corresponding parent EIN should be provided.
If parent EIN is provided, edit as described above.
(2) If no parent EIN is provided or if ‘129999999’ is pre-loaded and there are not attachments provided to show parent EIN, this test may be accepted using the Accept button.
Owner Code 1120
1120-A
1120-REIT
1120-RIC
Page 3, Line 5
Page 2, Part II, Line 2
Page 3, Line 4
Page 3, Line 4
Editing Instructions:
(1) Allowable entries for this field are "Y" and [ENTER].
(2) If the answer to this question is "Y" , the taxpayer should have indicated the percentage owned.
(3) The percentages for any owners appearing to be related should be totaled.
(4) If there is any indication (i.e. an attached schedule) that the ownership is made up of several entities, none of which exceeds or equals 50% individually, edit as [ENTER]. The only exception is if the owners appear to be related. You may assume that the parties are related if the figure listed for the percentage is the total of individual amounts on a schedule. Please be aware, however, that some companies may attach a schedule (i.e. Form 851) indicating that their subs are 100% owned by the parent company. This type of schedule should not be used to edit the owner code that relates to the parent company.
Owner Percentage 1120
1120-REIT
1120-RIC
Page 3, Line 5(I)
Page 3, Line 4(i)
Page 3, Line 4(i)
Editing Instructions:
(1) This field must be positive.
(2) Enter rounded whole percentages (i.e., 72.6 percent should be entered as "73" ). (1)
(3) If the answer to question 5 is " Y" , the taxpayer should have indicated the percentage of ownership on this line. Enter the indicated percentage.
(4) If the figure in this field exceeds or equals 50%, but the taxpayer has not answered ‘Y’ to question 5, change the response to question 5 to a ‘Y’.
(5) If the figure in this field is less than 50%, see number 4 (Owner Code) above and edit accordingly.
(6) If the taxpayer reports two different names that are not related on an attached schedule on a non-consolidated return and both percentages equal 50%, please edit as 50%.
(7) If there are more than one percentage given for the consolidated return, edit the largest figure. If there is no consolidated figure given, edit the figure listed for the parent corporation.
(8) If the taxpayer distinguishes between direct and indirect ownership, the total amount for each entity should be edited. Note, however, that certain amounts may be listed as the directly owned stock of one part of an entity and the indirectly owned stock of another. These amounts should not be double counted. If the total exceeds 100%, edit as 100%.
(9) If there is no owner code, but there is an owner percent, the following message appears, "If no owner code exists, there should not be an owner percent." If the taxpayer did indicate an owner percent, edit the owner code as "Y" even if the taxpayer left it blank or marked it "NO" . This must be corrected to continue.
(10) If schedule K is unclear, check schedule E for additional information.
(11) If there is more than one percentage shown, and if the names appearing on Schedule E seem related (same last name), add the percentages together.
(12) Do not use column (c) of the Schedule E to edit the percentage. If Columns (d) and (e) are balnk and there are no other attachments to verify the ownership percentage, edit this field as '999.'
(13) If the answer to question 5 is " Y" , but the taxpayer does not provide a percentage, enter " 999" in this field (after verifying no attachments contain this information).
(14) Do not use Form 851 to edit this percentage even if the taxpayer wrote this on the line. The Form 851 relates to their ownership of subsidiary companies and their relationship to one another.
(15) If an attached schedule breaks the percentage owned into common and preferred stock, refer to the balance sheet to determine the amount of each type of stock. Then, multiply the percentages by the amounts on the balance sheet. Divide that figure by the total amount of stock to determine the overall percentage. See the following example.
Common/Preferred Stock Example
Attached schedule shows the following: Balance Sheet shows the following:
Entity A 10% preferred stock Preferred Stock $1,000.00
60% common stock Common Stock $1,000,000.00
Total $1,001,000.00
Entity B 90% preferred stock
10% common stock
Calculate:
Entity A: .1 x 1000 = 100 Entity B: .9 x 1000 = 900
.6 x 1000000 = 600000 .1 x 1000000 = 100000
$600100 $100900
600100/1001000 = 59.9% 100900/1001000 = 10.1%
Conclusion: Round 59.9% to 60%
Excess Dividends Paid Code 1120 Page 3, Line 6
1120-REIT Page 3, Line 9
1120-RIC Page 3, Line 9
Editing Instructions:
(1) Allowable entries are ‘Y’ and return.
Foreign Owner Code 1120 Page 3, Line 7
1120-REIT Page 3, Line 5
1120-RIC Page 3, Line 5(a)
Editing Instructions:
(1) Allowable entries for this field are "Y" and [ENTER].
(2) If the answer to question 7 is " Y" , the taxpayer should have indicated the foreign country of the foreign owner and the percentage owned. If any of this information is not included by the taxpayer, edit the undeterminable percentage as "999 " and/or country code as "OC" .
(3) It there is any indication (i.e. an attached schedule) that the ownership is made up of several persons, none of which exceeds or equals 25% individually, edit as [ENTER].
(4) If the 5472 is specifically referenced here by the taxpayer and the name and EIN of the reporting corporation (part I, lines 1a and 1b) match that on page 1 of the Form 1120, refer to Part II of the Form 5472. If line 1a (or 3a for an ultimate indirect foreign shareholder) contains the name of a shareholder, edit this field as ‘Y’. The 5472 does not contain information on the foreign owner percent so if the figure is not on the 1120, edit as ‘999’. If the foreign country code is not indicated on the 1120, it may be edited from line 1d (or 3d) of the 5472.
(5) NOTE: In contrast to the owner code question, the foreign owner code specifies "foreign person" so the rules regarding family groups do not apply.
Test Description
L020 Company was foreign owned in prior year but is not in current year.
Correction Procedure:
(1) This test compares current and prior year foreign ownership codes.
(2) Check the taxpayer’s entries to verify the current-year foreign ownership code.
(3) Check the prior year record used and the code on the display screen.
(4) If this test can not be corrected, the Accept button can be used.
L022 Company was not foreign owned in prior year but is in current year.
Correction Procedure:
(1) This test compares current and prior year foreign ownership codes.
(2) Check the taxpayer’s entries to verify the current-year foreign ownership code.
(3) Check the prior year record used and the code on the display screen.
(4) If this test can not be corrected, the Accept button can be used.
Data Item Form Line Reference
Foreign Owner Percentage 1120 Page 3, Line 7a
1120-REIT Page 3, Line 5a
1120-RIC Page 3, Line 5b(1)
Editing Instructions:
(1) If the answer to the Foreign Owner Code question is ‘Y’, the taxpayer should indicate the percentage owned.
(2) If the taxpayer has answered the Foreign Owner Code question as ‘Y’ and this field is blank, use the prior year browse to determine the percentage. If this is not available, edit as "999" .
(3) If the answer to the Foreign Owner Question is ‘N’ and the taxpayer has filled in a percent (between 25 and 100, inclusive) for this field, change the answer for Foreign Owner Question to ‘Y’ and edit the percent given for this field.
(4) This field must be positive.
(5) Enter rounded whole percentages (i.e., 72.6 percent should be entered as "73" . If the number reported is 72.3 edit as 72.)
(6) If there are more than one percentage given for the consolidated or non-consolidated return, edit the largest figure. If there is no percentage listed for the consolidated corporation, edit the percentage given for the parent.
(7) If the taxpayer distinguishes between direct and indirect ownership, the total amount should be edited. If the total exceeds 100%, edit as 100%.
(8) If an attached schedule breaks the percentage owned into common and preferred stock, refer to the balance sheet to determine the amount of each type of stock. Then, multiply the percentages by the amounts on the balance sheet. Divide that figure by the total amount of stock to determine the overall percentage. See example under Owner Percentage.
Foreign Country Code 1120 Page 3, Line 7b
1120-REIT Page 3, Line 5(b)
1120-RIC Page 3, Line 5b(2)
Editing Instructions:
(1) If the answer to question 7 is " Yes" , the taxpayer should have indicated the countries of the owners. Enter the appropriate alphabetic code according to the following instructions:
a. There is a query table available to look up the code associated with the country listed. Press the [F9] Key to access the query table or access it using the lookup menu in the banner at the top of the screen. See Section 8.2.4:(5) for instructions to select the country code.
b. If more than one country is listed, select the country which is listed first.
(2) If the answer to the Foreign Owner Code question is ‘Y’ and the taxpayer does not provide the country of ownership, use the prior year browse to determine the country code. If this is not available, edit as "OC."
(3) If the answer to the Foreign Owner Code question is not ‘Y’, but the taxpayer has listed a country response, edit the Foreign Owner Question as ‘Y’ and edit the code for the country listed.
(4)

Note:

Please be aware of the distinction between the Netherlands Antilles (‘NT’) which are a group of islands in the Caribbean and the Netherlands in Europe, also known as Holland (‘NL’).

(5) If the taxpayer indicates China or Korea, but is not specific (Mainland or Taiwan for China, North or South for Korea), use the prior year browse for clarification. If there is no prior year browse available, please edit "China" as "Taiwan " and "Korea" as "South Korea."
(6) If there is an inconsistency between the Foreign Owner Code and the Foreign Country Code, a system message appears. Editing cannot continue until the error is corrected according to instructions (2) and (3) above.
Test Description
L025 Current and prior year foreign country codes don’t match.
Correction Procedure:
(1) This test compares current and prior year foreign country codes.
(2) Check the taxpayer’s entries, including any attached schedules, to verify the current-year foreign country code.
(3) Check the prior year record.
(4) If this test can not be corrected, the Accept button can be used.
Number of Forms 5472 Attached 1120 Page 3, Line 7c
1120-F Page 1, Line L
1120-REIT Page 3, Line 5c
1120-RIC Page 3, Line 5b(3)
Editing Instructions:
(1) This field must be positive.
(2) If Foreign Owner Code is coded as ‘Y’, but number of Forms 5472 is left blank, please check the return for attachments to verify.
(3) If there is no taxpayer entry, press [ENTER].
Test Description
L014 Form 5472 existed last year, but are not reported here.
Correction Procedure:
(1) If 5472’s existed for this record in the prior year they are expected to exist this year.
(2) After verifying that no 5472’s exist, the Accept button] may be used.
(3) If you do find that FORM 5472’s do exist, but this line was left blank by the taxpayer, insert the correct number of 5472’s attached to the Return.
Tax-Exempt Interest 1120 Page 3, Line 9
1120-A Page 2, Part II, Line 3
1120-F Page 2, Line P
1120-REIT Page 3, Line 8
1120-RIC Page 3, Line 8
Editing Instructions:
(1) This field must be positive.
(2) This is a double entry field.
(3) For consolidated returns, if this field is left blank, edit from the parent return. If there is no parent return, add up the amounts reported by all subsidiaries.
Number of Shareholders 1120 Page 3, Line 10
Editing Instructions:
(1) This field must be positive.
(2) If the number of shareholders is greater than 75, leave this field blank.
(3) If the number of shareholders is blank,
A. First look for any attachment indicating the number of shareholders.
B. Second, look at Schedule E. If the individual officers percentage of stock owned adds to 100% (column D or E), count the number of people indicated and edit as the number of shareholders. If the individuals’ percentage owned does not add up to 100%, do not use Schedule E to edit.
C. Third, if both line 10 and Schedule E are blank, and Schedule K line 5 has people listed on an attached schedule each with an ownership percentage (which when combined equal 100%), assume that the number of shareholders equals the number listed on the attached schedule for line 5.
(4) If the corporation indicates 1 shareholder, check line 4 or 5 (or attachments). If this indicates the company is owned by another corporation (or multiple corporations), leave this field blank.
A. If there are no attachments available to verify the number, and if line 4 is blank, line 5 is 100%, and line 7 is ‘Y’ and 100%, leave this field blank.
B. Otherwise, enter ‘1’.
(5) If Revenue Processing has inserted 129999999 on this line and there are not attachments provided to show parent EIN, do not edit this field.
Election to Forego NOLD Carryback 1120 Page 3, Line 11
1120-F Page 2, Line R
Editing Instructions:
(1) Allowable entries for this field are ‘Y’ or [ENTER].
NOLD Carryover from Prior Years 1120 Page 3, Line 12
1120-F Page 2, Line S
1120-REIT Page 3, Line 9
Editing Instructions:
(1) This field is double entry.
(2) If taxpayer reports a negative number, record as a positive.
(3) If question 12 refers to an attachment, and the amount on the attachment includes NOLD for the current year, please do not edit the total amount. Edit only the amount of NOLD from prior years.
(4) If question 12 refers to an attachment, and the attachment breaks down the carryover because of change of ownership, contact National Office.
Corporation Total Receipts and Assets Code 1120 Page 3, Line 13
1120-A Page 2, Part II, Line 7
Editing Instructions:
(1) Valid entries are ‘Y’ and [Enter].
(2) If the answer to this question is ‘Y’, the taxpayer should have indicated an amount for cash distributions and book value of property distributions.
(3) If the taxpayer answers 'Y' to this question and you have verified that the answer to this qustion shold be 'Y', if no amount is reported by the taxpayer, and no amounts are found on attached schedules, enter a zero in this fields that follow this code and make a comment in the comments field.
Total Amount of Cash Distributions 1120 Page 3, Line 13(i)
Editing Instructions:
(1) If Line 13, is marked ‘Y’, this field is a must enter field.
(2) Enter the amount of total cash distributions as reported by the taxpayer.
Book value of Property Distributions 1120 Page 3, Line 13(ii)
Editing Instructions:
(1) If Line 13, is marked ‘Y’, this field is a must enter field.
(2) Enter the book value of property distributions as reported by the taxpayer
Control Group Code 1120 Sch. J, Line 1
1120-F Sch. J, Line 1
1120-REIT Page 3, Sch. J, Line 1
1120-RIC Page 2, Sch. J, Line 1
Editing Instructions:
(1) If the return type = 08, this field will display a ‘Y’.
(2) a. Enter ‘Y’ if the corporation answers "Yes" to the question on, Schedule J, Line 1.
b. Enter ‘Y’ if an apportionment schedule is attached which shows the allocations of the tax bracket amounts among its members. The line may also refer to IR Code Section 1561 or 1563.
c. Enter ‘Y’ if line 12 on Schedule C is present.
d. Enter ‘Y’ if line 4 on Other Information is edited (line 3 for REIT’s or RIC’s).
(3) If this field is edited as ‘Y’, follow the specific instructions for controlled groups where provided throughout the section.
(4) If an 1120-REIT is coded as consolidated (Page 1, Box B1 = ‘C’), the system will code the control group code as ‘Y’.
Personal Service Corporation Code 1120 Sch. J, Line 3 or Page 1, Box A(3)
1120-A Page 1, Box A or Page 2, Part I, Box 1
Editing Instructions:
(1) Allowable entries for this field are ‘1’, ‘2’, and [ENTER].
(2) When Box A(3) is checked on Page One, enter ‘1’.
(3) When the box is checked on Page three, line 3, enter ‘2’.
(4) If both boxes are checked, enter ‘2’.
(5) If neither box is checked and Schedule H is attached, enter 2. The Schedule H is an indication that the corporation is a qualified "Personal Service Corporation."
(6) Also, verify the industry code. Only service industries (541110–541990 and 621111–713900) shoud have this code.
(7) If neither box is checked and Schedule H is not present, press [ENTER].
Test Description
E603 Industry code is not valid for a qualified personal service corporation.
Correction Procedure:
(1) Qualified personal service corporation should only be in the service industries. Look to see if the industry code needs to be corrected or if the return has attached any further information about being a qualified personal service corporation.
(2) If this test cannot be corrected, use the [Accept] button to accept this test.
Personal Holding Company Tax Code 1120 Sch. J, Line 7 or Page 1, Box A(2)
1120-REIT Sch. J, Line 6 or Page 1, Box B(2)
1120-RIC Sch. J, Line 6 or Page 1, Box F
Editing Instructions:
(1) Edit as ‘Y’ if there is an amount present for personal holding company tax or the Schedule PH is attached or Box A (2) on page 1, Form 1120 is checked. For consolidated returns, this data must be on the parent return. Do not mark ‘Y’ if the supporting information is found on a subsidiary found within a consolidation.
(2) Otherwise, edit as [ENTER].
Number of Forms 8865 Schedule N Line 2
(1) This field must be positive
(2) Please check the return for Forms 8865 and edit accordingly.
(3) If there are no Forms 8865 attached, press [ENTER].
CFC Shareholder Code Schedule N Line 4a
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) Allowable entries are ‘Y’ and [ENTER].
Number of Forms 5471 Attached Schedule N Line 4b
Editing Instructions:
(1) This field must be positive.
(2) If you have entered a number on this line, but did not code as a CFC Shareholder above, a ‘Y’ will be inserted on that line automatically.
(3) If taxpayer coded themselves as a ‘Y’ for CFC Shareholder above and did not enter the number of Forms 5471, please check the return for 5471 attachments and code accordingly.
(4) If there is no taxpayer entry, press [ENTER].
Test Description
V008 Corporation is a shareholder of a CFC and no 5471’s are attached.
Correction Procedure:
(1) If a corporation has indicated that it is a shareholder of a Controlled Foreign Corporation, it should have indicated the number of 5471’s that are attached.
(2) If the taxpayer has not filled in the number of 5471’s attached, the test may be accepted (after verifying attachments).
Test Description
L013 Form 5471 existed last year, but are not reported here.
Correction Procedure:
(1) If 5471’s existed for this record in the prior year they are expected to exist this year.
(2) After verifying that no 5471’s exist, the Accept button may be used.
(3) If you do find that FORM 5471’s do exist, but this line was left blank by the taxpayer, insert the correct number of 5471’s attached to the Return
Foreign Account Code Schedule N Line 6a
Editing Instructions:
(1) Allowable entries are ‘Y’ and [ENTER].
(2) If this field is left blank or marked as ‘N’ but there is a country name given on this line, please edit the code as ‘Y’.
Foreign Account Country Codes Schedule N Line 6b
Editing Instructions:
(1) If the answer to the Foreign Account Code, Schedule N, question 6a, is "Yes" , the taxpayer should have indicated the countries the corporation has an interest in. Enter the appropriate alphabetic code according to the following instructions:
a. There is a query table available to look up the code associated with the country listed. Press the [F9] Key to access the query table or access it using the lookup menu in the banner at the top of the screen. See Section 8.2.4:(5) for instructions to select the country code.
b. Edit up to three countries that are listed. If more than three countries are listed, select the first three countries which are listed.
(2) If the answer to the Foreign Account Code question is ‘Y’ and the taxpayer does not provide the country of ownership, use the prior year browse to determine the country code. If this is not available, edit as "OC."
(3) If the answer to the Foreign Account Code question is not ‘Y’, but the taxpayer has listed a country response, edit the Foreign Account Code Question as ‘Y’ and edit the code for the country listed.
(4)

Note:

Please be aware of the distinction between the Netherlands Antilles (‘NT’) which are a group of islands in the Caribbean and the Netherlands in Europe, also known as Holland (‘NL’).

(5) If the taxpayer indicates China or Korea, but is not specific (Mainland or Taiwan for China, North or South for Korea), use the prior year browse for clarification. If there is no prior year browse available, please edit "China" as "Taiwan " and "Korea" as "South Korea."
(6) If there is an inconsistency between the Foreign Account Code and the Foreign Account Country Code, a system message appears. Editing cannot continue until the error is corrected according to instructions (2) and (3) above.

Country Codes

Name Alpha Code
A
Abaco Islands BF
Abu Dhabi TC
Admiralty Islands PP
Aegean Islands GR
Afghanistan AF
Africa — not allocable QX
Agalega Islands MP
Ajman TC
Aland Islands Fl
Albania AL
Alberta CA
Aldabra IO
Algeria AG
American Samoa AQ
Amirantes Islands (Seychelles) SE
Andaman IN
Andorra AN
Andros Island BF
Anegada VI
Angola AO
Anguilla AV
Annobon EK
Antarctica AY
Anticosti Island CA
Antigua and Barbuda AC
Antipodes NZ
Antrim UK
Argentina AR
Armagh UK
Armenia AM
Aruba AA
Ascension Island SH
Ashmore and Cartier (Ashmore Island) AT
Asia UX
Australia AS
Austria AU
Azerbaijan AJ
Azores PO
B
Bahamas BF
Bahia Islands HO
Bahrain BA
Baker Island WX
Balearic Islands SP
Bali ID
Bangka ID
Bangladesh BG
Barbados BB
Barbuda and Antigua AC
Bassas Da India BS
Basse-terre GP
Bear Island NO
Belarus BO
Belgium BE
Belitung ID
Belize BH
Benin BN
Bermuda BD
Bhutan BT
Billiton (Belitung) ID
Bismark Archipelago PP
Bissagos Islands PU
Bolivia BL
Bonaire NT
Bornholm DA
Bosnia-Herzegovina BK
Botswana BC
Bougainville PP
Bounty NZ
Bouvet Island BV
Brazil BR
British Columbia CA
British Crown Colony(Hong Kong) HK
British Indian Ocean Territory IO
British Pacific Islands KR
British Virgin Islands VI
British West Indies CJ
Brunei BX
Buka PP
Bulgaria BU
Burkina Faso (Upper Volta) UV
Burma(Aka Myanmar) BM
Burundi BY
C
Cabinda AO
Caicos Islands TK
Cambodia CB
Cameroon, Federal Republic of CM
Campbell Island NZ
Campobello Island CA
Canada CA
Canary Islands SQ
Canton and Enderbury Island (Kiribati) KR
Cape Breton Island CA
Cape Verde, Republic of CV
Cargados Carajos Shoals MP
Caribbean AX
Caroline Island (Kiribati) KR
Cartier Islands AT
Cayman Islands CJ
Celebes ID
Central African Republic CT
Central America — not allocable CX
Ceram ID
Ceuta SQ
Chad CD
Chafarinas Islands SQ
Chagos Archipelago IO
Channel Islands UK
Chatham NZ
Chico Island (Elobey) EK
Chile CI
China, Republic of (Taiwan) TW
China, Peoples Republic CH
Christmas Island (Indian Ocean) KT
Christmas Island (Pacific Ocean) KR
Clipperton Islands IP
Cocos Islands CK
Colombia CO
Common Market GX
Comoros CN
Congo, Republic of (Also Known as Congo-brazzaville) CF
Congo(Zaire)(Also Known as Congo-kinshasa) CG
Cook Islands CW
Coral Sea Islands Territory CR
Corsica FR
Corsico Islands EK
Costa Rica CS
Cote D’ivoire (Aka Ivory Coast) IV
Cozumel Islands MX
Crete GR
Croatia HR
Cuba CU
Curacao NT
Cyprus CY
Cyrenaica LY
Czech Republic EZ
D
D'entrecasteaux Island PP
Denmark (ExceptGreenland) DA
Desirade Island GP
Diego Garcia Island IO
Djibouti DJ
Dodecanese GR
Dominica DO
Dominican Republic DR
Down UK
Dubai TC
E
East Timor IA
Easter Island CI
Eastern Asia ZX
Eastern Europe IX
Ecuador EC
Egypt EG
El Salvador ES
Elba IT
Eleuthera Island BF
Elobey Island EK
Enderbury Islands (Kiribati) KR
England UK
Equatorial Guinea EK
Eritrea ER
Estonia EN
Ethiopia ET
Europa Island EU
Europe — not allocable JX
F
Falkland Islands (Islas Malvinas) FK
Faroe Islands FO
Farquhar Islands (Seychelles) SE
Federal Republic of Germany GM
Federal Republic of Malaya (Malaysia) MY
Fermanagh UK
Fernando De Noronha Island BR
Fernando Po EK
Fezzan LY
Fiji FJ
Finland FI
Flores ID
France FR
French Antarctic Lands FS
French Guiana FG
French Indian Ocean Areas RE
French Pacific Islands FP
French Polynesia FG
French Southern Lands FS
Friendly Isles TN
Fujaira TC
Futuna WF
G
Gabon GB
Galapagos Isles EC
Gambia GA
Gambier FP
Gaza Strip GZ
Georgia GG
Germany GM
Ghana GH
Gibraltar GI
Glorioso Islands GO
Gonave Island HA
Gotland (Gothland) Isle SW
Gough Island SH
Gozo MT
Grand Bahama Island BF
Grand Manan Island CA
Grand Terre GP
Grande Island (Elobey) EK
Great Britain UK
Great Exuma Islands BF
Great Inagua Islands BF
Grecian Archipelago GR
Greece GR
Greenland GL
Grenada GJ
Grenadines and St. Vincent (See St Vincent) VC
Guadeloupe GP
Guam GQ
Guatemala GT
Guernsey GK
Guinea GV
Guinea, Equatorial EK
Guinea Bissau PU
Guyana GY
H
Haiti HA
Halmahera ID
Harbor Island BF
Heard Islands HM
Hebrides UK
Herzegovina BK
Hokkaido JA
Holland(Aka Netherlands) NL
Honduras HO
Hong Kong HK
Honshu JA
Howland Island WX
Hungary HU
I
Iceland IC
Ifni MO
Iles Australes FP
Iles Des Saintes GP
Inaccessible Island SH
India IN
Indonesia ID
Indonesian Borneo ID
Inner Mongolia CH
lonian Islands GR
Iran IR
Iraq IZ
Iraq-Saudia Arabia Neutral Zone IY
Ireland (Eire) EI
Irian Barat ID
Isla of Pines (Caribbean) CU
Islas Malvinas (Falkland Is.) FK
Isle of Man IM
Isle of Pines (French Pacific Island) NC
Isles Do La Petite-terre GP
Israel IS
Italy IT
Ivory Coast(Aka Cote D'ivoire) IV
J
Jamaica JM
Jan Mayen Isle JN
Japan JA
Jarvis Island WX
Java ID
Jersey JE
Johnston Atoll JQ
Jordan JO
Jost Van Dykes VI
Juan De Nova Island JU
Juan Fernandez Island CI
K
Kalimantan(indonesian Borneo) ID
Kamaran Island YS
Kampuchea (Cambodia) CB
Katar (Qatar) QA
Kazakhstan KZ
Keeling Islands CK
Kenya KE
Kermadec NZ
Khios GR
Kingman Reef KQ
Kiribati KR
Kiritimati KM
Korea, Democratic Peoples Republic of (North) KN
Korea, Republic of (South) KS
Kurile Islands RS
Kuwait KU
Kwantung Terr CH
Kyrgyzstan KG
Kyushu JA
L
Labrador CA
Laccadive Isles IN
Lagosta BK
Lampedusa IT
Laos LA
Latin America EX
Latvia LG
Lebanon LE
Leeward Islands SC
Lesotho LT
Lesser Sunda Islands ID
Lesvos GR
Liaoning Province CH
Liberia LI
Libya LY
Liechtenstein LS
Limnos GR
Line Island KR
Lithuania LH
Lombok ID
Londonderry UK
Long Islands BF
Lord Howe Island AS
Louisiade Archipelago PP
Loyalty Islands NC
Luxembourg LU
M
Macao (Macau) MC
Macedonia MK
Macquarie Island AS
Madagascar MA
Madeira Islands PQ
Madura ID
Magdalen Islands CA
Malawi MI
Malaya MY
Malaysia MY
Maldives MV
Mali ML
Malta MT
Man, Isle of IM
Manchuria CH
Manitoba CA
Mariana Islands RM
Marie Galante Island GP
Marquesas Island FP
Marshall Islands RM
Martinique MB
Mauritania MR
Mauritius MP
Mayotte MF
Mcdonald Islands HM
Melilla SQ
Mexico MX
Micronesia, Federated States of FM
Middle East RX
Midway Island MQ
Miquelon Island SB
Moldova MD
Moluccas ID
Monaco MN
Mongolia MG
Montenegro MW
Montserrat MH
Morant Cay JM
Morocco MO
Mozambique MZ
Myanmar (Aka Burma) BM
N
Namibia WA
Nansei Islands JA
Nauru NR
Navassa BQ
Nepal NP
Netherlands (Aka Holland) NL
Netherlands Antilles NT
Nevis SC
New Britain PP
New Brunswick CA
New Caledonia NC
New Ireland PP
New Providence Island BF
New Zealand NZ
Newfoundland CA
Nicaragua NU
Nicobar IN
Niger NG
Nigeria NI
Nightingale Island SH
Niue Islands NE
Norfolk Island NF
North Africa — not allocable KX
North Borneo MY
North Korea (Communist) KN
Northern Ireland UK
Northern Mariana Islands CQ
Northern Soloman Islands PP
Northwest Territory CA
Norway NO
Nova Scotia CA
O
Ocean Island (Banaba) KR
Oceania VX
Okinawa JA
Oland Island SW
Oman MU
Ontario CA
Orkney Island UK
Other Country not allocable OC
Other Western Europe — not allocable HX
Other Western Hemisphere — not allocable FX
Outer Mongolia MG
P
Pakistan PK
Palau PS
Palmyra Atoll LQ
Panama PM
Pantellerria IT
Papua New Guinea PP
Paracel Islands PF
Paraguay PA
Pedro Cays JM
Penon DeAlhucemas SQ
Penon De Valez De La Gomera SQ
Perim Island YS
Peru PE
Pescadores TW
Philippines RP
Phoenix Islands KR
Pitcairn Island PC
Poland PL
Portugal PO
Prince Edward Island CA
Principe TP
Puerto Rico RQ
Q
Qatar QA
Quebec CA
Queen Charlotte Islands CA
R
Ra’s Al Khaymah TC
Redonda AB
Reunion Island RE
Revillagigedo Island MX
Rhodes Island GR
Rio Muni EK
Riow Islands ID
Rodriquez Island MP
Romania RO
Russia RS
Rwanda RW
Ryukyu Islands JA
S
Saba NT
Sabah MY
Saint Bartholomew Island GP
Saint Christopher-Nevis-Anguilla SC
Saint Pierre and Miquelon SB
Saint Thomas Island TP
Sakhalin Island RS
Sakishima JA
SaIa-y-gomez Island CI
Samoa, American AQ
Samoa (Western Samoa) WS
Samos GR
Samothraki GR
San Ambrosio Island CI
San Felix Island CI
San Marino SM
Sao Paulo Island BR
Sao Pedro Island BR
Sao Tome and Principe TP
Sarawak MY
Sardinia IT
Saskatchewan CA
Saudia Arabia SA
Scilly Islands UK
Scotland UK
Senegal SG
Serbia SR
Seychelles SE
Sharja TC
Shetland Isles UK
Shikoku JA
Sicily IT
Sierra Leone SL
Sikang CH
Singapore SN
Sinkiang CH
Slovakia LO
Slovenia SI
Snares Islands NZ
Society Islands FP
Socotra Island YS
Soloman Islands BP
Somalia (Somali Republic) SO
Sombrera SC
South Africa, Republic of SF
South America — not allocable DX
South Georgia Island FA
South Korea, Republic of KS
South Orkney Islands FA
South Sandwich Islands FA
South Shetland Islands FA
South/South East Asia SX
Southern Africa PX
Southern Pacific Islands KR
Spain SP
Spanish Africa SQ
Spitzbergen NO
Spratly Islands PG
Sri Lanka CE
St. Eustache (St. Eustatius) NT
St. Helena Island SH
St. Kitts and Nevis VI
St. Lucia ST
St. Maarten, South NT
St. Martin, North GP
St. Martin, South NT
St. Vincent and Grenadines VC
Sudan SU
Sulawesi (Celebes) ID
Sumatra ID
Sumba ID
Sumbawa ID
Suriname NS
Svalbard SV
Swan Islands HO
Swaziland WZ
Sweden SW
Switzerland SZ
Syria SY
T
Tahiti FP
Taiwan TW
Tajikistan TI
Tangier MO
Tanzania TZ
Tasmania AS
Thailand TH
Three Kings Island NZ
Tibet CH
Timor ID
Tobago TD
Togo TO
Tokelau (Union) TL
Tonga TN
Tortola VI
Tortuga Island HA
Trinidad and Tobago TD
Trinidad (In South Atlantic) (Brazil) BR
Tristan Da Cunha SH
Tromelin Island TE
Trust Territory of the Pacific Islands PS
Tsinghai CH
Tuamotu FP
Tunisia TS
Turkey TU
Turkmenistan TX
Turks and Calcos Islands TK
Tutuila Island AQ
Tuvalu TV
Tyrone UK
U
U.S. Possessions WY
Uganda UG
Ukraine UP
Urn Al Quaiwan TC
Union (Tokelau) TL
Union Island (Windward Islands) VC
United Arab Emirates TC
United Kingdom UK
Uruguay UY
Uzbekistan UZ
V
Vancouver Island CA
Vanuatu NH
Vatican City VT
Venezuela VE
Vietnam VM
Virgin Gorda VI
Virgin Islands of the U.S. VQ
W
Wake Island WQ
Wales UK
Wallis and Futuna WF
Walpole Island NC
West Bank WE
West Indies CJ
West Irian ID
West New Guinea ID
West/Central Africa — not allocable NX
Western Sahara WI
Western Samoa (Samoa) WS
Wight, Isle of UK
Windward Islands VC
Y
Yemen Arab Rep. (Yemen) YM
Yukon CA
Z
Zaire(Aka Congo) CG
Zambia ZA
Zimbabwe ZI

Form 8594, Asset Acquisition Statement

Introduction
(1) This section details SOI requirements for the editing/test resolution of Form 8594, Assets Acquisition Statement.
(2) The Form 8594 is available in the form selection screen. If you select it the system will generate a pop-up box before the first sub asking "How many 8594’s are attached ?" , you should edit the number of original Forms 8594 attached and then proceed to edit the five largest forms. To determine which five forms to edit please use the Total Sales Price, Part I, line 3.
(3) The Form 8594 has been revised as of October 2002 and the edit screen has been updated to reflect the revision. Two new asset classes have been added after class II and all subsequent classes have been re-numbered. If the taxpayer files an 1998 version of the form you will need to follow the instruction on paragraph 9 of the introduction.
(4) In general, both the seller and the buyer of a group of assets that makes up a trade or business are required to file Form 8594 to report such a sale. Typically, taxpayers attach Form 8594 to their Federal Income Tax return for the year in which the sale date occurred. However, if the amount allocated to an asset is increased or decreased after a Form 8594 is filed, the seller and/or buyer must complete Parts I and III of a new Form 8594 and attach the form to their Federal tax form for the year in which the increase/decrease occurred. For purposes of the corporate study our main user of the data, the Office of Tax Analysis, requests that only originally filed Forms 8594 be edited. Consider a Form 8594 to be original if it contains information in Parts I and II only (if only Part I is present then consider Form 8594 as original). An original Form 8594 should also have a Date of Sale within the tax year (accounting period) the company is filing for. If the taxpayer has entered information in Parts I and IIIconsider this an amended Form 8594 (reporting increases/decreases in the amount allocated to any assets) and do not edit the form. It the taxpayer has completed Parts I and II of a Form 8594 but the Date of Sale is outside the correct accounting period you should not edit this Form, you should photocopy it and send it to the National Office along with the SCPL and the first page of the return. If the taxpayer has completed Parts I and III or Parts I, II, and III you do not need to send a photocopy to National Office. Since outdated Forms 8594 are not considered original do not count them when answering the Number of Forms 8594 question. For initial returns only: If the taxpayer has filed Form(s) with Date of Sale after the Date of Incorporation but before the beginning accounting period edit and count those forms as originals. If the taxpayer has filed Form(s) with Date of Sale before the Date of Incorporation please contact National Office.
(5) If the taxpayer has attached a schedule of sales and purchases instead of actual Forms 8594, count each sale or purchase as one Form 8594. If a company files as a buyer (seller) an original Form 8594 (Part I, II, completed) and an original Form 8594 with " see attached schedule" that includes three different transactions, then you should edit four different original Forms 8594. If a schedule is attached, please try to edit each Form 8594 as complete as the information given by the taxpayer allows you to, do not omit any information. Try to distinguish between a single transaction with two parts and two different transactions. Each transaction should have different seller (buyer) and/or date of sale and/or sales price. Please, be sure that the number of original Forms 8594 matches the number you have edited in the number of Forms 8594 question.
(6) The taxpayer may attach multiple original Forms 8594 as a buyer and/or multiple Forms 8594 as a seller. To minimize the number of original Forms 8594 edited for a particular tax return, only the five largest Forms 8594 (in terms of total sales price Part I, Line 3) are abstracted.

Note:

If Part I, Line 3 is blank, but there is an amount reported in Part II Line 4, Total, consider Total Sales Price as zero. These two figures are not required to be equal and OTA only wants to see the original reported amounts. If the taxpayer has completed Part I of Form 8594 only, edit the Form 8594 as an original one. It other parts of the Form are completed be sure that you distinguish between original and amended Forms 8594. Count and edit only originally filed Forms 8594. Do not edit a fully completed Form 8594 (Parts I, II completed) instead of a partially completed Form 8594 (Part I only completed) with a higher total sales price.

(7) Multiple Forms 8594 for a single EIN will be captured using a SUB sequence procedure, similar to the calcscreen feature. A SUB number will automatically be assigned and displayed for each Form 8594 of a particular EIN.
(8) As it was previously mentioned, Form 8594 is available on the form selection screen. Although there is a process allowing you to change your entered number of official Forms 8594, pre-editing the return may save valuable time. If you select Form 8594 in the form selection screen the system will not allow you to answer zero in the pop up question "How many 8594’s are attached" . If you do not want to edit any Forms 8594 you have to enter one, to get out of the pop up box, and then go to form selection and deselect the form. Keep in mind that the OTA is only interested in originally filed Forms 8594 having the five largest sales prices.
The question "How many 8594’s are attached " will pop up before you start editing the first sub. The NUM-F8594 question will be available on any sub and any field by pressing [F8]. If you want to exit the editing process you can so by pressing [ESC], as used in the other screens. Following is a set of possible scenarios that you may encounter while editing the Form 8594:
a. If you pre-edit the return and locate between one and five original Forms 8594, your answer to the number of Forms 8594 question will be between one and five. The system will generate between one and five blank Forms 8594 sub screens for edit, the number of subs edited will equal the number of original Forms 8594 you edited in the pop-up box question (NUM-F8594). For example: if you answered 3 in the number of Forms 8594 question, after you edit the third sub the system will take you to the next selected schedule /form.
b. If you pre-edit the return and locate more than five original Forms 8594, your answer to the number of Forms 8594 question will be the actual number of original Forms 8594 filed, but the system will only generate five blank Forms 8594 sub screens for edit. You will then edit only the five largest Forms 8594 in terms of sales price. In this case the number of generated and edited sub screens will not match the number you entered on the pop-up box question.
c. If your response to the question "How many 8594’s are attached" is 2, the system will automatically generate 2 blank Form 8594 subs to be edited. As you begin working the forms, you realize that there are actually 3, not 2 official Forms 8594 attached. In this case, all you need to do is press [F8] and the number of Forms 8594 question will pop up. Then you can change your answer to 3 and the system will allow you to edit 3 subs.
d. If your response to the question on the "How many 8594’s are attached" is 3, the system will automatically generate 3 blank Form 8594 subs to be edited. As you begin working the forms, you realize that there are only 2, not 3 official Forms 8594 attached. Again in this case you can press [F8] and change your answer to the number of Forms 8594 question to 2. Next the system will give you the following message "You need to remove the subs greater than the number indicated here. Use the [F5] key to remove all the extra subs." After you hit the [ENTER] key or click the [OK] button using the mouse the system takes you to the last sub edited. If you hit [F5] the third sub will be deleted, but if you want to delete one of the other subs, say the first sub, you can do so by pressing the [PAGE UP] key twice and then the [F5] key once.
(9) There are seven asset classes which may be transferred according to Part II of the Form 8594.
a. Class I — Includes cash, demand deposits, and similar accounts in banks, S & L associations and other depository institutions.
b. Class II — Includes certificates of deposit, U.S. Government securities, readily marketable stock or securities, foreign currency, etc.
c. Class III — Includes assets that the taxpayer marks-to-market at least annually for Federal income tax purposes and debt instruments, including accounts receivable.
d. Class IV — Includes stock in trade of the taxpayer or other property of a kind that would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business.
e. Class V — Includes all tangible/intangible assets not listed in classes I, II, III, IV, V or VII. Examples include furniture and fixtures, land, buildings, equipment, a covenant not to compete.
f. Class VI — Includes all amortizable section 197 intangible assets, except goodwill and going concern value.
g. Class VII — Includes section 197 intangibles in the nature of goodwill and going concern value.
If the taxpayer files an original 1998 revision year Form 8594, all amounts reported as Class III should be edited as Class V and all amounts reported as Classes IV and V should be edited as Class VI and VII. If the taxpayer files an original 1998 revision year Form 8594 with attachments that provide specific information about the assets transferred use that information to classify the assets according to the guidelines provided above.
(10) The system will place the subs in descending order (in terms of Total sales price Part I, Line 3) after the last sub has been edited. So if the return has five or less subs no pre-editing is necessary. But if the return has more than five subs it is imperative that you pre-edit before you begin working the return. The five largest original Forms 8594 (in terms of Total sales price Part I, Line 3) should be edited.
Important: If Part I, Line 3 Sales Price is zero but there is an amount reported in Part II, Total Price, do not change the amount reported in Part I, Line 3. These two amounts are not required to be equal, and for OTA's purposes, they want to see any reported differences in these two amounts.
(11) This exhibit contains specific instructions for the editing of the Form 8594 items and resolution of the associated tests.
Data Item Line Reference
Page 1, IDENTIFYING INFORMATION
Corporation Name Page 1
Editing Instructions:
(1) Press the [ENTER] key if the corporate name on the Form 8594 matches the corporate name on Page 1.
(2) If the corporate name on the Form 8594 differs from the corporate name on Page 1, edit the corporate name as shown on the Form 8594.
(3) If no corporate name is reported by the taxpayer on the Form 8594 edit N/A.
(4) The [F9] key will display a list of all previously edited corporation names. The key will only work if the cursor is on this field.
(5) See Exhibit 1.13.8-21(1) for general instructions for editing corporate names.
Identification Number Page 1
Editing Instructions:
(1) Press the [ENTER] key if the EIN on the Form 8594 matches the corporate EIN on Page 1.
(2) If the EIN on the Form 8594 differs from the consolidated EIN on Page 1, edit the EIN as shown on the Form 8594.
(3) It both an EIN and a SSN are reported by the taxpayer, edit the EIN.
(4) If no EIN is reported by the taxpayer on the Form 8594 press ‘9’ and [ENTER] and the system will edit the default EIN {999999999}.
(5) It should be a nine-digit number to be valid.
(6) This is a double-entry field.
(7) If you have two or more EINs, call National Office.
Purchaser/Seller Code Page 1
Editing Instructions:
(1) Enter ‘B’ for purchaser and ‘S’ for seller depending on how the corporation checked the box to identify themselves. If the taxpayer has not checked any box enter ‘N’ and make a note in the comments field. For any other entry, the message "Valid entries are ‘B’, ‘S’ or ‘N’ will be displayed."
(2) If the taxpayer files two Forms 8594 reporting the same transaction, one for a seller and one for a purchaser, then edit only the purchaserform.
(3) If both boxes have been checked, call National Office.
(4) This is a must enter field.
PART I, GENERAL INFORMATION
Name of Other Party to the Transaction Page 1, Line 1
Editing Instructions:
(1) Enter the name of the other party to the transaction if provided.
(2) See Exhibit 1.13.8-21(1) for general instructions for editing corporate names.
(3) If the name is not present or has been left blank by the taxpayer, enter N/A.
(4) If the taxpayer reports more than one Other Parties to the Transaction edit N/A. Please annotate in the comments field the number of Other Parties reported and edit as many names as possible.
(5) This is a must enter field.
Other Party’s Identification Number Page 1
Editing Instructions:
(1) Enter the nine-digit EIN (if other party is incorporated), enter SSN (if other party is a sole proprietorship or an individual).
(2) If no EIN is reported by the taxpayer on the Form 8594, or if the EIN reported is not nine digitd, press ‘9’ and [ENTER] and the system will edit the default EIN {999999999}.
(3) If the taxpayer reports more than one Other Party’s Identification Numbers to the Transaction edit the default EIN {999999999}. Please annotate in the comments field the number of Other Parties EIN’s reported and edit as many EIN’s as possible.
(4) This field is double-entry.
Date of Sale Page 1, Line 2
Editing Instructions:
(1) Enter the date in which the sale of the assets(s) took place.
(2) Enter month, day, and year of transaction by hitting the {ENTER} key after each entry.
(3) If the taxpayer has provided only the month that the transaction occurred, without reference to the day, use the last day of the month. For your convenience a Last Day Of The Month Chart has been provided for your use on the following page. Check for attachments before using this method of coding.
(4) If no date is indicated, or only the year has been given, or the month and the day have been given but no year, check the return for attachments and if none can be found press the [ENTER] key twice.
(5) If the Date of Sale is outside the tax year accounting period the company is filing for, do not edit the Form unless company is filing an initial return. Outdated Forms 8594 should be photocopied and sent to the National Office. If you have counted the outdated Form 8594 as an original one, when answering the Number of Form 8594 question, you can correct your answer by pressing [F8]. If the company has filed more than five Forms 8594 then go ahead and edit the next largest (in terms of total sales price Part I, Line 3) original Form 8594. If you are not clear of what you should do, please contact National Office. For initial returns only: If the taxpayer has filed Form(s) with Date of Sale after the Date of Incorporation but before the beginning accounting period edit and count those forms as original. If the taxpayer has filed Form(s) with Date of Sale before the Date of Incorporation please contact National Office.
(6) This field is double-entry.
FORM 8594 ASSET ACQUISITION STATEMENT
LAST DAY OF THE MONTHCHART
This chart may be used if the taxpayer has left the day blank when answering the date of sale question.
January 31
February 28 or 29 (during leap year). Leap year occurs every 4 years and can be determined by dividing year by 4, if the result is a whole number it is a leap year, otherwise it is not.
March 31
April 30
May 31
June 30
July 31
August 31
September 30
October 31
November 30
December 31
Data Item Line Reference
Total Sales Price (consideration) Part I, Line 3
Editing Instructions:
(1) Enter the dollar amount for the total sales price of this transaction.
(2) If the return has more than five subs it is imperative that you pre-edit before you begin working the return. The five largest original Forms 8594 (in terms of Total sales price Part I, Line 3) should be edited.
(3) If this field is blank and there are five or less original Forms 8594 attached, edit the form as reported (by pressing [ENTER] the system will automatically edit zero). If six or more original Forms 8594 are attached, edit only the five largest, disregarding any forms reporting zero in Sales Price, even if the reported total price (Part II, line 4) is large enough to be considered as one of the top five. If you are not sure of what you should do, please contact National Office.
(4) If the total sales price is not reported in U.S. dollars ($), contact National Office.
(5) This field must be positive. If the taxpayer reports a negative amount please contact National Office.
Class I Aggregate Fair Market Value Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the aggregate fair market value for Class I assets.
(2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
Class I Allocation of Sales Price Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the allocation of sales price for Class I assets.
(2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
Test Description
E3500 Class I Allocation of Sales Price should be less than or equal to Class I Aggregate Fair Market Value.
Correction Procedure:
(1) This field should be less than or equal to the Class I Aggregate Fair Market Value.
(2) Check the return to verify the taxpayer's entries and edited amounts for Class I Aggregate Fair Market Value and Class I Allocation of Sales Price.
(3) If this test cannot be corrected, the Accept button may be used.
Data Item Line Reference
Class II Aggregate Fair Market Value Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the aggregate fair market value for Class II assets.
(2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
Class II Allocation of Sales Price Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the allocation of sales price for Class II assets.
(2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
Test Description
E3505 Class II Allocation of Sales Price should be less than or equal to Class II Aggregate Fair Market Value.
Correction Procedure:
(1) This field should be less than or equal to the Class II Aggregate Fair Market Value.
(2) Check the return to verify the taxpayer's entries and edited amounts for Class II Aggregate Fair Market Value and Class II Allocation of Sales Price.
(3) If this test cannot be corrected, the Accept button may be used.
Data Item Line Reference
Class III Aggregate Fair Market (Tax Year 2002 Forms or later only) Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the aggregate fair market value for Class III assets.
(2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
Class III Allocation of Sales (Tax Year 2002 Forms or later only) Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the allocation of sales price for Class III assets.
(2) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
Test Description
E3510 Class III Allocation of Sales Price should be less than or equal to Class III Aggregate Fair Market Value.
Correction Procedure:
(1) This field should be less than or equal to the Class III Aggregate Fair Market Value.
(2) Check the return to verify the taxpayer’s entries and edited amounts for Class III Aggregate Fair Market Value and Class III Allocation of Sales Price.
(3) If this test cannot be corrected, the Accept button may be used.
Data Item Line Reference
Classes IV Aggregate Fair Market Value (Tax Year 2002 Forms or later only) Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the Aggregate Fair Market Value for Class IV assets.
(2) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
(3) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
Classes IV Allocation of Sales Price (Tax Year 2002 Forms or later only) Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the allocation of sales price for Class IV assets.
(2) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
(3) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
Test Description
E3511 Class IV Allocation of Sales Price should be less than or equal to Class IV Aggregate Fair Market Value.
Correction Procedure:
(1) This field should be less than or equal to the Class IV Aggregate Fair Market Value.
(2) Check the return to verify the taxpayer's entries and edited amounts for Class IV Aggregate Fair Market Value and Class IV Allocation of Sales Price.
(3) If this test cannot be corrected, the Accept button may be used.
Data Item Line Reference
Class V Aggregate Fair Market Value Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the Aggregate Fair Market Value for Class V assets.
(2) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
(3) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
Class V Allocation of Sales Price Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the allocation of sales price for Class V assets.
(2) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
(3) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
Test Description
E3512 Class V Allocation of Sales Price should be less than or equal to Class V Aggregate Fair Market Value.
Correction Procedure:
(1) This field should be less than or equal to the Class V Aggregate Fair Market Value.
(2) Check the return to verify the taxpayer's entries and edited amounts for Class V Aggregate Fair Market Value and Class V Allocation of Sales Price.
(3) If this test cannot be corrected, the Accept button may be used.
Data Item Line Reference
Classes VI and VII Aggregate Fair Market Value Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the Aggregate Fair Market Value for Class VI and VII assets.
(2) If the taxpayer has reported separate amounts for Classes VI and VII please edit the sum of the two amounts reported.
(3) If the taxpayer has filed a earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
(4) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Aggregate Fair Market Value Total to reflect the change.
Classes VI and VII Allocation of Sales Price Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the allocation of sales price for Class VI and VII assets.
(2) If the taxpayer has reported separate amounts for Classes VI and VII please edit the sum of the two amounts reported.
(3) If the taxpayer has filed an earlier revision year Form 8594 (not a 1998 or a 2002 revision year) please call National Office.
(4) This field must be positive. If the taxpayer reports a negative amount then edit it as zero and recalculate the Allocation of Sales Price Total to reflect the change.
Test Description
E3513 Classes VI and VII Allocation of Sales Price should be less than or equal to Classes VI and VII Aggregate Fair Market Value.
Correction Procedure:
(1) This field should be less than or equal to the Classes VI and VII Aggregate Fair Market Value.
(2) Check the return to verify the taxpayer's entries and edited amounts for Classes VI and VII Aggregate Fair Market Value and Classes VI and VII Allocation of Sales Price.
(3) If this test cannot be corrected, the Accept button may be used.
Data Item Line Reference
Total Aggregate Fair Market Value Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the Aggregate Fair Market Value for Total Assets Transferred.
(2) If the taxpayer has left this field blank but has entries in Classes I–VII, add the Classes together to determine the Total Aggregate Fair Market Value.
(3) This field must be positive. If the taxpayer reports a negative amount please contact National Office.
Test Description
E3514 Sales price fair market value components do not add to total.
Correction Procedure:
(1) This field should be less than or equal to the Class I, II, III, IV,V, VI, and VII Aggregate of Sales Price Fair Market Value totals.
(2) Verify the taxpayer's entry and edited amount for Total Aggregate of Sales Price Fair Market Value.
(3) If the taxpayer has left this field blank but has entries in Classes I–VII, add the Classes together to determine the Total Aggregate Fair Market Value.
(4) If this test cannot be corrected, the Accept button may be used.
Data Item Line Reference
Total Allocation of Sale Price Part II, Line 4
Editing Instructions:
(1) In Part II, Assets Transferred, enter the allocation of sales price for all assets (total) reported by the corporation.
(2) If the taxpayer has left this field blank but has entries in Class I–VII, add the Classes together to determine the Allocation of Sales Price Total.
(3) This field must be positive. If the taxpayer reports a negative amount please contact National Office.
Test Description
E3515 Sales price components do not add to total.
Correction Procedure:
(1) This field should be less than or equal to the Class I, II, III, IV, V, VI, and VII Allocation of Sales Price totals.
(2) Verify the taxpayer's entry and edited amount for Total Allocation of Sales Price.
(3) If the taxpayer has left this field blank but has entries in Classes I–VII, add the Classes together to determine the Allocation of Sales Price Total.
(4) If this test cannot be corrected, the Accept button may be used.
Data Item Line Reference
Arrangement with Seller Code Part II, Line 6
Editing Instructions:
(1) Allowable entries are ‘Y’ for the yes box and ‘N’ for the no box.
(2) If unable to determine enter ‘N’.
(3) This is a must enter field.

Form 8824, Like-Kind Exchanges

Introduction

(1) Parts I, II, and III report the exchange of business or property that are of a like kind.

(2) If one party exchanges business or investment property solely for business or investment property of a like kind from another party and no other property or money is exchanged, no gain or loss is recognized under Section 1031. Returns of this type are often identified by Part I and II filled out, the property exchanged is similar (a car for a car, a copier for a copier), and Part III is filled with 0's.
Deselect these 8824's and do not edit. If you have doubt, contact N.O.

(3) Properties are of like kind if they are of the same nature or character regardless of grade or quality.

(4) A multi-asset exchange occurs if the properties exchanged consist of more than one group of like kind properties.

(5) Edit all Forms 8824 filed (except those noted on #2 above). When you finish editing a Form 8824, you will be prompted to edit information from the next Form 8824. If you have completed editing of all of the Forms 8824, you may exit.

(6) Many times if an 8824 falls into the category of a " Multi-Asset" exchange, the taxpayer will not fill out line(s) 15-18. If you are unable to determine these lines via an attached schedule, contact N.O.

(7) This exhibit provides specific instructions for the editing of the Form 8824 items and resolution of the associated tests.

(8) If you select Form 8824 in the form selection screen, the system will not allow you to answer zero for the question "How many 8824's are attached?" If you do not want to edit any Forms 8824, you can enter '1' and then go to form selection and deselect the form. To change the number of 8824s to edit, press [F-8] or [F-12].

(9) If a summary 8824 is included and individual forms are present, only edit the individual forms. If a summary 8824 is included and no individual forms are present, please edit the summary 8824. If a summary form is included, send a copy of the summary and the attached statements to N.O.

Data Item Line Reference
Identifying Number Page 1
Editing Instructions:
(1) Enter [ENTER] if the EIN on the Form 8824 matches the corporate EIN on Page 1.
(2) If the EIN on the Form 8824 differs from the consolidated EIN on Page 1, edit the EIN as shown on the Form 8824.
(3) If multiple EIN's are provided, edit the one that matches the consolidated EIN. If no EIN matches the consolidated EIN, call National Office.
(4) If both an EIN and a SSN are reported by the taxpayer, edit the EIN.
(5) If no EIN is reported by the taxpayer on the Form 8824 edit the default EIN {999999999}.
(6) It should be a nine-digit number to be valid.
(7) This is a double-entry field.
PART I, Information on the Like-Kind Exchange
Was the exchange made with a related party? Part 1, Line 7
Editing Instructions:
(1) Enter the letter of the taxpayer response — either a, b, or c.
(2) If no box is checked and Part II is complete, enter a.
(3) If no box is checked and Part II is incomplete, enter c.
PART III, Realized gain or (loss), Recognized Gain and Basis of Like-Kind Property Received
Multi-Asset Exchange Part 3
Editing Instructions:
(1) Enter Y if the taxpayer identifies the exchange as being a "multi-asset exchange."
(2) A multi-asset exchange is defined as "An exchange which consists of more than 1 group of like kind property being exchanged or received."
Example 1: land, vehicle and cash for land and vehicle is a multi-asset exchange.
Example 2: land, vehicle and cash for only land is NOT a multi-asset exchange.
(3) If line(s) 12–18 are blank, look for an attachment with realized and recognized gains, and code as a Multi-Asset.
(4) The taxpayer should file the multi-asset exchange on an attached sheet. If this is the case, mark this box ‘Y’ and continue carefully. If you are unsure whether it is a multi-asset exchange and there is a sheet attached, enter ‘Y’.
FMV of Other Property Given Up Part 3, Line 12
Editing Instructions:
(1) When using attachments look for the key words
FAIR MARKET VALUE OF OTHER PROPERTY GIVEN UP.
Adjusted Basis of Other Property Given Up Part 3, Line 13
Editing Instructions:
(1) When using attachments look for the key words
ADJUSTED BASISBASIS GIVEN UP
Gain or (Loss) Recognized on Other Property Given Up Part 3, Line 14
Editing Instructions:
(1) This line should equal line 12 less line 13.
Test Description
E2097 Line 14 does not equal the expected amount.
Correction Procedure:
(1) Gain or (loss) recognized on other property given up should equal line 12 less line 13. Check the amounts on these lines.
(2) If this test cannot be corrected, the Accept button may be used.
Cash Received, FMV of Other Property Received Part 3, Line 15
Editing Instructions:
(1) When using attachments look for the key words
CASH RECEIVED or
FAIR MARKET VALUE OF OTHER PROPERTY GIVEN UP.
FMV of Like-Kind Property Received Part 3, Line 16
Editing Instructions:
(1) When using attachments look for the key words
FAIR MARKET VALUE OF LIKE-KIND PROPERTY RECEIVED
Add Lines 15 and 16 Part 3, Line 17
Editing Instructions:
(1) This should be the sum of lines 15 and 16.
Test Description
E2100 Line 17 does not equal expected amount.
Correction Procedure:
(1) Line 17 should equal the sum of lines 15 and 16. Check the amounts in these fields.
(2) If this test cannot be corrected, the Accept button may be used.
Adjusted Basis of Like-Kind Property Part 3, Line 18
Editing Instructions:
(1) When using attachments look for the key words
ADJUSTED BASIS or
BASIS GIVEN UP
Realized Gain or (Loss) Part 3, Line 19
Editing Instructions:
(1) Realized gain or (loss) should equal line 17 less line 18.
Test Description
E2105 Line 19 does not equal the expected amount.
Correction Procedure:
(1) Realized gain or (loss) should equal line 17 less line 18. Check the amounts in these lines and line 19.
(2) If this test cannot be corrected, the Accept button may be used.
Enter the smaller of line 15 or line 19, but not less than zero Part 3, Line 20
Editing Instructions:
(1) This line should be the smaller of lines 15 or 19. It should not be less than zero.
Test Description
E2110 Line 20 does not equal the expected amount.
Correction Procedure:
(1) The gains shown in line 20 should equal the smaller of lines 15 and 19, but not less than zero.
(2) Check the amounts in these lines.
(3) If this test cannot be corrected, the Accept button may be used.
Ordinary Income Under Recapture Rules Part 3, Line 21
Editing Instructions:
(1) If there are any questions about the amounts in line 21, check Form 4797, line 16 and identify the amounts from here reported on the Form 4797.
Subtract line 21 from line 20 Part 3, Line 22
Recognized Gain Part 3, Line 23
Test Description
E2115 Line 23 does not equal the expected amount.
Correction Procedure:
(1) Line 23 should equal the sum of lines 21 and 22.
(2) Check the amounts in these lines.
(3) If this test cannot be corrected, the Accept button may be used.
Deferred Gain or (Loss) Part 3, Line 24
Test Description
E2120 Line 24 does not equal the expected amount.
Correction Procedure:
(1) If line 19 is less than zero, a loss, Line 24 should equal line 19. Otherwise, Line 24 should equal line 19 less line 23.
(2) If this test cannot be corrected, the Accept button may be used.
Basis of Like-Kind Property Received Part 3, Line 25
Test Description
E2125 Line 25 does not equal the expected amount.
Correction Procedure:
(1) Line 25 should equal the sum of lines 18 and 23, less line 15.
(2) If this test cannot be corrected, the Accept button may be used.

Form 4626, Alternative Minimum Tax — Corporations

Introduction

(1) All of the tests associated with the Form 4626 are Error Tests and can be test released. In general, we want to correct any obvious taxpayer errors, such as mathematical or transcription mistakes. However, if the form is correctly filed and balances but there is confusion as to what the taxpayer intended, we do not want to make arbitrary changes. An example of this may be a taxpayer writing in an adjustment item not listed on the form and labeling it as "Other" . This difference would cause a test to read out, but since the difference is due to a unique situation referred to by the taxpayer, rather than an error, the test could be accepted. Be careful to edit the correct Form 4626. Forms 1118, 4562, and 4797 may have a Form 4626 attached, however, the only Form 4626 that should be edited is the one that corresponds to Schedule J, Line 4.

(2) If Revenue Processing corrects an obvious taxpayer error, edit in accordance with the changes. If Revenue Processing changes do not seem correct, edit the form as the taxpayer completed it. If Revenue Processing changed line 14, Alternative Minimum Tax (and also changed the corresponding amount on the Schedule J), correct the return and send National Office a copy of the Form 4626 and the first four pages of the return. If Revenue Processing changes line 1 but does not carry the change through the rest of the form, edit the form as the taxpayer completes it, even if it appears to be an obvious taxpayer error. If there is any doubt on what items to edit on a giant return, contact National Office.

(3) Line 5 Total — When the return is not a member of a controlled group, and after combining lines 3 and 4e, the result is zero, or less than zero, enter zero or the negative amount and STOP HERE. Enter zeros on the remaining lines of the Form 4626. This return is not subject to the alternative minimum tax. Members of controlled groups may still be subject to alternative minimum tax based on the way the group reports and our users want us to edit all money amounts reported on lines 6 through 14. The corporation is a member of a controlled group if the control group code is ‘Y’ See Exhibit 1.13.8-22 for instructions for editing "Control Group Code."

(4) Under Section 38(c) taxpayers have been reducing the amount of Alternative Minimum Tax (AMT) reported on the Schedule J. This may also be referred to as an investment tax credit (ITC) adjustment or empowerment zone employment credit (EZE) adjustment in the case that a taxpayer did not refer to the specific lR Code Section. The reduction is usually reported by way of a margin entry on the Form 4626 or the Schedule J. An example of what may be shown on Form 4626 is line 14 (15) has an amount of $18,000 but there is a margin entry showing (Sec 38(c) Adjustment) AMT = $16,000. This $16,000 is carried forward to the Schedule J. The Sec 38(c) adjustment is then $2000 ($18000 - $16000). If the 38(c) adjustment is not shown on Form 4626, then it will be on the Schedule J, line 4 (line 9 for 1999 Forms), dotted line. The Schedule J will usually show the money amount they are reducing their AMT by on the dotted line next to AMT. Example: Sec 38(c) 2000.

(5) Occasionally, taxpayers will provide two worksheets instead of the Form 4626, the Statement of Consolidated Alternative Minimum Tax and the Statement of Adjusted Current Earnings. When there is no Form 4626 and these statements are provided, regardless of whether AMT is present, please use the guides on the last two pages of this exhibit, along with the instructions in this exhibit, to edit the amounts. If after creating the form, the Alternative Minimum Tax amount (line 14) does not correspond with the AMT provided by the taxpayer in Sch J, then please call National Office.

(6) If a taxpayer provides annualized data for the 4626, and line 14 is 0, please edit as the taxpayer has reported. If there is an amount on line 14, then use the amount provided by the taxpayer on line 5 to edit the rest of the form, making changes where necessary. However, if using the amount on line 5 causes a change to line 14, then edit as the taxpayer reported.

(7) If the taxpayer makes reference to a small business exemption or IRC Section 55(e) AND has no amount on line 14(15), please deselect the form.

(8) In general, taxpayer reporting should be used to edit this form.

(9) This exhibit provides specific instructions for the editing of the Form 4626 items and resolution of the associated tests.

(10) The line entry for the Alternative Minimum Tax has been eliminated from the 2002 Form 1120-A, and all subsequent lines have been renumbered. 1120-A returns reporting an amount for AMT have been instructed to use Form 1120. Note: The line entry for AMT will still be present for revision year 2001 filers. Please contact National Office if an 1120-A files a 4626.

Data Item Line Reference
Taxable Income Before Net Operating Loss Deduction Line 1
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Depreciation of Post-1986 Property Line 2a
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Amortization of Certified Pollution Control Facilities Line 2b
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Amortization of Mining Exploration and Development Costs Line 2c
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Amortization of Circulation Expenditures Line 2d
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Adjusted Gain or Loss Line 2e
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Long-Term Contracts Line 2f
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Merchant Marine Capital Construction Funds Line 2g
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Section 833(b) Deduction (Blue Cross, etc.) Line 2h
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Tax Shelter Farm Activities Line 2i
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Passive Activities Line 2j
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Loss Limitations Line 2k
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Depletion Line 2l
Editing Instructions:
(1) If the corporation reports this item as negative, and uses it as a negative, edit this field as a negative number.
Tax-Exempt Interest from Private Activity Bonds Line 2m
Editing Instructions:
(1) If the corporation reports this item as negative, and uses it as a negative, edit this field as a negative number.
Intangible Drilling Costs Line 2n
Editing Instructions:
(1) If the corporation reports this item as negative, and uses it as a negative, edit this field as a negative number.
(2) If an amount is present here, please take note that intangible drilling costs should be present in Other Costs from the Schedule A and/or Other Deductions from the Income and Deduction Schedule.
Other Adjustments Line 2o
Editing Instructions:
(1) If the corporation reports this item as negative and uses it as a negative, edit this field as a negative number.
Taxable Income, Total Adjustments and Tax Preference Items Line 3
Editing Instructions:
(1) This field should be equal to the sum of lines 1 through 2o.
Test Description
E038 Taxable Income, Total Adjustments and Tax Preferences Items are not equal to the sum of its components.
Correction Procedure:
(1) This field should be equal to the sum of lines 1 through 2o.
(2) Check the return to verify the taxpayer’s entries and edited amounts for Taxable Income Before Net Operating Loss Deduction, and Total Adjustments and Preference items.
(3) Use the "Difference" amount to help pinpoint possible editing errors.
(4) If this test cannot be corrected, the Accept Button can be used.
Adjusted Current Earnings Line 4a
Editing Instructions:
(1) Lines 4a thru 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
(2) If the corporation reports this item as a negative and uses it as a negative, edit this field as a negative number.
Alternative Minimum Taxable Income Less Adjusted Current Earnings Line 4b
Editing Instructions:
(1) Lines 4a thru 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
(2) Line 4b should be equal to line 4a minus line 3.
(3) If the corporation reports this item as a negative and uses it as a negative, edit this field as a negative number.
Test Description
E041 Line 4b is not equal to computed amount.
Correction Procedure:
(1) Line 4b should equal line 4a minus line 3.
(2) Returns filing forms 1120-REIT and 1120-RIC have been excluded from this test.
(3) Check the return to verify the taxpayer's entries and edited amounts for Adjusted Current Earnings, and Alternative Minimum Taxable Income.
(4) Use the "Difference" amount to help pinpoint possible editing errors.
(5) If this test cannot be corrected, the Accept Button may be used.
75% of Adjusted Current Earnings Adjustment Line 4c
Editing Instructions:
(1) This field must be positive.
(2) Please consult the taxpayer amount from the proper line on the form.
(3) Lines 4a thru 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
(4) If this amount is negative, please enter the absolute value of the amount.
Test Description
E042 Line 4c is not equal to computed amount.
Correction Procedure:
(1) Line 4c should be equal to 75% of line 4b.
(2) Check the return to verify the taxpayer's entry for line 4b.
(3) Use the "Difference" amount to help pinpoint possible editing errors.
(4) If this test cannot be corrected, the Accept Button can be used.
Adjusted Current Earnings Excess Line 4d
Editing Instructions:
(1) Lines 4a through 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
(2) If any of lines 4a through 4e are present, than this is a must enter field. If line 4d is blank, enter [Enter].
Adjusted Current Earnings Adjustment Line 4e
Editing Instructions:
(1) Lines 4a thru 4e should not be edited for Form 1120-REIT and Form 1120-RIC returns.
(2) If line 4a thru 4e is a positive, then line 4e should be positive or zero. If line 4b is a negative, then line 4e should be negative or zero.
Test Description
E043 Line 4e is not equal to the absolute value of line 4c.
Correction Procedure:
(1) This field should be equal to the amount on line 4c if you entered a positive number or zero on line 4b. Line 4e should also be positive.
(2) Check the return to verify the taxpayer's entries for lines 4b, 4c, and 4e.
(3) If this test cannot be corrected, the Accept Button can be used.
Test Description
E044 The absolute value of line 4e is not equal to the smaller of line 4c or the absolute value of line 4d or if 4e is positive.
Correction Procedure:
(1) This field should be equal to the smaller of line 4c or line 4d entered as a negative number if you entered a negative amount on line 4b.
(2) Check the return to verify the taxpayer's entries for lines 4c, 4d, and 4e.
(3) If this test reads out because 4e is positive, and the sum of lines 3 and 4e equals line 5 and line 5 is greater than 2 million then please contact National Office, else accept this test.
(4) If this test reads out because 4e is positive, and the sum of lines 3 and 4e does NOT equal line 5, try the equation using 4e as a negative. If the equation balances, change line 4e to a negative.
(5) If this test reads out because line 4d is negative and the corporation has Alternative Minimum Tax greater than 0, enter a comment in the comment screen, send the Form 4626 and the first four pages of the return to Gabe Schneider at the National Office, and accept the test.
(6) If this test cannot be corrected, the Accept Button can be used.
Line 5 Total Line 5
Editing Instructions:
(1) This field should equal the sum of lines 3 and 4e. Enter the amount on line 5 whether positive or negative.
(2) If the above result is zero or less than zero, enter the computed amount. STOP HERE if the corporation is not a member of a controlled group (the corporation is not subject to the alternative minimum tax). Continue to edit the form if the return is a member of a controlled group. Go to the next form by pressing the down arrow key to zero fill the remaining lines of the Form 4626.
Test Description
E046 Line 5 is not equal to the computed amount.
Correction Procedure:
(1) This field should equal the sum of lines 3 and 4e.
(2) Use the "Difference" amount to help pinpoint possible editing errors.
(3) If test reads out because line 5 is negative, or the taxpayer puts a zero on line 5, enter the computed amount and STOP HERE (by entering zeros on the remaining lines of the Form 4626) if the corporation is not a member of a controlled group. Do not edit any more lines on this form. Proceed to the next form.
(4) If the taxpayer has provided annualized data see page 26-2(6).
(5) If this test cannot be corrected, the Accept Button can be used.
V027 Company is not a member of a controlled group and Line 5 is Zero or less.
Correction Procedure:
(1) Please check to make sure the return is a member of a controlled group.
(2) Check to make sure that taxpayer entry has been keyed in correctly.
(3) If both of these items are correct STOP HERE and proceed to the next form for editing.
Alternative Tax Net Operating Loss Deduction Line 6
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(3) This field must be positive.
(4) This field is limited to 90% of line 5.
(5) If the corporation reports this item as a negative but uses it as a positive, edit the absolute value of the amount.
(6) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call Gabe Schneider at National Office.
Test Description
E055 Alternative Tax Net Operating Loss Deduction exceeds limitation.
Correction Procedure:
(1) This test will fail when line 5 is greater than zero and line 6 is greater than 90% of line 5.
(2) Check the return to verify taxpayer's entries and edited amounts for line 5 Total and Alternative Tax Net Operating Loss Deduction.
(3) Use the "Difference" amount to help pinpoint possible editing errors.
(4) If this test cannot be corrected, the Accept Button can be used.
Alternative Minimum Taxable Income Line 7
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(3) This field must be positive.
(4) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call Gabe Schneider at National Office.
Test Description
E060 Line 7 is out of balance.
Correction Procedure:
(1) This field should be equal to line 5 minus line 6.
(2) Check the return to verify the taxpayer's entries and edited amounts for line 5 Total, Alternative Tax Net Operating Loss Deduction, and Alternative Minimum Taxable Income.
(3) Use the "Difference" amount to help pinpoint possible editing errors.
(4) If the taxpayer has provided annualized data see page 26-2(6).
(5) If this test cannot be corrected, the Accept Button can be used.
Exemption One Line8a
Editing Instructions:
(1) An amount should be on this line when line 7 is less than $310,000.
(2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(3) This field should be positive. Do not edit this field if the corporation reports this item as a negative and uses it as a negative and Alternative Minimum Tax is 0 or less. Otherwise, call National Office.
(4) This field is edited and not generated because members of controlled groups must take into account AMTI line 7 for all members of its controlled group and the decrease of the tentative exemption amount must be divided equally among the members unless the members consent to an unequal allocation. Members must subtract their share of the $150,000 from the members share of the combined AMTI and enter the difference on line 8a.
(5) If the 4626 is being edited off of a worksheet, this field should be computed by subtracting $150,000 from the amount on line7 if the company is a member of a control group.
Exemption Amount Line 8c
Editing Instructions:
(1) This field must be positive and should be zero if line 7 is $310,000 or more.
(2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(3) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call National Office.
(4) If the amount is being edited off of a worksheet and no other information is available, line 8b(9b) can be subtracted from $40,000 to generate this field.
Test Description
E065 Exemption amount is out of balance.
Correction Procedure:
(1) This test will fail when line 7 is greater than zero and less than $310,000, and line 8c is not equal to the greater of $40,000 minus line 8b or zero.
(2) Check the return to verify the taxpayer's entries, edited and generated amounts for line 8c, and (Generated) line 8b.
(3) Use the "Difference" amount to help pinpoint possible editing errors.
(4) If this test cannot be corrected, the Accept button can be used.
Alternative Minimum Tax Foreign Tax Credit Line 11
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(3) This field must be positive.
(4) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call National Office.
Tentative Minimum Tax Line 12
Editing Instructions:
(1) This field must be positive.
(2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(3) If the corporation reports this item as a negative and uses it as a negative, do not edit this field if Alternative Minimum Tax is 0 or less. Otherwise, call National Office.
Test Description
E070 Tentative Minimum Tax is out of balance.
Correction Procedure:
(1) This field should be equal to line 10 minus line 11.
(2) Check the return to verify the taxpayer's entries and edited amounts for (Generated) line 10, Alternative Minimum Tax Foreign Tax Credit and Tentative Minimum Tax.
(3) Use the "Difference" amount to help pinpoint possible editing errors.
(4) If line 10 minus line 11 is negative, and Alternative Minimum Tax is 0 or less, make line 12 zero and accept the test.
(5) If the taxpayer has provided annualized data see page 26-2(6).
(6) If this test cannot be corrected, the Accept button can be used.
Income Tax Before Credits Except Foreign Tax Credit and Possessions Tax Credit Line 13
Editing Instructions:
(1) This field must be positive.
(2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(3) If the corporation reports this item as a negative but uses it as a positive, edit the absolute value of the amount.
(4) If this line is blank, calculate Income Tax minus the sum of Foreign Tax Credit and Possessions Tax Credit (for the Form 1120, this equation would be line 3 - (line 6a + line 6b), and line 3 - (line 4a + line 4b) for 1999 Forms). If using the Schedule J computation instead of the amount reported on line 13(14) of this form resolves test E077, enter the calculated amount in line 13.
Section 38(c) Adjustment Margin
Editing Instructions:
(1) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(2) Under IR Code Section 38(c) taxpayers have been reducing the amount of alternative minimum tax (AMT) reported on the Schedule J. We will edit this amount on this line. We will not be including this amount in the total tax adjustment field. Edit this amount when it is present near the dotted line on line 14 or on the dotted line of Line 4 (line 9 for 1999 Forms) of the Schedule J.
(3) If the amount on Form 4626 is larger than the amount on line 4 (line 9 for 1999 Forms) of the Schedule J, check to see if the difference is due to IR Code Section 38(c). It may also be referred to as:
• EZE
• Investment tax credit adjustment
• Empowerment zone employment credit adjustment
• Section 38(c)(2)
• Section 38(c)(3)
• Section 38
If it is, edit the difference on this line. Also, check Form 3800, page 2, line 36 and Form 8844, Line 24 (line 23 for 1999 Forms). If either of these items or the sum of these items equals the difference between the Form 4626 line 14 and Line 4 (line 9 for 1999 Forms) of the Schedule J, edit the difference on this line.
(4) This field must be positive. If this amount is negative and used as a negative such that the Schedule J, line 4 (line 9 for 1999 Forms) AMT is greater than the line 14 AMT, please call National Office. If this amount is negative and used as a positive such that it reduces AMT (Schedule J, line 4 (line 9 for 1999 Forms) AMT is less than line 14 AMT), please enter the amount as a positive value.
Alternative Minimum Tax Line 14
Editing Instructions:
(1) Please consult the taxpayer amount from the proper line on the form.
(2) Press [Enter] if line 5 is 0 or less and the corporation is not a member of a controlled group.
(3) This field must be positive.
(4) If IR Code Section 38(c) adjustment is present, edit the reduced AMT onto line 14. This amount will be displayed on the Schedule J. An IR Code Section 38(c) adjustment should NEVER lower alternative minimum tax to zero. Call National Office if a 38(c) adjustment minimizes AMT to zero.
(5) If you have edited this field and Schedule J is not selected, a system message will read out. If the AMT edited is a result of editor calculations rather than taxpayer entries, please re-edit so the form is as the taxpayer filed.
(6) If the amount edited on this field does not match the amount on Schedule J and the amount was a result of taxpayer calculations rather than taxpayer entries, please re-edit so the form is as the taxpayer filed.
(7) Schedule J should never be changed to match the 4626. Call National Office if the two forms conflict.
Test Description
E077 Alternative minimum tax does not compute correctly.
Correction Procedure:
(1) This field should be equal to the greater of (line 12 minus line 13 minus the 38(c) adjustment amount) or 0.
(2) Check the return to verify the taxpayer's entries and edited amounts for: Tentative Minimum Tax, Income Tax Before Credits Except Foreign Tax Credit And Possessions Tax Credit, 38(c) adjustment and Alternative Minimum Tax.
(3) Compare Income Tax Before Credits Except Foreign Tax Credit And Possessions Tax Credit against the following equation from the Schedule J: Income Tax minus the sum of Foreign Tax Credit and Possessions Tax Credit (for the Form 1120, this equation would be line 3 - (line 6a + line 6b), and 3 - (line 4a + line 4b) for 1999 Forms). If using the Schedule J computation instead of the amount on line 13 resolves the test, enter the calculated amount in line 13.
(4) Use the "Difference" amount to help pinpoint possible editing errors.
(5) Remember that this amount will display as Alternative Minimum Tax on the Schedule J/Tax Computation screen. Check the return's Schedule J/Tax Computation to verify the amount the taxpayer carried forward.
(6) Compare the Section 38(c) adjustment to Form 3800, page 2, line 36 and Form 8844, Line 24 (line 23 for 1999 Forms). If entering the Form 3800 and/or the Form 8844 amount in the Section 38(c) adjustment line resolves this test, enter the amount there. If there is an amount on the Form 3800, line 36 and/or Form 8844, line 24 (line 23 for 1999 Forms) and it does not resolve this test, please call National Office.

Form 4626, Alternative Minimum Tax
AMT Worksheets
Statement of Consolidated Alternative Minimum Tax

Alternative Minimum Taxable Income Schedule
Reference
Combined
Amounts
Consolidated
Adjustments
Consolidated
Amounts
Taxable income or (loss) before NOI deduction Line 1
Adjustments and Preferences
Depreciation of post-1986 property Line 2a
Amortization of certified pollution control facilities Line 2b
Amortization of mining exploration and development Line 2c
Amortization of circulation expenses Line 2d
Adjusted gain or loss Line 2e
Long-term contracts Line 2f
Merchant marine capital construction funds Line 2g
Section 833(b) deduction Line 2h
Tax shelter farm activities Line 2i
Passive activities Line 2j
Loss limitations Line 2k
Depletion Line 2l
Tax-exempt interest from private activity bonds Line 2m
Intangible drilling costs Line 2n
Other adjustments Line 2o
Pre-adjustment AMTI Line 3
Adjusted Current earnings Adjustment Line 4e
Combined pre-adjustment AMTI and above amount Line 5
Alternative tax NOI deduction Line 6
Alternative Minimum Taxable Income Line 7/8
Environmental Tax

Complete the rest of the Form 4626 screen, lines 8a(9a) through 14(15), by using the Form 4626 Field Reference guide and following the line instructions on the guide. If the amount on line 14(15) that you compute does not match line 4 (line 9 for 1999 Forms) of the Schedule J within $1000, please give National Office a call.

Statement of Consolidated Adjusted Current Earnings

Adjusted Current Earnings Schedule
Reference
Combined
Amounts
Consolidated
Adjustments
Consolidated
Amounts
Pre-adjustment AMTI
ACE Depreciation Adjustment
Depreciation expense recomputed for AMT purposes
Post-1993 depreciation
Post-1989, Pre-1994 property ACE depreciation
Pre-1990 MACRS property ACE depreciation
Pre-1990 original ACRS property ACE depreciation
Sec. 168(f)(1) through (4) property ACE depreciation
Other property ACE depreciation
Total ACE Depreciation
ACE Depreciation Adjustment
Inclusion in ACE of Items Included in E&P
Tax-exempt interest income
Death benefits from life insurance contracts
All other distributions from life insurance contracts
Inside buildup of undistributed income in life insur.
Other items
Total Inclusion of Items
Disallowance of Items Not Deductible in Computing E&P
Certain dividends received
Dividends paid on preferred stock of public utilities
Dividends paid to an ESOP
Non-patronage dividends
Other items
Total Disallowance of Items
Certain Other E&P Adjustments
Intangible drilling costs
Circulation expenditures
Organizational expenditures
LIFO inventory adjustments
Installment sales
Total Other E&P Adjustments
Disallowance of loss on exchange of debt pools
Acquisition expenses of life insurance companies
Depletion
Basis adjustments
Adjusted Current Earnings Line 4a
Subtract pre-adjustment AMTI from ACE Line 4b
Adjusted Current Earnings Adjustment Line 4c

Form 8609, Schedule A — Annual Statement

Introduction

(1) Form 8609, Schedule A, Annual Statement, supports Form 8586, Low-Income Housing Credit. Multiple Forms 8609 may be attached to Form 8586. Edit only the Form 8609 with the largest amount on Line 18 (Taxpayer's Credit for Tax Years after the Election Year).

(2) This exhibit provides specific instructions for the editing of Form 8609.

Data Item Line Reference
Eligible Basis of Building Line 1
Editing Instructions:
(1) This field must be positive.
(2) Edit the amount reported by the taxpayer for Line 1.
Qualified Basis of Low-Income Building Line 3
Editing Instructions:
(1) This field must be positive.
(2) Edit the amount reported by the taxpayer for Line 3.
Test Description
E090 Qualified Basis should be less than Eligible Basis.
Correction Procedure:
(1) This test will read out if Qualified Basis (Line 3) is more than the Eligible Basis (Line 1).
(2) Line 3 should equal Line 1 multiplied by Line 2 on the form.
(3) If this test cannot be corrected, the Accept Button can be used.
Taxpayer's Credit for Tax Years After Election Years Line 18
Editing Instructions:
(1) This field must be positive.
(2) The amount edited should equal Line 16 minus Line 17. If there are amounts on these lines but no amount on line 18, compute the amount and enter in this field.
Test Description
V010 Taxpayer's Credit for Tax Years After the Election Year should be no more than 20% of the Qualified Basis of Low-Income Building.
Correction Procedure:
(1) This test will read out when Taxpayers' Credit for Tax Years After the Elections Year (Line 18) is more than 20% of Qualified Basis of Low-Income Building (Line 3).
(2) Verify the edited amounts for the Eligible Basis (Line 1), Qualified Basis (Line 3) and the Taxpayer's Credit for Tax Years after the Election Year Line 18.
(3) If the amount is in question, check what has been entered on Form 8586.
(4) If this test cannot be corrected, the Accept Button can be used.

Form 8586, Low-Income Housing Credit

Introduction

(1) The Low-Income Housing Credit is part of the General Business Credit, you should read the General Business Credit instructions in Exhibit 1.13.8-47.

(2) If the corporation claims only the Low-Income Housing Credit and the credit is not from a passive activity, has no carryforward of any credits, the corporation completes the entire Form 8586. If the corporation claims the Low-Income Housing Credit and any other general business credit, or has a carryforward, or a credit from a passive activity, the corporation completes Part I, Lines 1 through 6 on Form 8586. After completing Part I, the current year Low Income Housing Credit amount (Line 6) is transferred to Form 3800, General Business Credit (Line 1f) and combined with other general business credits to total to the current year general business credit. Part II of Form 3800, general Business Credit is used to figure the tax liability limitation.

(3) Members of controlled groups apportion the allowed Low-Income Housing Credit among themselves. One group member completes Part I, Lines 1–6 to figure the group credit. On separate Forms 8586, that member and every other member skips Lines 1–5 and enters its share of the group credit on Line 6. Each member then completes the rest of the form to figure its own credit. When a corporation indicates they are a member of a controlled group, edit only those amounts attributable to that corporation.

(4) This exhibit provides specific instructions for the editing of Form 8586.

Data Item Line Reference
Number of Forms 8609 Attached Line 1
Editing Instructions:
(1) This field must be positive.
(2) This field requires double entry key verification.
(3) Enter the number of Forms 8609 reported on this line, but not more than 9999.
Eligible Basis of Building(s) Line 2
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported on Line 2.
Qualified Basis of Low-Income Building(s) Line 3a
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported on Line 3a.
Test Description
E095 Qualified Basis should be less than Eligible Basis.
Correction Procedure:
(1) This test will read out if Qualified Basis more than Eligible Basis.
(2) Verify edited amount for Eligible Basis (Line 2) and Qualified Basis (Line 3a).
(3) If this test cannot be corrected, the Accept Button may be used.
Credit for the Year Line 4
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported on Line 4.
Test Description
V015 Credit for the Year should not be greater than 20% of Qualified Basis.
Correction Procedure:
(1) This test will read out if the Credit for the Year is greater than 20% of the Qualified Basis.
(2) Check the edited amounts for Credit for the Year (Line 4) and Qualified Basis of Low-Income Building(s) (Line 2).
(3) If this test cannot be corrected, the Accept may be used.
Housing Credits from Flow-through Entities Line 5
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount on Line 5.
Current Year Low-Income Housing Credit Line 6
Editing Instructions:
(1) This field must be positive.
(2) Please consult the taxpayer amount from the proper line on the form.
(3) Members of controlled groups apportion the allowed Low-Income Housing Credit among themselves. One group member completes Part I, Lines 1–6 to figure the group credit. On separate Forms 8586, that member and every other member skips Lines 1–5 and enters its share of the group credit on Line 6. Each member then completes the rest of the form to figure its own credit. When a corporation indicates they are a member of a controlled group, edit only those amounts attributable to that corporation.
Test Description
E100 Current Year Low-Income Housing Credit (Line 6) is out of balance.
Correction Procedure:
(1) Current Year Low-Income Housing Credit should equal:

+ Credit for the Year (Line 4)
+ Housing Credits from Flow-through Entities (Line 5)
(2) Verify the above amounts and Current Year Low-Income Housing Credit (Line 6) with those reported on the tax return.
(3) Use the "Out Of Balance By" amount to pinpoint possible errors.
(4) If this test cannot be corrected, the Accept Button may be used.

Form 6478, Alcohol Fuel Credit

Introduction

(1) Form 6478 is used to claim the Alcohol Fuel Credit. Corporations rarely claim the Alcohol Fuel Credit. It is based on the number of gallons of alcohol or alcohol mixtures used as fuel in trade or business. This credit is part of the General Business Credit, you should read the General Business Credit instructions in Exhibit 1.13.8-47.

(2) If the corporation claims only the Alcohol Fuel Credit and the credit is not from a passive activity, has no carryforwards of any credits, the corporation completes the entire Form 6478. If the corporation claims the Alcohol Fuel Credit and any other General Business Credit or has a carryforward of any credits, or a credit from a passive activity, the corporation completes lines 1 through 11 on Form 6478. After completing Part I, the current year Alcohol Fuel credit amount is transferred to Form 3800, General Business Credit, (Line 1d) and combined with the other current year credits to total to the current year General Business credit. Part II of Form 3800, General Business Credit is used to figure the tax liability limitation.

(3) This exhibit provides specific instructions for the editing of Form 6478.

Data Item Line Reference
Qualified Ethanol Fuel Production Line 1(c)
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported on Line 1(c).
Add Lines 1, 2a and 2b in Both Columns Line 3(c)
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported on Line 3(c). The amount reported should equal lines 1, 2a and 2b column (c). Compute the amount if none is reported.
Add Lines 7a through 7c, Column (c) Line 8
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer on Line 8.
Current Year Credit Less Excise Tax Line 9
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported on Line 9. The amount should equal line 3(c) minus line 8. Compute the amount if none is reported.
Test Description
E105 Current Year Credit Less Excise Tax Benefit (Line 9) is out of balance.
Correction Procedure:
(1) Current Year Credit Less Excise Tax Benefit should equal:

+ Line 3(c), (Lines 1, 2a and 2b in both columns)
- Line 8, (Lines 7a through 7c, column (c))
(2) Verify the above amounts and Current Year Credit Less Excise Tax Benefit (Line 9) with those reported on the tax return.
(3) Use the "Out Of Balance By" amount to pinpoint possible editing errors.
(4) If this test cannot be corrected, the Accept Button can be used.
Flow-through Alcohol Fuel Credit(s) Line 10
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported on Line 10.
Total Current Year Credit for Alcohol Used as a Fuel Line 11
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported on Line 11. This amount should equal Line 9 pIus Line 10.
(3) Please consult the taxpayer amount from the proper line on the form.
Test Description
E110 Total Current Year Credit for Alcohol Used as a Fuel is too small.
Correction Procedure:
(1) Total Current Year Credit for Alcohol Used as Fuel should equal:

+ Current Year Credit Less Excise Tax Benefit (Line 9)
+ Flow-through Alcohol Fuel Credit(s) (Line 10)
(2) Verify the above amounts and Total Current Year Credit for Alcohol Used as Fuel (Line 11).
(3) If this test cannot be corrected, the Accept Button can be used.

Form 8835, Renewable Electricity and Refined Coal Production Credit

Introduction

(1) Form 8835 is used to claim the Renewable Electricity and Refined Coal Production Credit. The credit is allowed only for the sale of electricity or refined coal produced in the United States or U.S. possessions from qualified energy resources at a qualified facility. The current year credit amount from Section A is included as part of the General Business Credit (Line 1i), you should read the General Business Credit instructions in Exhibit 1.13.8-49. If the taxpayer reports current year credit on Section B, the credit is computed on the Form 8835 itself. (2) If the corporation claims the Renewable Electricity and Refined Coal Production Credit prior to October 23, 2004, then it should complete Section A. If the corporation claims the Renewable Electricity and Refined Coal Production Credit after October 22, 2004, then it should complete Section B. After completing Section A, Part I, the Renewable Electricity and Refined Coal Production Credit amount is transferred to Form 3800, General Business Credit (Line 1i) and is combined with the other general business credits to total the current year general business credit. Part II of Form 3800, General Business Credit is used to figure the tax liability limitation. If Section B is completed, the amount reported on line 40, Credit Allowed for the Current Year is and should be included on Form 3800 screen, General Business Credit, Line 19. This amount is carried to the Schedule J.

(2) If the corporation claims only the Renewable Electricity Production Credit and the credit is not from a passive activity, and has no carryforward of any credits, the corporation completes the entire Form 8835. If the corporation claims the Renewable Electricity Production Credit and any other General Business Credit or has a carryforward, or a credit from a passive activity, they complete Part I, Lines 1 through 14, Form 8835. After completing Part I, the Renewable Electricity Production credit amount is transferred to Form 3800, General Business Credit (Line 1i) and is combined with the other general business credits to total to the current year general business credit. Part II of Form 3800, General Business Credit is used to figure the tax liability limitation.

(3) This exhibit provides specific instructions for the editing of Form 8835.

Data Item Line Reference
Kilowatt-hours Produced and Sold Part 1, Line 1
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 1.
Credit before reduction. Subtract line 2 from line 1 Part 1, Line 3
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 3.
Subtract line 7 from line 3 Part 1, Line 8
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 8.
Section A Credits from Pass-Through Entities Part 1, Line 9
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 9.
Current Year Credit Part I, Line 10
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 10.
Test Description
E107 Current year credit should equal the sum of Line 8 and 9.
Correction Procedure:
(1) Verify the edited amounts for line 8 and line 9.
(2) Line 10 should equal the sum of line 8 and line 9.
(3) If this test cannot be corrected, the Accept Button can be used.
_________________________________________________________________________________________________
Section B
Data Item Line Reference
Kilowatt-hours produced and sold Part 1, Line 1
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 1.
Kilowatt-hours produced and sold after 10/22/04 and before 01/01/05 Part I, Line 2
Editing Instructions: Part I, Line
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 2.
Kilowatt-hours produced and sold after 12/2104 Part I, Line 3
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 3.
Subtract line 5 from 4 Part I, Line 6
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 6.
Tons Produced and Sold Part I, Line 7
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 7.
Subtract line 8 from 7 Part 1, Line 9
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 9.
Credit Before Reduction Part 1, Line 10
Editing Instructions:
(1) This is a generated field.
(2) This amount should be the sum of lines 6 and 9.
Multiply Line 12 by the lesser of 1/2 or line 13 Part 1, Line 14
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 14.
Subtract Line 14 from Line 10. Part 1, Line 15
Editing Instructions:
(1) This is a generated field.
(2) This amount should be equal to line 14 subtracted from line 10.
Divide Line 16 by Line 17 Part 1, Line 18
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 18.
Kilowatt-hours produced and sold Part 1, Line 19
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 19.
Subtract line 21 from 20 Part 1, Line 22
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 22.
(3) This amount should equal line 21 subtracted from line 20.
Section B Credits from Pass-through Entities Part 1, Line 23
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 23.
Add Lines 15, 22, and 23 Part 1, Line 24
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 24.
Test Description
E108 Line 24 should equal the sum of line 15, 22, and 23.
Correction Procedure:
(1) Verify the edited amounts for line 15, 22 and 23.
(2) Line 24 should equal the sum of line 15, 22 and 23.
(3) If this test cannot be corrected, the Accept Button can be used.
Renewable Electricity and Refined Coal Production Credit from Passive Activities Part 1, Line 25
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 25.
Subtract Line 25 from Line 24 Part 1, Line 26
Editing Instructions:
(1) This is a generated field.
(2) Enter the amount reported by the taxpayer for Part 1, Line 26
(3) This amount should be equal to line 25 subtracted from line 24.
Renewable Electricity and Refined Coal Production Passive Activity Credit Allowed Part 1, Line 27
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 27.
Current Year Credit Part 1, Line 29
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part 1, Line 29.
Test Description
E109 Line 29 Should Not Be Less than Line 29 through 28.
Correction Procedure:
(1) Verify the edited amounts for lines 26 through 28.
(2) Line 29 should not be less than lines 28 through 28.
(3) If this test cannot be corrected, the Accept Button can be used.
Section B--Part II Allowable Credit
Data Item Line Reference
Regular and Alternative Minimum Tax Part II, Line 32
Editing Instructions:
(1) This amount should be positive.
(2) Enter the amount reported by the taxpayer for Part II, Line 32.
Credits That Reduce Regular Tax Before the REP/RCP Credit Part II, Line 33f
Editing Instructions:
(1) This amount should be positive.
(2) Enter the amount reported by the taxpayer for Part II, Line 33f.
Net Income Tax Part II, Line 34
Editing Instructions:
(1) This amount may be reported as a positive or negative amount.
(2) Enter the amount reported by the taxpayer for Part II, Line 34.
Net Regular Tax Part II, Line 35
Editing Instructions:
(1) This amount may be reported as a positive or negative amount.
(2) Enter the amount reported by the taxpayer for Part II, Line 35.
If Line 35 is More than $25,000, Enter 25% of the Excess Part II, Line 36
Editing Instructions:
(1) This amount should be positive.
(2) Enter the amount reported by the taxpayer for Part II, Line 36.
General Business Credit Part II, Line 38
Editing Instructions:
(1) This amount should be positive
(2) Enter the amount reported by the taxpayer for Part II, Line 38.
(3) This amount should be the amount of all other allowedcredits for the current year included in the general business credit from line 19 of that form, plus Form 8884, line 21 and 8844, line 24.
REP/RCP Credit Allowed for Current Year Part II, Line 40
Editing Instructions:
(1) Enter the amount reported by the taxpayer for Part II, Line 40.
(2) The amount entered will be applied to the General Business Credit total, which will be carried to the Schedule J.
Test Description
E106 REP/RCP Credit Allowed for the Current Year does not equal the expected amount.
Correction Procedure
(1) The amount entered for line 40 should equal the smaller of line 29 or line 39 (on the return).
(2) Verify all edited amounts in Part II, allowable credit.

Form 8830, Enhanced Oil Recovery Credit

Introduction

(1) Form 8830 is used to claim the Enhanced Oil Recovery Credit. This credit is part of the General Business Credit, you should read the General Business Credit instructions in Exhibit 1.13.8-47.

(2) If the corporation claims only the Enhanced Oil Recovery Credit and the credit is not from a passive activity, and has no carryforward of any credits, the corporation completes the entire Form 8830. If the corporation claims the Enhanced Oil Recovery Credit and any other general business credit or has a carryforward of a credit, or a credit from a passive activity, they complete Part I, Lines 1 through 4 on Form 8830. After completing the Part I, the current year Enhanced Oil Recovery credit amount is transferred to Form 3800, General Business Credit (Line 1g) and combined with the other general business credits to total to current year general business credit. Part II of Form 3800, General Business Credit is used to figure the tax liability limitation.

(3) This exhibit provides specific instructions for the editing of Form 8830.

Data Item Line Reference
Qualified Enhanced Oil Recovery Cost Part I, Line 1
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 1.
Enhanced Oil Recovery Credits From Flow-Through Entities Part I, Line 3
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 3.
Total Current Year Enhanced Oil Recovery Credit Part I, Line 4
Editing Instructions:
(1) This field must be positive.
(2) Enter the amount reported by the taxpayer for Part I, Line 4.
Test Description
V020 Total Current Year Enhanced Oil Recovery Credit should equal 15% of Qualified Costs (Line 1) plus the Enhanced oil recovery credits from flow-through entities (Line 3).
Correction Procedure:
(1) If the amount that the credit is out of balance, is very small (by 1 or 2, pIus or minus), this is probably due to rounding. If this is the case, then use the Accept Button to by past the test.
(2) If the amount the credit is out of balance is greater than 2, verify the amounts for Line 1, 2, 3, and 4. Line 2, which is not edited, should equal 15% of Line 1 and also equal Line 4 minus, Line 3.
(3) If this test cannot be corrected, the Accept Button can be used.

Form 8826, Disabled Access Credit

Introduction

(1) Eligible small businesses use Form 8826 to claim the Disabled Access Credit. The credit is pat of the General Business Credit, you should read the General Business Credit instructions in Exhibit 1.13.8-47.

(2) If the corporation claims only the Disabled Access Credit and the credit is not from a passive activity, and the corporation has no carryforward of any credits, they complete the entire Form 8826. If the corporation claims the Disabled Access Credit and any other general business credit, or if the corporation has a carryforward of any credit, or a credit from a passive activity, they complete Part I, Lines 1 through 8 on Form 8826. After completing Part I, the Disabled Access credit information is transferred to Form 3800, General Business Credit (Line 1h) and combined with the other general business credits to total to current year general business credit. Part II of Form 3800, General Business Credit is used to figure the tax liability limitation.

(3) All members of a controlled group are treated as one for purposes of the credit. The group member with the most eligible access expenditures figures the group credit in Part I and skips Part II. Each member of the group skips lines 1 through 5 and enters its share of the group credit on line 6. Each member then completes the remaining applicable lines (or Form 3800, if required) on its separate form. Each member must also attach to its Form 8826 a schedule showing how the group credit was divided among all members. The members share the credit in the same proportion that they contributed eligible access expenditures. Edit the corporations share on the lines below.

(4) This exhibit provides specific instructions for the editing of Form 8826.

Data Item Line Reference
Total Eligible Access Expenditures