3.11.16 Corporate Income Tax Returns

Manual Transmittal

November 09, 2021

Purpose

(1) This transmits revised IRM 3.11.16, Returns and Documents Analysis - Corporate Income Tax Returns.

Material Changes

(1) IRM 3.11.16.2.1(2)d) - IRS Employee Contacts - Deleted "Note" per feedback from Chief Council. The information is in IRM 3.11.16.2.4, Taxpayer Advocate Service (TAS).

(2) IRM 3.11.16.2.4(1) - Taxpayer Advocate Service (TAS) - Taxpayer Bill of Rights (TBOR) content updated based on guidance from the Division Counsel/Associate Chief Counsel (National Taxpayer Advocate Program) and Branch 3 of the Associate Chief Counsel (Procedure and Administration) in the Internal Management Document (IMD) community e-mail dated March 12, 2021 (IPU 21U0474 issued 03-26-2021).

(3) IRM 3.11.16.2.4.1(2) - TAS Service Level Agreements (SLAs) - Corrected the Service Level Agreements (SLAs) location (IPU 21U0624 issued 04-19-2021).

(4) IRM 3.11.16.2.12(2) - Section 965 Returns - Changed instructions relating to tax period (IPU 21U0092 issued 01-04-2021) This instruction was superseded by the material change below.

(5) IRM 3.11.16.2.12 Title and (2) - Section 965 Returns (201712 through 202012) - Added 201712 through 202012 timeframe to title and instructions per circulation issued 06-17-2021.

(6) IRM 3.11.16.3.1(6) - Action Codes - Changed Action Codes due to temporary instructions still needed (IPU 21U0092 issued 01-14-2021).

(7) IRM 3.11.16.3.1(8) - Action Codes - Added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(8) IRM 3.11.16.3.1(10) - Action Codes - Deleted Action Code 343.

(9) IRM 3.11.16.3.2(1) - Unprocessable Conditions and Rejection of Tax Returns - Added Form 1120-ND to list of returns only processed in Ogden.

(10) IRM 3.11.16.3.4.2(2) - Issuing Correspondence - Added language for the lead to research and determine the correct action (IPU 21U1073 issued 08-31-2021).

(11) IRM 3.11.16.3.4.4(5) - Leaving Information on Answering Machines moved from IRM 11.3.2, Disclosure of Official Information, Disclosure to Persons with a Material Interest, to IRM 10.5.1, Privacy and Information Protection, Privacy Policy (IPU 21U0300 issued 02-24-2021).

(12) IRM 3.11.16.3.7(8) - Statute Returns - Added instructions to edit a CCC "W" if processing return (IPU 21U0092 issued 01-14-2021).

(13) IRM 3.11.16.3.9(1) - Amended Returns - Added new bullet for returns that appear to be a duplicate and IDRS research shows TC 150 per Servicewide Electronic Research Program (SERP) Feedback 202101722 for IRM 3.11.217 (IPU 21U0907 issued 07-02-2021).

(14) IRM 3.11.16.3.9(1) - Amended Returns - Deleted new bullet previously added in IPU 21U0907 per feedback from Course Development and OSPC (IPU 21U1073 issued 08-31-2021).

(15) IRM 3.11.16.3.10(1)(2)(3) - IRC 847 Deduction - Instructions changed to include tax period validation per LB&I Exam (IPU 21U1023 issued 08-05-2021).

(16) IRM 3.11.16.3.12 - Form 8913 - Credit for Federal Telephone Excise Tax Paid Only Tax Return - Deleted section - TETR Instructions are not applicable, over fifteen years old.

(17) IRM 3.11.16.7.7(2)c) - Short Period Returns - Editing Form 1128 with No Indication of Approval or Disapproval - Added clarification for returns coming back from Entity per feedback from Course Development.

(18) IRM 3.11.16.9.1.10(1) - CCC "J" - Section 965 - Added tax period time frame for CCC" J" per circulation issued 06-17-2021.

(19) IRM 3.11.16.9.1.22(1) - CCC "V" - Qualifying Therapeutic Discovery Project Credit - Deleted instructions for CCC "V" . Instructions are more than 10 years old.

(20) IRM 3.11.16.9.1.32(1) - CCC "6" - Section 847 Deductions - Instructions changed to include tax period validation per LB&I Exam (IPU 21U1023 issued 08-05-2021).

(21) IRM 3.11.16.9.1.34(1) - CCC "9" - Low-Income Housing Form - Revised instructions per new form revision.

(22) IRM 3.11.16.9.3(7)c) - ABLM Code and Schedule M-3 Checkbox - Deleted old instructions.

(23) IRM 3.11.16.11(2) - Return Processing - Form 1120 - Added Note to clarify instructions (IPU 21U0092 issued 01-14-2021).

(24) IRM 3.11.16.11.1 - Sequence - Form 1120 - Added Form 4797 and Form 8997 to sequencing instructions.

(25) IRM 3.11.16.11.4.8(1) - Line 9 - Net Gain or Loss from Form 4797 - Added "Note" regarding new transcription.

(26) IRM 3.11.16.11.4.8(2) - Line 9 - Net Gain or Loss from Form 4797 - Clarified instructions by adding "for Schedule D" per Course Development feedback.

(27) IRM 3.11.16.11.6.2 Title (1)(2) - Line 32 - Net 965 Tax Liability Paid for the Reporting Year - Changed title and added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(28) IRM 3.11.16.11.6.3 Title and (1) - Total Payments and Credits (Schedule J, Part III, Line 23) Line 33 - Changed title and added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(29) IRM 3.11.16.11.6.7(2) - Lines 35 and 36 - Amount Owed/Overpayment - Added table to show computation of tax for different form revisions.

(30) IRM 3.11.16.11.7(7) - Signature - Extended exception for digital signatures on certain forms (IPU 21U0300 issued 02-24-2021).

(31) IRM 3.11.16.11.7(7) - Signature - Extended "Exception" and added forms to Digital signature exception for returns filed on paper due to Covid-19 (IPU 21U00638 issued 04-21-2021).

(32) IRM 3.11.16.11.14(4) - Schedule J, Line 5c - General Business Credits - Deleted old information for Form 3468.

(33) IRM 3.11.16.11.14(4) - Schedule J, Line 5c - General Business Credits - Deleted old information for Form 6478.

(34) IRM 3.11.16.11.14(4) - Schedule J, Line 5c - General Business Credits - Added" carryforward only" for Form 8586.

(35) IRM 3.11.16.10.14.1(2) - Form 3468, Investment Credit - Deleted Line 4a. Only Line 1a applies.(IPU 21U0092 issued 01-14-2021). This section does not exist for PY2022 IRM.

(36) Deleted Section 3.11.16.10.14.1 - Form 3468, Investment Credit - Old information.

(37) IRM 3.11.16.11.14.1(1) - Form 8586, Low-Income Housing Credit - Revised instructions per new form revision.

(38) Deleted Section 3.11.16.10.14.2 - Form 6478, Biofuel Producer - Old information.

(39) IRM 3.11.16.11.14.6(1) - Schedule J, Line 5e - Form 8912, Credit to Holders of Tax Credit Bonds - Deleted old information regarding Form 8806.

(40) IRM 3.11.16.11.17.1(1) - Schedule J, Line 9a - Recapture of Investment Credit (Form 4255) - Deleted 2010 and prior instructions.

(41) IRM 3.11.16.11.17.3(1) - Schedule J, Line 9c - Interest Computation Under the Look-Back Method for Completed Long-Term Contracts (Form 8697) - Deleted 2010 and prior instructions.

(42) IRM 3.11.16.11.17.4(1) - Schedule J, Line 9d - Interest due under the look-back method (Form 8806) - Added "Detach Form 8866" to clarify instructions (IPU 21U0092 issued 01-14-2021).

(43) IRM 3.11.16.11.17.5(1) - Schedule J, Line 9e - Alternative Tax on Qualifying Shipping Activities (Form 8902) - Deleted 2010 and prior instructions.

(44) IRM 3.11.16.11.19 Title (1)(2)(3) - Reserved - Changed title and added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(45) IRM 3.11.16.11.20.2(2)(3) - Schedule J, Part III, Line 16 - Payments - Deleted 2010 and prior instructions.

(46) IRM 3.11.16.11.20.3(3) - Schedule J, Part III, Line 17 - Tax Deposited with Form 7004 - Deleted 2010 and prior instructions.

(47) IRM 3.11.16.11.20.4(2) - Schedule J, Part III, Line 18 - Withholding - Deleted 2010 and prior instructions.

(48) IRM 3.11.16.11.20.5(2) - Schedule J, Part III, Line 19 - Total Payments - Deleted 2010 and prior instructions.

(49) IRM 3.11.16.11.20.6(2)(3)(4) - Schedule J, Part III, Line 20a - Regulated Investment Co. Credit, Form 2468 - Deleted 2010 and prior instructions.

(50) IRM 3.11.16.11.20.8(4) - Schedule J, Part III, Line 20c - Reserved for Future Use - Deleted 2010 and prior instructions and clarified revision.

(51) IRM 3.11.16.11.20.9(2) - Schedule J, Part III, Line 20d - Other - Deleted 2010 and prior instructions.

(52) IRM 3.11.16.11.20.10 Title (1)(2)(3) - Reserved - Changed title and added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(53) IRM 3.11.16.11.20.11(2) - Schedule J, Part III, Line 23 - Total Payments and Credits - Deleted 2010 and prior instructions.

(54) IRM 3.11.16.11.30(1) - Schedule K, Question 25 (Form 8996 - Qualified Opportunity Fund) - Added 2020 revision line number.

(55) IRM 3.11.16.11.31(2)(3)(4) - Schedule L, Balance Sheet - Rewrote instructions to match Functional Specification Package (FSP) and Error Resolution System (ERS) IRM.

(56) IRM 3.11.16.11.31.1(1)(6)c) - Editing Schedule L, Balance Sheet - Rewrote instructions to match Functional Specification Package (FSP) and Error Resolution System (ERS) IRM.

(57) IRM 3.11.16.11.32.10(2)b)(4)e) Schedule N, Line 8 - Form 8938, Statement of Specified Foreign Financial Assets - Changed line numbers per new revision of Form 8938 and updated processable revisions.

(58) IRM 3.11.16.14(1) - Schedule D - Capital Gains and Losses - Clarified instructions to include the checkbox (IPU 21U0092 issued 01-14-2021).

(59) IRM 3.11.16.15 - Form 4797 - Sales of Business Property (Form 1120 Only) - Added section for Form 4797 transcription.

(60) IRM 3.11.16.17(1)(4) - Form 8996 - Qualified Opportunity Fund - Added new checkbox .

(61) IRM 3.11.16.18(7) - Form 1125-A - Cost of Goods Sold (Formerly Form 1120, Schedule A) - Deleted 2010 and prior instructions.

(62) IRM 3.11.16.19(1)(4) - Form 4136 - Credit for Federal Tax Paid on Fuels - Added individual form lines and created table for computation per Course Development feedback.

(63) IRM 3.11.16.24(3) - Form 3800 - General Business Credit - Deleted reference to prior year exhibit.

(64) IRM 3.11.16.25(9)a) - Form 6252 - Installment Sale Income (Form 1120 only) - Added "Note" to clarify instructions per feedback from Course Development.

(65) IRM 3.11.16.26 - Form 8997 - Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments - Added section for Form 8997 transcription.

(66) IRM 3.11.16.31.8(3) - Return Processing Code (RPC) - Added RPC "6" to Form 1120-C per Small Business Self Employed (SBSE) (IPU 21U0014 issued 01-04-2021).

(67) IRM 3.11.16.31.12(2) - Type of Organization Code - Item C - Changed valid characters for "Type of Organization Code" per FSP, and ERS Instructions (IPU 21U1004 issued 08-02-2021).

(68) IRM 3.11.16.31.12(2) - Form 1120-C - Box C - Added two sections to include instructions for Type of Corporation Code and Type of Organization Code. Both Codes have fields associated with the checkboxes in Box C. C&E instructions did not include both transcription fields. per FSP, and ERS Instructions (IPU 21U1031 issued 08-11-2021).

(69) IRM 3.11.16.31.12.1 - Type of Cooperative Code - Added two sections to include instructions for Type of Corporation Code and Type of Organization Code. Both Codes have fields associated with the checkboxes in Box C. C&E instructions did not include both transcription fields. per FSP, and ERS Instructions (IPU 21U1031 issued 08-11-2021).

(70) IRM 3.11.16.31.12.2 - Type of Organization Code - Added two sections to include instructions for Type of Corporation Code and Type of Organization Code. Both Codes have fields associated with the checkboxes in Box C. C&E instructions did not include both transcription fields. per FSP, and ERS Instructions (IPU 21U1031 issued 08-11-2021).

(71) IRM 3.11.16.31.15(1)(4) - Deductions - Lines 11 through 26c - Changed title and instructions to include Line 11. Added clarification for Paragraph (4).

(72) IRM 3.11.16.31.16(3)a)b)(11)a)b) - Tax and Payments - Lines 27 through 34 - Added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(73) IRM 3.11.16.31.23(1) - Schedule K, Question 5 - Is the Cooperative a Subsidiary in an Affiliated Group/Controlled Group - Deleted the incomplete sentence in Paragraph (1).

(74) IRM 3.11.16.32.2 - Sequence - Form 1120-F - Added Form 8997 to sequencing instructions.

(75) IRM 3.11.16.32.14.6(1) - Added clarification to paragraph (1) per Course Development feedback.

(76) IRM 3.11.16.32.16(1) - Added the line numbers for the withholding forms per Course Development.

(77) IRM 3.11.16.32.23(1) - Page 3, Question II (Form 8996 - Qualified Opportunity Fund) - Added 2020 revision line number.

(78) IRM 3.11.16.32.25(2) Table - Page 5, Schedule J - Tax Computation Tax Preference Code and Page 5, Schedule J - Lines 3, 5a, 5b, 5c, 5d and 8 - Deleted Form 8860 old information.

(79) IRM 3.11.16.32.35 - Form 8997 - Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments - Added section for Form 8997 transcription.

(80) IRM 3.11.16.34.12(1) - Tax and Payments - Lines 21 through 26 - Deleted old information for Form 6478.

(81) IRM 3.11.16.35.7(3) - Return Processing Code (RPC) - Added RPC "6" to Form 1120-L per SBSE (IPU 21U0014 issued 01-04-2021).

(82) IRM 3.11.16.35.14(3)a)b)(11)a)b) - Tax and Payments - Added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(83) IRM 3.11.16.35.14(4) - Tax and Payments - Instructions changed to include tax period validation per LB&I Exam (IPU 21U1023 issued 08-05-2021).

(84) IRM 3.11.16.37.8(3) - Return Processing Code (RPC) - Added RPC "6" to Form 1120-PC per SBSE (IPU 21U0014 issued 01-04-2021).

(85) IRM 3.11.16.37.16(2)a)b)(4)a)b) - Lines 13 through 19 - Tax Computation and Payments - Added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(86) IRM 3.11.16.37.16(3) - Tax and Payments - Instructions changed to include tax period validation per LB&I Exam (IPU 21U1023 issued 08-05-2021).

(87) IRM 3.11.16.38.1 - Sequence - Form 1120-REIT - Added Form 8997 to sequencing instructions.

(88) IRM 3.11.16.38.15(2)a)b)(8)a)b) - Tax Computation - Lines 23 through 28 - Added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(89) IRM 3.11.16.38.23 - Schedule J, Line 6 - Added new Line 6.

(90) IRM 3.11.16.38.24 - Schedule J, Line 7 - Other Taxes - Changed title to accommodate new Line 6.

(91) IRM 3.11.16.38.27 - Schedule K, Question 10 - Schedule K, Line 10 new transcription.

(92) IRM 3.11.16.38.28 - Schedule K, Question 11 - Schedule K, Line 10 new transcription.

(93) IRM 3.11.16.38.29(1) - Schedule K, Question 12 (Qualified Opportunity Fund - Form 8996) - Added 2020 revision line number.

(94) IRM 3.11.16.38.42 - Form 8997 - Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments - Added section for Form 8997 transcription.

(95) IRM 3.11.16.39.1 - Sequence - Form 1120-RIC - Added Form 8996 and Form 8997 to sequencing instructions.

(96) IRM 3.11.16.39.8(3) - Return Processing Code (RPC) - Added RPC "6" to Form 1120-RIC per UWR 364903.

(97) IRM 3.11.16.39.16(2)a)b)(9)a)b) - Page 2 - Tax and Payments, Lines 27 through 33 - Added 201712 through 202012 timeframe to instructions per circulation issued 06-17-2021.

(98) IRM 3.11.16.39.22(1) - Schedule J, Line 3d - Other Credits - Changed section title and clarified instructions to include "other credits" (IPU 21U0092 issued 01-14-2021).

(99) IRM 3.11.16.39.24(1) - Schedule K, Question 12 (Qualified Opportunity Fund - Form 8996) - Schedule J, Line 6.

(100) IRM 3.11.16.39.25 - Schedule J, Line 7 - Other Taxes - Changed title to accommodate new Line 6.

(101) (1) - Form 8996 - Qualified Opportunity Fund - Added section for Form 8996 transcription.

(102) IRM 3.11.16.39.40 - Form 8997 - Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments - Added section for Form 8997 transcription.

(103) IRM 3.11.16.42.2(10)d) - Eligibility Determination - Changed line number per SERP feedback #202102169 from KSPC (IPU 21U1004 issued 08-02-2021).

(104) Exhibit 3.11.16-3 - Form 1120 - Prior Year Conversion Chart - Added various clarifications to tables (IPU 21U0092 issued 01-14-2021).

(105) Exhibit 3.11.16-5- Form 1120-F - Prior Year Conversion Chart - Deleted old conversion table.

(106) Exhibit 3.11.16-10 - Form 1120-REIT - Prior Year Conversion Chart - Added Schedule J line changes due to form change.

(107) Exhibit 3.11.16-10 - Form 1120-REIT - Prior Year Conversion Chart - Deleted old conversion charts.

(108) Exhibit 3.11.16-11 - Form 1120-RIC - Prior Year Conversion Chart - Added Schedule J line changes due to form change.

(109) Exhibit 3.11.16-11 - Form 1120-RIC - Prior Year Conversion Chart - Added various clarifications to tables (IPU 21U0092 issued 01-14-2021).

(110) Exhibit 3.11.16-16 - Routing Guide for Attachments

  • Form 965 - transition statement - Added tax period check

  • Form 965 - Added tax period check

  • Form 965 - Schedules - Added tax period check

  • Form 3468 - Deleted outdated information

  • Form 3949-A - Deleted Fresno as referral for routing and corrected to Ogden

  • Form 4797 - Added reference to new transcription instructions

  • Form 6478 - Deleted outdated information

  • Form 8586 - Added forms with a valid CCC “9” to the "applicable returns" column

  • Form 8609 - Added forms with a valid CCC “9” to the "applicable returns" column

  • Form 8816 - Instructions changed to include tax period validation per LB&I Exam

  • Form 8860 - Deleted instructions - this form has been historical since 2009

  • Form 8913 - Deleted instructions - this form has been historical since 2006

  • Form 8996 - Added Form 1120-RIC to instructions

  • Form 8997 - Added reference to new transcription instructions

(111) Editorial changes made throughout the IRM include:

  • Corrected spelling and grammatical errors

  • Corrected references, citations and links

  • Updated figures and exhibits

  • Updated dates throughout

  • Updated form titles

  • Deleted old line numbers throughout

  • Used simpler words

  • Deleted unnecessary words

  • Changed consistency sections per BMF Consistency template

Effect on Other Documents

IRM 3.11.16 dated November 20, 2020 (effective January 1, 2021) is superseded. The following IRM Procedural Updates (IPUs), issued from January 4, 2021 through August 31, 2021, are incorporated into this IRM: IPU 21U0014, IPU 21U0092, IPU 21U0300, IPU 21U0474, IPU 21U0624, IPU 21U0638 and IPU 21U0907, IPU 21U1004, IPU 21U1023, IPU 21U1031 and IPU 21U1073.

Audience

This IRM is intended for use by Wage and Investment (W&I) personnel in the Submission Processing Campuses.

Effective Date

(01-01-2022)

James L. Fish
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. This IRM section has instructions for Wage and Investment (W&I)Tax Examiners to process the following returns:

    • Form 1120, U.S. Corporation Income Tax Return

    • Form 1120-C, U.S. Income Tax Return for Cooperative Associations

    • Form 1120-F, U.S. Income Tax Return of a Foreign Corporation

    • Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation

    • Form 1120-H, U.S. Income Tax Return for Homeowners Association

    • Form 1120-L, U.S. Life Insurance Company Income Tax Return

    • Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons

    • Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return

    • Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts

    • Form 1120-RIC, U.S. Income Tax Return For Regulated Investment Companies

    • Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B)

    • Form 1120-IC-DISC, Interest Charge Domestic International Sales - Corporation Return

    • Form 8404, Interest Charge on DISC-Related Deferred Tax Liability

  2. Purpose: The purpose of Document Perfection is to Code and Perfect (Edit) documents.

  3. Audience: These procedures apply to employees responsible for coding and editing returns in this IRM including:

    • Clerks, Lead Clerks, and Supervisory Clerks

    • Tax Examining Technicians, Lead Tax Examining Technicians and Supervisory Tax Technicians

  4. Policy Owner: Director, Submission Processing.

  5. Program Owner: Business Master File (BMF) Paper Processing Section.

  6. Primary Stakeholders: Other areas that may be affected by these procedures include (but not limited to):

    • Accounts Management (AM)

    • Chief Counsel (CC)

    • Compliance

    • Information Technology (IT) Programmers

    • Large Business and International (LB&I)

    • Small Business Self-Employed (SBSE)

    • Statistics of Income (SOI)

    • Submission Processing (SP)

    • Taxpayer Advocate Service (TAS)

    • Tax Exempt and Government Entities (TEGE)

  7. Program Goals: Ensure all necessary action is taken on the return and attachments to ensure correct posting of the return data.

Background

  1. Document Perfection perfects returns and other documents for input to the Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP) or the Service Center Recognition Image Processing System (SCRIPS). In addition, Document Perfection forwards any other documents or attachments not related to the processing of the returns to the function responsible for handling them.

  2. Code and Edit does not mathematically verify or check the validity of the returns and other documents being processed unless otherwise specified in the applicable section. The computer and/or Error Correction (Resolution) will perform these functions if the returns and other documents are coded and edited as prescribed in the applicable subsections of this section.

Authority

  1. Authority for these procedures is found in the following sections of the Internal Revenue Code and their corresponding Treasury regulations:

    • IRC 6201(a) - Assessment Authority

    • IRC 6213(b) - Exceptions to restrictions on assessment

Responsibilities

  1. The Campus Director is responsible for monitoring operational performance for their campus.

  2. The Operations Manager is responsible for monitoring operational performance for their operation.

  3. The Team Manager/Lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

  4. The Team Employees are responsible to follow the instructions in this IRM and maintain updated IRM procedures.

Program Management and Reviews

  1. Program Reports: The Batch/Block Tracking System (BBTS) stores a vast amount of data which can be used in performance monitoring and production projections.

  2. Program Effectiveness: The program goals are measured using the following methods:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial reviews

Program Controls

  1. Quality Review conducts a statistical valid sample size review of completed work to ensure IRM guidelines are followed.

Terms/Definitions/Acronyms

  1. For Terms, Definitions and Acronyms, see Exhibit 3.11.16-21, Terms/Definitions/Acronyms.

Related Resources

  1. The following is a list of related resources:

    • Servicewide Electronic Research Program (SERP)

    • Submission Processing Design Center (SPDC)

    • Integrated Data Retrieval System (IDRS)

General Information

  1. This IRM can’t address every possibility that occurs while perfecting returns or documents. Take taxpayer intent into consideration. Refer issues not addressed in this IRM to the subject matter expert (SME), lead or manager to determine the corrective action.

  2. The purpose of this section is to provide instructions for general required processing actions on corporate tax returns in order to eliminate repetition of the same instructions in different sub-sections.

  3. In case of a conflict of instruction between this general sub-section and the subsequent specific sub-section, the specific sub-section will govern.

♦IRS Employee Contacts ♦

  1. The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98), Section 3705(a) gives identification requirements for all IRS employees working tax-related matters.

  2. All IRS employees who communicate by telephone, face-to-face, or any other method of correspondence with taxpayers or their personal representatives on tax-related matters must give (at a minimum) the following information:

    1. Telephone Contact - Their title (e.g., Mr., Mrs., Ms., Miss), last name and badge identification (ID Card) number. Toll-free employees may also give their location for identification purposes. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

    2. Face-to-Face Contact - Their title (e.g., Mr., Mrs., Ms., Miss), give as appropriate during the conversation, their last name and badge identification (ID Card) number.

    3. Correspondence (sent to the taxpayer and authorized representatives) - A telephone number that taxpayers can call for answers to questions. In addition, manually generated correspondence must have the employee's title (e.g., Mr., Mrs., Ms., Miss), last name, Integrated Data Retrieval System (IDRS) number, and letter system number, which are systemically generated by IDRS. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

    4. Correspondex letters - Specific employee name and telephone number if the employee initiating the correspondence is in the best position to respond to any questions the taxpayer may have or if the taxpayer is being asked to give more case-related information. If the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

  3. When taxpayer requests to speak with a specific employee who previously worked their inquiry or request, or complains about the level of service previously given, make every attempt to resolve the taxpayer's inquiry. If unable to resolve the issue, refer the inquiry using established procedures to the manager.

  4. Secretaries, receptionists, or other people who answer the telephone in functional offices need to identify themselves and should give their badge identification (ID Card) number only if they are answering telephones which are routinely used to give tax or account information.

  5. It is not necessary to repeat the badge identification (ID Card) number on a subsequent contact, when the nature of an employee's work involves multiple contacts with the same taxpayer and the employee has given the taxpayer (either telephone or in-person) his or her badge identification (ID Card) number on the first contact.

♦ BMF Consistency ♦

  1. The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code and Edit processing IRMs.

  2. Ogden, Kansas City, and Paper Processing Branch, BMF Code and Edit and Error Resolution System (ERS) identified and developed topics for BMF Consistency.

  3. A ♦ (diamond) before and after the subsection title shows BMF Consistency subsections.

  4. Text in normal print is the common processes for BMF tax returns. The text in BOLD print is form specific and applies to this IRM only.

♦ IRM Deviation Procedures ♦

  1. Submit IRM deviations in writing following instructions from IRM 1.11.2.2.4, When Procedures Deviate from the IRM, and elevate through proper channels for executive approval.

♦ Taxpayer Advocate Service (TAS) ♦

  1. The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For more information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights. Under these rights, taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to give information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

  2. TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Wage and Investment (W&I) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, TAS Operations Assistance Request (OAR) Process.

  3. Refer taxpayers to TAS when the contact meets TAS criteria (see IRM 13.1.7), or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer's issue the same day.

  4. The definition of "same day resolution" is within 24 hours. The following two situations meet the definition of "same day resolution" :

    • The issue can be resolved within 24 hours.

    • IRS takes steps within 24 hours to resolve the taxpayer’s issue.

    See IRM 13.1.7.5, Same Day Resolution by Operations.

  5. When making a TAS referral, use Form 911, and forward to TAS in accordance with local procedures.

♦ TAS Service Level Agreements (SLAs) ♦
  1. The National Taxpayer Advocate (NTA) reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SB/SE) Division, Tax Exempt Government Entities (TE/GE), Criminal Investigation (CI), Appeals, and Large Business and International (LB&I) that outline the procedures and responsibilities for processing Taxpayer Advocate Service (TAS) casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as Service Level Agreements (SLAs).

  2. The SLAs are found at https://irssource.web.irs.gov/TAS/SitePages/SLA.aspx.

♦ Edit Marks ♦

  1. Edit marks are edited on the tax return for transcription to the Automatic Data Processing (ADP) System through Integrated Submission and Remittance Processing (ISRP). Enter edit marks in brown, red, orange, purple, or green pencil or pen.

  2. Only edit items on the return that are for transcription except where specific instructions require editing of a non-transcribed item. Leave lines blank if the entry would be a zero amount unless otherwise instructed.

  3. Do not obliterate, alter, or erase the original entry on a return when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who may work with the return later.

  4. Edit marks entered by other areas, such as Collections, Entity or Accounts Management, are not to be re-edited except to place the marks in the correct area or to perfect for legibility. Do not edit (or write) over another area's edit marks.

    Exception:

    Photocopied Returns.

  5. Photocopied Returns - Re-edit or underline any valid, black edit marks. See IRM 3.11.16.3.4.3, Correspondence Imaging System (CIS) Returns, and IRM 3.11.16.3.8 Re-Entry Document Procedures.

  6. For a description of specific edit marks, see the table below:

    Edit Mark Description
    "X" Deletes tax data or indicates do not transcribe an item. For example, if deleting an original entry, edit an "X" to the left of the entry to delete. Edit the correct entry to the left or above the "X" .
    "/ " (slash) Indicates do not transcribe a form or schedule.
    "/ /$" Identifies the beginning and ending of a foreign country code in the entity area. For example, "/EI/$" is edited for "Ireland" or "/GM/$" is edited for "Germany" .
    "c/o" or "%" Indicates an "in-care-of" name for transcription.
    Circle Indicates do not transcribe an entry. Also, deletes entity data or a Received Date.

    Note:

    If the taxpayer circles an entry, edit the entry.

    Underline Identifies an entry for transcription (e.g., Name Control, Tax Period, etc.).
    Arrow Indicates the correct placement of a misplaced entry. Use an arrow if the misplaced item is close to the correct line and there is no question where the entry belongs.

    Note:

    Use a double arrow to identify the same figure for transcription in two different places (along with any required transcription data between the two arrows).

    Check Mark Indicates that an entry was manually math verified and is correct.
    Bracket/Parenthesis Indicates a negative numerical amount.

    Note:

    C&E is not required to bracket negative amounts when brackets are preprinted on the form or schedule or when the taxpayer clearly indicates a negative amount with brackets "( )" or "-" sign. Bracket negative amounts when editing negative entries on transcription lines (e.g., computing and entering a line entry, entering a missing line entry, etc.).

    Vertical Line or Decimal Point Indicates the separation of dollars and cents.
    Zero, Dash, None, or N/A "ZERO," "DASH," "NONE," or "N/A" are valid entries except when specific instructions require editing of an entry.
    Rocker Indicates the amount paid when drawn under a remittance amount.

♦ Frivolous Arguments ♦

  1. Businesses use frivolous arguments for expressing dissatisfaction with the substance, form or administration of the tax laws by trying to illegally avoid or reduce tax liabilities. See IRM 25.25.10, Frivolous Return Program, shown in Exhibit 3.11.16-14, Potential Frivolous Arguments for Examination Review.

  2. Review the tax return to decide whether it appears to be a frivolous return.

    If... Then...
    The return meets any of the conditions shown as a frivolous return, see Exhibit 3.11.16-14, Potential Frivolous Arguments for Examination Review,

    Exception:

    If the return shows Action Code "331," and has a Form 4227, Intra-SC Reject or Routing Slip, attached with the remarks, "Refer to Exam FRP for audit after processing," continue to next procedure.

    Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Program (FRP) for review.
    Examination has selected the return as frivolous (e.g., shown by an Action Code "331," and a Form 4227, Intra-SC Reject or Routing Slip, with the remarks, "Refer to Exam FRP for audit after processing," but sends the return for processing), Continue processing the return using procedures in IRM 3.11.16. However, do not circle or void the Action Code showing a frivolous return.

  3. Do not consider the following returns as frivolous:

    • Returns that have only zeros, blanks, or no entries.

    • Returns showing "None," "Not Liable," etc.

    • Returns showing no evidence of a frivolous argument.

♦ Foreign Currency ♦

  1. Remove returns marked as "Protective Claims," "Protective Claim for Refund," or similar statement from the batch and route to Accounts Management (AM). Notate "Protective Claim" in the remarks box of Form 4227 , Intra-SC Reject or Routing Slip.

    Note:

    Do not remove any Form 1120-F with the "Protective return" box (upper right-hand corner) checked from the batch. These returns are not considered "Protective Claims."

    Exception:

    If the return is amended, do not remove from the batch. Edit Computer Condition Code "G" and follow normal processing procedures.

♦ Protective Claims ♦

  1. Remove returns marked as "Protective Claims," "Protective Claim for Refund," or similar statement from the batch and route to Accounts Management (AM). Notate "Protective Claim" in the remarks box of Form 4227 , Intra-SC Reject or Routing Slip.

    Note:

    Do not remove any Form 1120-F with the "Protective return" box (upper right-hand corner) checked from the batch. These returns are not considered "Protective Claims."

    Exception:

    If the return is amended, do not remove from the batch. Edit Computer Condition Code "G" and follow normal processing procedures.

♦ Criminal Investigation (CI) Referral ♦

  1. Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information.

  2. If CI has stamped the return, do not send for further CI action.

  3. For returns with refund claims of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do the following:

    Refund Claim Kansas City and Ogden
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Make a copy of the first two pages of the tax return along with any page on the return that appears suspicious.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, to the copy.

    3. Route the copy to Ogden, Mail Stop 9001, Criminal Investigation (CI).

    4. Edit an action trail "Copy to CI," or "CI Referral," or similar language in the lower left corner going vertically up the side of the return.

    5. Edit Action Code "341" or CCC U (whichever is applicable) on the return, see IRM 3.11.16.4, Refund Returns (45 Day Jeopardy and High Dollar Refunds).

    6. Continue processing the return.

  4. Because of the repetitive nature of the Code and Edit (C&E) function, C&E Tax Examining Technicians often recognize income tax return data which is outside of the norm for data found on similar returns for each income tax return type. If C&E finds return characteristics not meeting Audit Code or Exam referral criteria it deems suspicious, CI is available to review the referral.

  5. If a suspicious return is found, do the following:

    1. Make a copy of the first two pages of the tax return along with any page on the return that appears suspicious.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, to the copy.

    3. Route the copy as shown in the table below.

      Ogden Kansas City
      Mail Stop 9001, Criminal Investigation (CI) Mail Stop S2 9000, Criminal Investigation (CI)

    4. Edit an action trail "Copy to CI," or "CI Referral," or similar language in the lower left corner going vertically up the side of the return.

    5. Continue processing the return.

  6. If the return fits other criteria (e.g., Frivolous Argument), take proper action.

♦ Examination(Exam) Funny Box ♦

  1. The primary goal in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination gives support and helps Submission Processing (SP) with any questionable return found during processing. Exam has a vast multitude of programs and tolerance criteria already found in several IRM sections. SP can refer any questionable return to Exam, unless prohibited by instructions currently found in several IRMs.

♦ Business Master File (BMF) Identification (ID) Theft ♦

  1. BMF Identification (ID) Theft is increasing. If a case is found with attachments or correspondence showing the taxpayer is a victim of "ID Theft" , give the entire case to the manager/lead.

  2. The manager/lead will expedite the case to the Planning and Analysis (P&A) staff for referral to one of the Submission Processing (SP) BMF ID Theft liaisons. The taxpayer must show that they are a victim of "ID Theft" ; do not send cases that are subject to Criminal Investigation (CI), Examination (Exam), or Fraud review.

Section 965 Returns (201712 through 202012)

  1. The instructions in this section only apply to tax periods 201712 through 202012.

  2. Section 965, as amended by the Tax Cuts and Jobs Act (TCJA) of 2017, requires certain taxpayers to pay a transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the United States.

  3. Identify a corporate Section 965 return when any of the following are present and the corporation’s Tax Period is 201712 through 202012:

    • Form 965, Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System, is attached.

    • Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net Tax 965 Tax Liability and Electing REIT Report of 965 Amounts, is attached.

    • IRC 965 Transition Tax Statement (or similar statement) is attached for TY2017.

    • A significant entry is present on any of the following forms and/or lines.

      Note:

      A significant entry is defined as any amount other than zero.

      Form Lines
      Form 1120
      • Schedule C, Line 15

      • Schedule J, Line 12

      • Schedule J, Line 22

      • Page 1, Line 32

      Form 1120-C
      • Schedule C, Line 15

      • Page 2, Line 29

      • Page 2, Line 30i

      Form 1120-L
      • Page 1, Line 27

      • Page 1, Line 28i

      Form 1120-PC
      • Page 1, Line 14

      • Page 1, Line 15d

      Form 1120-REIT
      • Page 2, Line 24

      • Page 2, Line 25h

      Form 1120-RIC
      • Page 1, Line 28

      • Page 1, Line 29i

  4. When a return has been identified as a Section 965 return, edit as follows:

    1. Completely edit the return.

    2. Edit CCC "J," see IRM 3.11.16.9.1.10, CCC "J" - Section 965.

    3. Edit Action Code "460," see IRM 3.11.16.3.1, Action Codes.

    4. Do not issue correspondence on the return. ERS will correspond for any missing information.

Unprocessable Documents - Error Resolution System

  1. The Document Perfection tax examiner will have the first opportunity to identify a return having a problem which requires correspondence, research, or other action in order to make the return processable. Depending on the type of return, either an Action Code or Computer Condition Code (CCC) "U" is edited to identify these unprocessable returns.

  2. On Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, the tax examiner will determine the kind of action required and assign an Action Code to the return which will force it to Error Resolution System (ERS) (on-line correction system). The code will indicate whether correspondence, research, or some other action is needed. Action Codes apply only to Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

  3. Form 1120-FSC, Form 1120-ND, and Form 1120-SF are processed through a manual correction system. Use Computer Condition Code "U" on these returns when action such as correspondence is needed.

♦ Action Codes ♦

  1. Action Codes are used to indicate whether correspondence, research, or some other action is needed. The Action Code sets the suspense period for the return and places the return in the workable or unworkable suspense inventory.

  2. When necessary, assign a three-digit Action Code. Action Codes are valid on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. Any other returns are processed through a manual correction system. Use Computer Condition Code "U" on these returns when actions such as correspondence are needed.

  3. Edit the Action Code in the bottom left margin of the tax return.

  4. Assign Action Codes in the following priority:

    1. Action Code "310" (Statute Control).

    2. Action Code "320" (Entity Control).

    3. Action Code "4XX"

    4. Action Code "6XX"

    5. Action Code "3XX"

    6. Action Code "2XX" (Correspondence).

  5. Temporary Guidance - Due to processing delays, more suspense time is needed in Rejects for correspondence. Use the table below and replace current Action Codes (211, 215, 225 and 226) with Action Codes 231 and 232 whenever they are listed throughout the IRM:

    Current Action Code New Action Code
    211 231
    215 231
    225 232
    226 231

    Note:

    These changes are temporary. When processing time frames return to normal, an IPU will be issued to revert Action Codes to their previous uses.

  6. Use the following table if more than one Action Code is needed:

    If ... Then ...
    Action Codes include 211, 215, 225 or 226 and Action Code 341,
    1. Edit the Action Code 211, 215, 225 or 226 on:

      • Form 1120,

      • Form 1120-C,

      • Form 1120-F,

      • Form 1120-H,

      • Form 1120-L,

      • Form 1120-PC,

      • Form 1120-REIT,

      • Form 1120-RIC

    2. Edit Action Code "341" on the Form 4227, Intra-SC Reject or Routing Slip.

    Action Codes have the same priority,
    1. Edit the Action Code with the shorter suspense period on:

      • Form 1120

      • Form 1120-C

      • Form 1120-F

      • Form 1120-H

      • Form 1120-L

      • Form 1120-PC

      • Form 1120-REIT

      • Form 1120-RIC

    2. Edit the second Action Code on the Form 4227, Intra-SC Reject or Routing Slip.

    3. See IRM 3.11.16.3.1(8), Action Codes, for suspense periods.

    Action Codes have different priorities,
    1. Edit the Action Code with the higher priority on:

      • Form 1120

      • Form 1120-C

      • Form 1120-F

      • Form 1120-H

      • Form 1120-L

      • Form 1120-PC

      • Form 1120-REIT

      • Form 1120-RIC

      Exception:

      Use Action Code 211, 215, 225 or 226 before Action Code 341 to ensure the return is complete before a manual refund is issued.

    2. Edit the second Action Code on the Form 4227, Intra-SC Reject or Routing Slip.

  7. See Figure 3.11.16-1.

    Figure 3.11.16-1

    This is an Image: 33500001.gif

    Please click here for the text description of the image.

  8. Edit the following Action Codes when a return can’t be perfected:

    Action Code Description
    "211" (First Correspondence) or "215" (International Correspondence)
    • Return is illegible, incomplete, or contradictory and therefore unprocessable.

    • The taxpayer notates on the tax return or attachment that they are reporting tax for more than one tax period or for more than one type of tax.

    "225" (Missing Signature Correspondence)
    • Unsigned returns (only issue for correspondence).

    "226" (Missing Signature International Correspondence)
    • Unsigned foreign returns (only issue for correspondence).

    "440" (LB&I, review of Form 1120-F)
    • Foreign Payments Practice (FPP) review of credits for Form 1120-F.

    "460" (Section 965 indicated)
    • Section 965, Treatment of Deferred Foreign Income upon Transition to Participation Exemption System of Taxation, see , IRM 3.11.16.2.12, Section 965 Returns (201712 through 202012).

    "480" (Early Filed - Suspense)
    • The return is an early-filed (future) return.

    "610" (Renumbered non-remittance) or
    "611" (Renumbered with-remittance)
    • Mis-batched return (e.g., Form 1065, U.S. Return of Partnership Income, found in a Form 1120, U.S. Corporation Income Tax Return, batch of work).

    "640" (Void)
    • To delete the assigned Document Locator Number (DLN) on the return (e.g., Re-entry Returns).

    "650" (International)
    • An international return, processed in Ogden Submission Processing Center (OSPC).

  9. Continue perfecting the return after editing the Action Codes.

  10. Valid Action Codes are listed below:

    Action Code Description Workday Suspense Period
    211 First Taxpayer Correspondence 40
    215 International Correspondence 45
    225 Taxpayer Correspondence (Signature Only) 40
    226 International Correspondence (Signature Only) 40
    310 Statute Control 10
    320 Entity Control 10
    321
    (Modernized Electronic Filing (MeF) only)
    Entity Control - Form 1120 with Form 851, Affiliations Schedule, attached 20
    322
    (MeF only)
    Foreign Investment in Real Property Act (FIRPTA) Credit Verification 10
    331 Frivolous Review 3
    341 Manual Refund 10
    342 Credit Verification 10
    345
    (MeF only)
    Form 1120-F Total Tax Math Error  
    346
    (MeF only)
    Form 1120-F Balance Due Math Error  
    352 Name Research 3
    360 Other In-House Research 10
    370 Examination - Prompt Assessment - Form 4810, Request for Prompt Assessment under Section 6501(d) 10
    420 Management Suspense A - (2006 Tax Return with Form 8913, Credit for Federal Telephone Excise Tax Paid) 5
    440 Management Suspense C, Large Business and International (LB&I) review of Form 1120-F in OSPC only) 15
    450 Management Suspense D 20
    460 Management Suspense E

    Note:

    Used for "Section 965" identification.

    25
    480 Early Filed Suspense 150
    610 Renumber - Non-Remittance 0
    611 Renumber - Remittance 0
    640 Void 0
    650 International 0

  11. For more information and applicable Action Codes, see IRM 3.12.38.3.4, Error Resolution System (ERS) Action Codes, and the exhibit in IRM 3.12.38-1, Action Codes.

Unprocessable Conditions and Rejection of Tax Returns

  1. A tax return is an "Ogden Submission Processing Center (OSPC) only" return if at least one of the following conditions exists:

    1. The tax return has a foreign address.

    2. The tax return is a Form 1120-C.

    3. The tax return is a Form 1120-F.

    4. The tax return is a Form 1120-FSC.

    5. The tax return is a Form 1120-L.

    6. The tax return is a Form 1120-ND.

    7. The tax return is a Form 1120-PC.

    8. The tax return is a Form 1120-SF.

    9. There is a refund credit claimed because of U.S. income tax paid or withheld at source because of the Foreign Investors in Real Property Tax Act whether or not Form 8288-A, Statement of Withholding on Certain Dispositions by Foreign Persons.

      Note:

      Form 8288-A credit must be verified by the OSPC Foreign Team.

Treatment of All Unprocessable Tax Returns

  1. If the tax return is an Ogden Submission Processing Center (OSPC) "only" return, discontinue perfection of the return. Prepare Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer the return has been sent to Ogden Submission Processing Campus.

  2. If the tax return is other than an OSPC "only" return, perfect the return if possible:

    1. Examine schedules and other attachments for the necessary information and edit the return as needed for processing.

    2. If perfection is not possible, perfect to the extent possible and proceed as set forth in (3) below.

  3. Action to secure perfection:

    1. Where indicated, prepare Form 4227, Intra-SC Reject or Routing Slip, indicating the reason for rejecting the document and that the document should be resubmitted for processing when it has been perfected.

    2. Attach the Form 4227, to the face of document in such a position that the Employer Identification Number (EIN) is visible for transcription.

    3. If the tax return has not been numbered, withdraw it from processing and forward it to the proper activity.

    4. For numbered Form 1120-FSC, Form 1120-ND, and Form 1120-SF, edit Computer Condition Code (CCC) "U" and attach Form 4227.

    5. For numbered Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit the right Action Code in the bottom left margin of the return and leave it in the block.

♦ Correspondence ♦

  1. There are two types of correspondence that C&E may encounter:

    • Correspondence received from taxpayers, and

    • Correspondence Issued to taxpayers.

♦Definition of Correspondence from Taxpayers♦
  1. Correspondence is all written communications from a taxpayer or his/her representative, excluding tax returns, whether solicited or unsolicited. This includes:

    1. Written communications in response to IRS requests for information or data.

    2. Written communications, including annotated notice responses, which provide more information or dispute a notice.

    3. A telephone call that results in a written referral or research (Form e-4442, Inquiry Referral).

  2. The key to identifying taxpayer correspondence is to ask the following questions:

    1. Is the taxpayer waiting for a response from IRS?

    2. Is the taxpayer waiting for IRS to take action?

    3. Is the taxpayer asking a question?

    Note:

    A Post-It-Note, Sticky Note, or some other type of note stuck on the return by another function, for example - "Taxpayer (TP) requests penalties be waived" - does not constitute correspondence from the taxpayer.

♦Issuing Correspondence♦
  1. Issue correspondence to resolve any conditions causing the return to be unworkable or unprocessable.

    Exception:

    Section 965 Returns - Do not issue correspondence on the return. ERS will correspond for any missing information.

    Exception:

    Do not correspond on returns prepared by Collections, Section 6020(b) or by Examination, "Substitute for Return" (SFR).

  2. If the return is incomplete and doesn't appear to be a return meant for filing or is a conduit for providing information (e.g., indicates "payment only”), give the return to the lead. The lead must determine the correct course of action. The lead researches for a Transaction Code (TC) 150 and any other information necessary to determine if the return should continue processing, is an amended return, or must be routed to another function. An incomplete return could include any of the following:

    • A one-page return, with or without a signature.

    • Incomplete returns indicating "Payment Only."

    • Incomplete returns indicating they have previously e-filed.

    Note:

    This list is not all inclusive. Tax examiners may see other unusual documents not addressed in this subsection or in other areas of the IRM.

  3. Correspond for back up forms and schedules≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.
    Exceptions:

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Example:

      Substantial evidence includes closing documents or settlement statement which shows the amount of tax withheld.

      Exception:

      If a letter is attached, signed by the Competent Authority, accept the letter as proof of Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, withholding and do not correspond for the missing Form 1042-S.

  4. Examine the return or all unprocessable conditions before initiating correspondence.

    If... And... Then...
    The return needs correspondence, Requires a response,
    1. Complete an approved Correspondence Action Sheet indicating the letter number (86C, 118C, etc.), Master File Tax (MFT) code, and the right paragraphs.

      Note:

      Some paragraphs may require fill-ins to enter, such as , tax period, form number, Document Locator Number (DLN), etc.

    2. Attach the Correspondence Action Sheet to the front of the return below the entity area.

    3. Edit Action Code "211" (First Correspondence) or "215" (International Correspondence) on:

      • Form 1120

      • Form 1120-C

      • Form 1120-F

      • Form 1120-H

      • Form 1120-L

      • Form 1120-PC

      • Form 1120-REIT

      • Form 1120-RIC

      Note:

      If the return is consolidated, input a Transaction Code (TC) "590" with Closing Code "014" for each subsidiary corporation listed on the Form 851 to satisfy the filing requirement.

    4. Edit CCC "U" for Form 1120-FSC, Form 1120-ND, and Form 1120-SF.

    5. Finish editing the return and leave in the batch.

    The return needs correspondence, Does not require a response,
    1. Complete an approved Correspondence Action Sheet indicating the letter number (86C, 118C, etc.), Master File Tax (MFT), and the right paragraphs.

      Note:

      Some paragraphs may require fill-ins to enter, such as tax period, form number, DLN, etc.

    2. Photocopy the first page of the tax return and attach a Correspondence Action Sheet below the entity area on front of the return copy. Be sure the name and address clearly show above the Correspondence Action Sheet.

    3. Forward the copy to the Correspondence area.

    4. Edit an Action Trail (e.g., "118C Sent" ) in the lower left corner going vertically up the side of the return.

    5. Finish editing the return and leave in batch.

    Note:

    There are more campus exclusive letters. They are for processing specific forms or conditions. Go to the lead or manager for copies of these letters.

♦ Correspondence Imaging System (CIS) Returns ♦
  1. Correspondence Imaging System (CIS) is an inventory system for scanning all Accounts Management (AM) receipts into digital images and working the cases from those images.

  2. "CIS" returns are shown with "CIS Image - Do not correspond for Signature" stamped below the signature line or "CIS" annotated on the front of the return.

  3. Verify all edit marks and ensure placement is correct on a "CIS" return.

    If... Then...
    The edit marks are black, Underline the edit mark if correct or circle if incorrect.
    The edit marks are red or green, Circle if incorrect.
    The edit marks are missing or incorrect, Perfect as necessary.

  4. Follow the correspondence instructions below for "CIS" returns:

    If... And... Then...
    The "CIS" return has a Form 13596, Reprocessing Returns, attached, The return is incomplete (e.g., missing signature, schedules, or forms),
    1. Do not correspond.

    2. Remove the return from the batch and route to AM.

    3. If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information. Indicate "Additional information needed to process incomplete CIS return," or similar language on Form 4227 (or other proper routing slip).

    The "CIS" return has a Form 13596, Reprocessing Returns, attached and the return is incomplete (e.g. missing signature, schedules, or forms), The return shows correspondence was sent (e.g., CCC "3" is edited on the return), Do not route the return to AM. Continue processing the return.
    The "CIS" return does not have a Form 13596, Reprocessing Returns, attached, The return is incomplete (e.g., missing signature, schedules, or forms), Follow normal correspondence procedures.

♦ Use of Fax for Taxpayer Submissions ♦
  1. Taxpayers may send tax return information via fax as part of return perfection even when submitting a signature. In circumstances where contact with the taxpayer was made and documented, faxed signatures are acceptable. For more information about accepting signed taxpayer documents by fax, see the most recent revision of the IRS Policy for Use of Fax, available at http://imdtrack.web.irs.gov/IG_Uploads/IRS.gov_No/NHQ-01-1019-0001.pdf

  2. Contact with the taxpayer may be by telephone or correspondence. Follow local procedures to decide which method of contact to use.

  3. Indicate the fax paragraph on the approved Correspondence Action Sheet to inform the taxpayer of the fax options.

  4. Use the following resources to make sure you are speaking with the taxpayer or authorized representative before disclosing any tax information:

    • IRM 21.1.3.2.3, Required Taxpayer Authentication

    • IRM 21.1.3.2.4, Additional Taxpayer Authentication

  5. Before leaving any messages on a taxpayer's answering machine, review:

    • IRM 10.5.1.6.7.2, Answering Machine or Voice mail

    • IRM 11.3.1.14, Facsimile (FAX), Electronic Facsimile (E-FAX), and IRS Internal Enterprise Electronic Facsimile (EEFAX) Transmission of Tax Information

C/SC Letters

  1. Listed below are letters provided by Headquarters for Submission Processing Center use in corresponding for items listed in this IRM. Tax examiners or their supervisors (or delegates) will have access to and be familiar with the Submission Processing Center Correspondex Handbook for selection of right letters.

    1. Letter 118(C), Corporate Return Incomplete for Processing: Form 1120, Form 1120 Series, Form 1120-S.

    2. Letter 143(C), Signature Missing (IMF/BMF)

    3. Letter 319(C ), Return Covers Other Than 12-month Accounting Period.

    4. Letter 105(C), Claim Disallowed.

    5. Letter 3064(C), IDRS Special Letter.

♦ Compliance Secured/Prepared Returns ♦

  1. Compliance notates:

    1. Prepared tax returns with "6020(b)" or "SFR" (Substitute for Return).

    2. Secured tax returns with "TC 59X" or "ICS" or "Process as Original" with a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

    Note:

    If "RD" (Return Delinquency) is notated on the front of the return and not circled, remove from the batch and route to Collections.

♦ IRC 6020(b) - Prepared by Collections ♦
  1. When the taxpayer doesn’t file a required return, IRC 6020(b) is the authority for the IRS to prepare the return.

  2. These tax returns are identified by the notation: "PREPARED AND SIGNED UNDER AUTHORITY OF SECTION 6020(b) OF THE INTERNAL REVENUE CODE," which is located in the center bottom of Page 1.

    1. Returns must have a received date. If missing, follow the normal procedures for editing the received date, see IRM 3.11.16.8, Received Date.

    2. Compliance Function representatives must sign returns. If not signed, route to Compliance using Form 4227, Intra-SC Reject or Routing Slip.

      Note:

      Accept Revenue Officer (RO) typed or electronic signatures as valid signatures on the return.

    3. Edit CCC "D" if the Compliance Function representative notates: "DO NOT ASSESS FAILURE TO PAY PENALTY" and the return due date (without regard to extensions) is July 30, 1996 or prior.

      Note:

      Do not edit CCC "D" if the return due date is after July 30, 1996 (without regard to extensions) even if the Compliance Function representative notates "DO NOT ASSESS FAILURE TO PAY PENALTY."

    4. Do not correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

    5. Edit CCC "W" if the received date is more than two years and nine months after the return Due Date. Do not send the return to Statute Control.

♦ Collection Secured ♦
  1. These returns are identified by the notations: "TC 59X" or "ICS."

    1. Do not edit CCC "G" on these returns.

    2. Use approved Correspondence Action Sheet to correspond for conditions that are unprocessable (e.g., missing signatures, missing schedules, etc.).

    3. Edit CCC "W" if the received date is more than two years and nine months after the return Due Date. Do not send to Statute Control function.

    Reminder:

    If there is an indication penalties require suppression, edit the right Computer Condition Code(s). Please refer to IRM 3.11.16.9.1, Computer Condition Codes, for more information.

♦ Examination Prepared Returns ♦
  1. These tax returns are identified by the notation "SFR" or "SUBSTITUTE RETURN" on Page 1.

    1. The return must have a received date. If no received date is present, follow the normal procedures for editing the received date.

    2. Do not correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

    3. If Form 13133, Expedite Processing Cycle, is attached, edit the Computer Condition Codes checked on the form.

      Note:

      Do not enter CCC "D" unless the return due date (without regard to extensions) is July 30, 1996 or prior, even if the CCC “D” box is checked on Form 13133.

    4. Edit CCC "W" if the received date is more than two years and nine months after the return Due Date. Do not send to Statute Control function.

♦ Examination Secured ♦
  1. These tax returns are identified by the notation "Process as Original" on Page 1 of the return and a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

    1. Do not edit CCC "G" on these returns.

    2. Use approved Correspondence Action Sheet to correspond for conditions that are unprocessable (e.g., missing signatures, missing schedules, etc.).

    3. Edit the Computer Condition Codes checked on Form 13133.

    4. Edit CCC "W" if the received date is more than two years and nine months after the return Due Date. Do not send to Statute Control function.

    Reminder:

    If Form 13133 (or something similar) indicates penalties require suppression, edit the right Computer Condition Code(s). Please refer to IRM 3.11.16.9.1, Computer Condition Codes, for more information.

♦ Statute Returns ♦

  1. Any tax return with a received date that is two years and nine months or more after the Return Due Date is a potential statute control return.

  2. Route Statute returns to the Statute Control Unit daily or more often if needed.

  3. If any of the conditions listed below are present, do not route to Statute Control Unit for clearance. Instead, edit CCC "W" and continue processing.

    • Compliance IRC 6020(b) returns

    • Secured by Examination/Collections, secured by TE/GE, secured by TE/GE EP Exam

    • Returns with Transaction Code (TC) TC 59X or "ICS" notated on the face of the return

    • Returns showing "substitute returns prepared by Examination (SFR)" in top margin of the return

    • Returns with a stamp indicating a previous clearance by Statute Control within the last 90 days

  4. If any of the following computer paragraphs (CPs) or letters are attached to a BMF return, do not route to Statute Control Unit for clearance. Edit CCC "W" if it is determined that the return should be processed. See Exhibit 3.11.16-16, Routing Guide for Attachments, for more information.

    • CP 259, Master File Generated 1st TDI Notice

    • CP 959, Master File Generated 1st TDI Notice (Spanish version)

    • CP 518, Final Notice - Return Delinquency

    • Letter 112-C, Payment/Overpayment/Credit Applied; No Record of Return Filed

    • Letter 282-C, Return Not Received: Copy Requested/Received

    • Letter 2255-C, Delinquent Return (Forms 720, 1041, 1065, 1120)

    • Letter 2284-C, Delinquent Return (Form 940, 941, 942, 943)

  5. If a return is received with a Form 12412, Operations Assistance Request (OAR), from TAS and is a potential statute control return but is not stamped "Cleared by Statute" , give it to the lead. The lead will contact the TAS employee listed on the OAR for rejection of the return and send it back to TAS for clearance by the Statute Unit.

    Note:

    If the return is within 90 days of the statute expiration date, advise the TAS employee of such and route the return directly to statute for clearance.

  6. Statute returns are unprocessable until cleared by Statute Control.

    If... Then...
    The return is numbered,
    1. Edit Action Code "310" on:

      • Form 1120

      • Form 1120-C

      • Form 1120-F

      • Form 1120-H

      • Form 1120-L

      • Form 1120-PC

      • Form 1120-REIT

      • Form 1120-RIC

    2. All other returns edit CCC "U" and attach Form 4227. Check the "Statute Control" box on Form 4227, Intra-SC Reject or Routing Slip.

    3. Leave the return in the batch and continue processing.

    The return is unnumbered,
    1. Do not continue processing.

    2. Pull the return from the batch.

    3. Attach Form 4227, Intra-SC Reject or Routing Slip, and check the box for "Statute Control."

  7. Edit a CCC "W" if the tax return was cleared by the Statute Control Unit. Statute will stamp or indicate clearance on the front of the return.

  8. Statute stamps "No Statute Issue" or shows clearance on the front of the return. Follow the chart below to determine if a CCC "W" is needed.

    If... And... Then...
    The return received date is two years and nine months or more after the Return Due Date, The return is stamped, "No Statute issue," "Statute N/A," or a similar statement indicating there is no statute issue, Edit a CCC "W."
    The return received date is less than two years and nine months from the Return Due Date, The return is stamped, "No Statute issue," "Statute N/A," or a similar statement indicating there is no statute issue, Do not edit a CCC "W."

♦ Re-Entry Document Procedures ♦

  1. A tax return posted to the wrong account or module or attempting to post must be reprocessed to post to the proper account or module.

  2. Some re-entry returns may have originally been filed electronically (E-File). These returns may be identified by the presence of Mod E-File printouts in lieu of an actual return. Do not correspond for missing signatures on these documents.

  3. Each re-entry tax return must have a Form 3893, Re-Entry Document Control or Form 13596, Reprocessing Returns, attached.

    • Form 3893 is used to reinput returns that have not posted to an account or module.

    • Form 13596 is used to reprocess returns to the correct account or module that had previously posted to the wrong account or module.

  4. Always leave the Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

  5. Examine Form 3893 or Form 13596 to determine the action needed to make the return processable.

    Caution:

    If the received date is two years and nine months or more after the Return Due Date, refer to Statute procedures before re-entering or reprocessing the return, see IRM 3.11.16.3.7, Statute Returns.

♦ Form 3893 - Re-Entry Document Control ♦
  1. Reprocess a return posted to the wrong account or module to post it to the correct account module.

  2. If more than one return is in the batch and only the top Form 3893 has an entry in Box 1 (Alpha/Numeric block control no.), edit all returns using current processing instructions and keep all returns clipped together.

  3. Circle the CCC "G" if present.

  4. Do not Edit CCC "G" on amended returns.

  5. Do not send Letter 1382C, Penalty Removal Request Incomplete, if a request for reasonable cause is attached.

  6. If the return is not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

  7. If the return is edited according to current processing instructions, ensure that the information from Form 3893 is edited to the return.

    Form 3893 Action Taken
    Box 14 (Remarks)
    1. Ensure that the information is edited to the return.

    Box 15 (Process as)
    1. Circle any green rocker and edit marks that may indicate a receipt of remittance.

    2. Do not change any tax due amounts.

  8. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    If... Then...
    Improper perfection, Edit the same correction in red/green (per local procedure) to the right area.
    Taxpayer error, Leave the entries as shown on the document.

  9. A received date must be present on all re-input returns.

    If... Then...
    Received date is not present, Edit a received date to the middle of the return, see IRM 3.11.16.8, Received Date.
    Multiple Received Dates are present, Circle all but the earliest date.

  10. When more information is still needed to make the return processable, prepare approved Correspondence Action Sheet or Form 4227, Intra-SC Reject or Routing Slip, for the proper action (e.g. correspondence, research, etc.).

  11. When perfection is not possible, edit Action Code "640" (or CCC "U" ) and attach Form 4227 noting "PERFECTION NOT POSSIBLE" and leave in batch.

♦ Form 13596 - Reprocessing Returns ♦
  1. Form 13596, Reprocessing Returns, is used to reprocess a return to the correct account or module that had previously posted to the wrong account or module.

  2. Circle CCC "G" if present.

  3. Do not edit CCC "G" on amended returns.

  4. Do not send Letter 1382C, Penalty Removal Request Incomplete, if a request for reasonable cause is attached.

  5. If the return is not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes, and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

    Caution:

    If a Form 1120 converted from Form 1120-S is received, ensure that the following items are present: EIN, name control, North American Industry Classification System (NAICS), received date, audit code 4, tax period (prior year returns), and CCC "3" (as applicable for No Replies). If not, then edit the needed items. No other editing is required.

  6. If the return is edited according to current processing instructions, ensure that the information from Form 13596 is edited on the return.

    Form 13596 Action Taken
    Taxpayer Identification Number (TIN) correction, Edit the correct TIN on tax return.
    Tax period correction, Edit the correct tax period ended on the tax return.
    Reasonable cause, Edit right Computer Condition Code.
    1. Edit CCC "R" if the "FTF" (Failure to File) box is checked.

    2. Edit CCC "D" if the "FTP" (Failure to Pay) box is checked.

  7. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    If... Then...
    Improper perfection, Edit the same correction in red/green (per local procedure) to the right area.
    Taxpayer error, Leave the entries as shown on the document.

  8. A received date must be present on all reprocessed returns.

    If... Then...
    Received date is not present, Edit a received date to the middle of the return, see IRM 3.11.16.8, Received Date.
    Multiple received dates are present, Circle all but the earliest date.

  9. Circle any green rocker and edit marks that may indicate a receipt of remittance.

  10. When more information is still needed to make the return processable prepare an approved Correspondence Action Sheet or Form 4227, Intra-SC Reject or Routing Slip, for the proper action (e.g., correspondence, research, etc.).

♦ Amended Returns ♦

  1. A return is considered Amended based on the following:

    • The "Amended" box is checked

    • On MeF returns the "Superseded Return" or the "Amended Return" box is checked. The "Superseded Return" and the "Amended Return" boxes will only be on MeF returns that have been printed. They will be located on Line E.

    • Words such as "Supplemental," "Corrected," "Additional," "Superseded" are present

    • Any indication from the taxpayer that a previous return was filed

      Note:

      Words such as "Copy" or "Duplicate" are not sufficient indicators and must be accompanied by a statement from the taxpayer that a previous return was filed.

  2. Examine the return for attachments:

    • Do not separate any related attachments submitted to explain the reason for the Amended return. Accounts Management may use the information.

    • Detach any unrelated documents and route them to the correct function using Form 4227, Intra-SC Reject or Routing Slip. Edit an Action Trail on the return.

    Note:

    Pull any amended return that has "CBR" notated and route to AM.

  3. Follow the instructions in the chart below when there is an indication of an amended return:

    If... Then...
    Compliance Services entered "TC 59X" or "ICS" on the return,
    1. Do not edit CCC "G."

    2. Process the return as an original.

    Statute stamped the return "Delinquent Original Cleared for Processing" ,
    1. Do not edit CCC "G."

    2. Process the return as an original.

    Form 3893 or Form 13596, Reprocessing Returns, is attached,
    1. Do not edit CCC "G."

    2. See IRM 3.11.16.3.8.1, Form 3893 - Re-Entry Document Control, or IRM 3.11.16.3.8.2, Form 13596 - Reprocessing Returns.

    None of the above are present,
    1. Edit CCC "G."

    2. Do not use any other codes with CCC "G" .

    Exception:

    CCC "S," "T," "U," "W," "3" and/or Error Resolution System (ERS) Action Codes may be used with CCC "G."

  4. The following data must be edited on all amended returns:

    1. Name control, see IRM 3.11.16.6.3, Entity Perfection - Name Control

    2. EIN, see IRM 3.11.16.6.2, Entity Perfection - Employer Identification Number (EIN)

    3. Tax period, see IRM 3.11.16.7, Tax Period

    4. CCC "G," see Exception above

    5. Received date, see IRM 3.11.16.8, Received Date

    6. Signature, see IRM 3.11.16.11.7, Signature

    Note:

    No further editing is required.

IRC 847 Deduction

  1. The instructions in this section only apply to tax periods 201812 and prior. For tax periods 201901 and later, no action is needed.

    Note:

    IRC 847 applies to taxable years beginning before January 1, 2018. Section 13516 of the Tax Cuts and Jobs Act (PL 115-97) repealed IRC 847. IRC 847 required certain insurance companies to make SETP in the amount equal to the tax benefit derived from the additional deduction permitted under IRC 847 Deduction. Following the repeal of IRC 847, the entire amount of existing SETP is taken into account for the first tax year beginning after 2017, see IRM 21.7.4.4.4.11.5.

  2. If Special Estimated Tax Payments (SETP) is claimed for tax periods 201812 and prior, follow the instructions in the paragraphs below.

  3. The SETP payment (or application of prior SETP payment) was reported on the following lines:

    Form Line Number
    Form 1120
    Form 1120 Consolidated with a subsidiary Form 1120-PC or Form 1120-L attached.
    Schedule J, Part III, Line 14 (Part II, Line 13 for 2017 -2011) identified by a notation in the margin or on the line referring to a "Form 8816" and/or SETP, and/or attached schedule, and/or Form 8816, Special Loss Discount Account and Special Estimated Tax Payments for Insurance Companies is attached.
    Form 1120-L Page 1, Lines 28b for 2018 (Lines 29b and/or 29d for 2017 and prior) and/or Form 8816 is attached.
    Form 1120-PC Page 1, Lines 15b for 2018 (Lines 14b and/or 14d for 2017 and prior) and/or Form 8816 is attached.

  4. If SETP are claimed, edit Action Code "342" and enter CCC "6" on the return. Give the return to the lead.

  5. C&E Lead or other assigned individual will do the following:

    1. Edit an action trail such as "Faxed to LB&I Exam 01-01-2018" (01-01-2018 would be the date faxed).

    2. Fax pages 1, 2, and 3 of the Form 1120, Form 1120-PC, and/or Form 1120-L and all Form 8816 to LB&I Exam at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ with your contact information (name, phone number and e-mail address). For a consolidated Form 1120, also fax the subsidiary return or attachment on which the SETP are identified. If the fax does not work, contact LB&I Exam directly at ≡ ≡ ≡ ≡ ≡ ≡ ≡ or e-mail ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

    3. Set the return aside in a location designated for Section 847 returns with a copy of fax acknowledgement or other record of correspondence with LB&I Exam. Check the bin daily to ensure returns have been properly communicated to LB&I Exam.

    4. LB&I Exam will respond within 72 hours by e-mailing a Form 3809, Miscellaneous Adjustment Voucher, to the person who provided the fax. Print the e-mailed Form 3809 on green paper and attach to the back of the return. If LB&I responds back stating the return is not a true Section 847 case, print that e-mail on green paper and attach to the back of the return.

    5. Place the return back in the processing pipeline.

Prompt Assessment (Form 4810) / Prompt Determination

  1. A "Prompt Assessment," Section 6501 is requested, either in the form of a letter or on Form 4810, Request for prompt Assessment Under Internal Revenue Code 6501(d). A "Prompt Determination," is requested under U.S.A. 505(b) of the U.S. Bankruptcy Code.

    If... And... Then...
    A Prompt Assessment or Prompt Determination request is not attached to a tax return,   Forward the Prompt Assessment/Prompt Determination request to Examination.
    A Prompt Assessment or Prompt Determination request is attached to a tax return, A TC "150" has not posted for that return, Process the return and forward the Prompt Assessment/Prompt Determination request to Examination with a copy of the tax return.
    A Prompt Assessment or Prompt Determination request is attached to a tax return, A TC "150" has posted for that return, Route the return and the Prompt Assessment/Prompt Determination request to Examination.

    Note:

    If the return is numbered, edit Action Code "370" and continue processing.

♦ Refund Returns (45-Day Jeopardy and High Dollar Refunds) ♦

  1. Document Perfection identifies refunds in jeopardy and requests manual refunds.

    Note:

    Expeditious processing of refund returns is critical if the 45 day period is about to expire.

    If... Then...
    A refund tax return is batched in a non-refund batch,
    1. Completely edit the return.

    2. Pull the return from the non-refund batch using local procedures.

    Note:

    Follow the instructions below when the processing date is more than 20 days after the received date or the return due date OR the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    The processing date is more than 20 days after the received date or the return due date (whichever is later) and the refund amount is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

     

    Note:

    "Refund" in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    1. Edit Action Code "341" for:

      • Form 1120

      • Form 1120-C

      • Form 1120-F

      • Form 1120-H

      • Form 1120-L

      • Form 1120-PC

      • Form 1120-REIT

      • Form 1120-RIC

    2. Edit CCC "U" for Form 1120-FSC, Form 1120-ND, and Form 1120-SF. Attach Form 4227 and check the "Reject Correction" box.

    3. Unnumbered returns: Give the return to the manager.

    4. Numbered returns: Leave in batch.

    The refund is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡,

     

    Note:

    "Refund" in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    • Unnumbered Returns:

      1. Pull the return from the batch.

      2. Code and edit the return as completely as possible.

      3. Edit Action Code "341" or CCC U (whichever is applicable).

        Note:

        For returns with CCC U, attach Form 4227, Intra-SC Reject or Routing Slip, and check the "Reject Correction" box.

      4. Make a copy of the first two pages of the return along with any page of the return that appears suspicious, see IRM 3.11.16.2.9, Criminal Investigation (CI) Referral.

      5. Edit an action trail "Copy to CI" or "CI Referral," or similar language in the lower left corner going vertically up the side of the return.

      6. Expedite processing.

    • Numbered Returns:

      1. Code and edit the return as completely as possible.

      2. Edit Action Code "341" (or CCC U as applicable)

      3. Attach Form 4227, Intra-SC Reject or Routing Slip, to the return, edit Action Code "341" on Form 4227, and leave in batch.

        Note:

        For returns with CCC U, attach Form 4227 and check the "Reject Correction" box.

      4. Make a copy of the first two pages of the return along with any page of the return that appears suspicious for Criminal Investigation (CI), see IRM 3.11.16.2.9, Criminal Investigation (CI) Referral.

      5. Edit an action trail "Copy to CI" or "CI Referral," or similar language in the lower left corner going vertically up the side of the return.

    The W&I Submission Processing TAS Liaison walks a return through C&E, In addition to normal editing, edit the following:
    1. CCC "O," to freeze the refund.

    2. CCC "Y," to send the return to ERS.

Examination of Tax Data

  1. This subsection addresses general tax data editing procedures.

Non-Standard or Prior Year Format

  1. All prior year returns must be reformatted to current year format, see prior year conversion exhibits and the Job Aids for specific year coding.

  2. If the return is on other than current form format (may be either a prior year or non-standard form) and the transcription lines cannot be numbered to agree with the current year return:

    1. Edit all available transcribed tax data items to the tax data portion of a blank current year form.

    2. Place a large "X" across the tax data entries of the prior year (or non-standard) form.

    3. Staple the forms together, attaching the dummied form (current format) on top so that ISRP can enter the entity data from the prior year (or non-standard) form.

Conversion of Form 1120-S to Form 1120

  1. If a taxpayer filed Form 1120-S and the Entity Control Unpostable Unit has determined the Taxpayer does not have a valid Small Business Election on file (Form 2553), Rejects will convert Form 1120-S to a Form 1120. No action is required for Document Perfection. Do not detach Form 1120-S.

    Caution:

    If a Form 1120 converted from Form 1120-S is received and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.16.3.8.2, Form 13596 - Reprocessing Returns, for more information.

Significant Entries

  1. Reference is made throughout this IRM to "significant entries." A significant entry is defined as any amount other than zero.

    Note:

    Blank, Dash, "None," "N/A," or zero are not significant entries unless otherwise specified.

Incomplete Return

  1. When the return serves only as a transmittal for statements, schedules, and other attachments, or is otherwise incomplete, analyze the supporting documents and edit the missing entries on the form itself.

  2. Examine attachments and edit the information to correct transcription lines of both the income and deduction sections. This does not apply to Consolidated - Mixed Component returns.

    Exception:

    See IRM 3.11.16.5.5, Minimum Edit.

    1. Edit the income section if Line 11 is the only entry in the income section.

    2. Edit the deduction section if Line 27 is the only entry in the deduction section.

    3. Edit the income and/or deduction section if blank and there is an indication the income and/or deduction items are included on an attachment (e.g., a notation such as "See attached," "See Schedule F," "Statement attached," etc.).

    Note:

    When a doubt exists concerning placement of an income or deduction item because of terminology used by taxpayer, edit income items as "other income" deduction items as "other deductions."

  3. Secured Delinquent Returns are returns secured by compliance personnel. If information is missing from one of these returns, correspond using an approved Correspondence Action Sheet.

Minimum Edit

  1. If Form 1120 does not require Balance Sheet inspection (see IRM 3.11.16.11.31, Schedule L, Balance Sheet, instructions), perform the least time-consuming edit on the income section and the deductions section through Total Deductions.

    1. If only totals are shown in Total Income and/or Total Deductions, edit Total Income to the Other Income line and/or edit Total Deductions to the Other Deductions line.

    2. If there is an entry on Form 1120, Page 1, Line 29b, enter Form 1120, Page 1, Line 4 (Dividends), from Schedule C, Page 2, Line 23a (Line 19 for 2017 and prior). Subtract the Line 4 (Dividends) amount from Line 11 (Total Income) to determine the difference. Enter the difference on Line 10 (Other Income).

      Exception:

      On a "Final" Form 1120, analyze and edit to right lines any entry on the attachments for Income and Deductions items.

    Note:

    (Form 1120 Only) Form 1120 filed by a large corporation (defined as a corporation with $10 million or more of assets in Box D), where "see attached" is notated in the Income Section and the Deduction Section, should be brought to the attention of your supervisor. Taxpayer correspondence should be initiated on these returns. Suggested language for the correspondence is as follows:
    "Complete every applicable entry space on Form 1120. Do not write "see attached" instead of completing the entry spaces. If you need more space on the forms or schedules, attach separate sheets, using the same size and format as the printed forms. Be sure to put the corporation's name and EIN on each sheet."

  2. Initiate correspondence using Letter 118C, Corporate Return Incomplete for Processing: Form 1120, Form 1120 Series, Form 1120-S if Form 1120, (Form 1120 Only), is filed by a large corporation (defined as a corporation with $10 million or more of assets in Box D), and "see attached" is notated in the Income Section and the Deduction Section.

Editing Dollars and Cents

  1. Document Perfection is not required to edit a vertical line, 00, dash, or decimal point to indicate dollars and cents.

    If... Then...
    • The taxpayer has entered money amounts showing dollars and cents separated by a decimal point,

    • The taxpayer has entered dollars only where dollars only should be entered,

    • The taxpayer has entered dollars only where dollars and cents should be entered,

    No editing is required.

Negative Entries

  1. Edit negative entries as follows:

    If... Then...
    Brackets are pre-printed on the form, No editing is required.
    The taxpayer indicates a negative amount with brackets or a minus (-) sign, No editing is required.
    Editing a negative amount to a transcription line (e.g., computing a line entry, entering a missing entry, etc.), Bracket the negative amount.

♦ Entity Perfection - General ♦

  1. The entity of a tax return identifies the taxpayer on the Business Master File. The entity area of the return has the following:

    • Employer Identification Number (EIN)

    • Name

    • "In-care-of" Name

    • Address

♦Bankruptcy♦

  1. If any of the Form 1120 series forms indicates bankruptcy (e.g., shows RECEIVER, TRUSTEE, or DEBTOR IN POSSESSION) in the entity area or on an attachment, route to Entity Control. Follow local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

♦ Entity Perfection - Employer Identification Number (EIN) ♦

  1. The EIN is a nine digit number (xx-xxxxxxx) assigned to identify the taxpayer.

  2. The EIN is located in the upper right area of the form ("Employer Identification Number" box).

  3. Determine the EIN as follows:

    1. If... And... Then...
      The EIN is missing, The correct EIN can be determined from the attachments and/or schedules, Edit the EIN to the proper location.
      The EIN is either a PTIN or Individual Taxpayer Identification Number (ITIN), or
      Multiple EINs are present,
      Unnumbered,
      1. Remove return from batch.

      2. Route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal, for EIN assignment.

      The EIN is either a PTIN or Individual Taxpayer Identification Number (ITIN), or
      Multiple EINs are present,
      Numbered,
      1. Edit Action Code "320" on

        • Form 1120

        • Form 1120-C

        • Form 1120-F

        • Form 1120-H

        • Form 1120-L

        • Form 1120-PC

        • Form 1120-REIT

        • Form 1120-RIC

        All other returns edit CCC "U."

      2. Leave return in batch.

      The EIN has any of the following conditions and can’t be determined from attachments and/or schedules:
      • Illegible;

      • Missing;

      • Other than 9 digits;

      • All zeroes; or,

      • All nines

      Unnumbered,
      1. Circle all illegible EINs, zeroes, or nines.

      2. Research IDRS.

      3. If found, edit to the proper location.

      4. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      The EIN has any of the following conditions and can’t be determined from attachments and/or schedules:
      • Illegible;

      • Missing;

      • Other than 9 digits;

      • All zeroes; or,

      • All nines

      Numbered,
      1. Circle all illegible EINs, zeroes, or nines.

      2. Edit Action Code "320" on

        • Form 1120

        • Form 1120-C

        • Form 1120-F

        • Form 1120-H

        • Form 1120-L

        • Form 1120-PC

        • Form 1120-REIT

        • Form 1120-RIC

        All other returns edit CCC "U."

      3. Leave return in batch.

      "PENDING," "APPLIED FOR," etc., is indicated in the EIN area, Unnumbered,
      1. Research IDRS.

      2. If found, edit to the proper location.

      3. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      "PENDING," "APPLIED FOR," etc., is indicated in the EIN area, Numbered,
      1. Edit Action Code "320" on

        • Form 1120

        • Form 1120-C

        • Form 1120-F

        • Form 1120-H

        • Form 1120-L

        • Form 1120-PC,

        • Form 1120-REIT

        • Form 1120-RIC

        All other returns edit CCC "U."

      2. Leave return in batch.

♦ Entity Perfection - Name Control ♦

  1. The Name Control consists of four characters or less.

    1. Valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank. However, blanks are only valid in the last three positions.

    2. Disregard the word "THE" in the Name Control only when followed by more than one word.

  2. See Job Aid Document 7071A, Name Control Job Aid - For Use Outside the Entity Area, to determine the Name Control.

  3. If Box E(3) "Name Change," Form 1120 is checked, route the return to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

    • Form 1120-C - Box D(3)

    • Form 1120-F - Box Name or address change

    • Form 1120-FSC - Box F(2)

    • Form 1120-H - Box (2)

    • Form 1120-L - Box E(2)

    • Form 1120-ND - Box D(2)

    • Form 1120-PC - Box E(2)

    • Form 1120-REIT - Box F(2)

    • Form 1120-RIC - Box E(2)

    • Form 1120-SF - Box (2)

  4. Edit the Name Control as follows:

    1. If... And... Then...
      Able to determine the Name Control,   Underline the Name Control.
      See Figure 3.11.16-2.
      Unable to determine the Name Control, Unnumbered,
      1. Research IDRS.

      2. If found, edit to the proper location.

      3. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      Unable to determine the Name Control, Numbered,
      1. Edit Action Code "352" (Name Research) on:

        • Form 1120

        • Form 1120-C

        • Form 1120-F

        • Form 1120-H

        • Form 1120-L

        • Form 1120-PC

        • Form 1120-REIT

        • Form 1120-RIC

      2. All other returns, edit CCC "U." Attach Form 4227 and indicate "Name Research" in the "Other (explain)" area.

      3. Leave return in batch.

    Figure 3.11.16-2

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    Please click here for the text description of the image.

♦ Entity Perfection - "In-Care-Of" Name ♦

  1. An "in-care-of" name can be identified by the words "in care of" or the symbols "c/o" or "%" (percent).

  2. Ensure the "in-care-of" name is in the proper location.

    If... Then...
    The "in-care-of" name is located on the street address line preceding the street address, Do not edit.
    The "in-care-of" name is located above the first name line or below the street address,
    1. Arrow the "in-care-of" name so it appears below the first name line and above the street address.

    The "in-care-of" name is shown on an attachment, Edit the "in-care-of" name above the street address beginning with the "%" or "c/o" in the first position.
    The street address for the "in-care-of" name is different from the street address of the corporation,
    1. Arrow the "in-care-of" street address below the "in-care-of" name or edit the "in-care-of" street address below the "in-care-of" name if included on an attachment.

    2. Circle the corporation street address and input TC "014."

    Note:

    Always circle the in-care-of symbol (% or c/o) if it is present with an address. Do not use the ampersand (&) and the percent sign (%) when editing address information.

  3. Determine a change in the in-care-of name by any of the following:

    • A check mark in the "Name change" box, or

    • A check mark in the "Address change" box, or

    • Taxpayer edits or added to the "in-care-of" ” name (e.g., original "in-care-of" name crossed out, new name added, etc.).

      If... Then...
      An "in-care-of" name is changed but there is no sign of an address change,
      1. Edit the "in-care-of" name as shown above.

      2. Continue editing the return.

      An "in-care-of" name is present and the "Address change" box is checked (or there is a sign of an address change),
      1. Edit the "in-care-of" name as shown above.

      2. Correct the address, see IRM 3.11.16.6.5, Entity Perfection - Domestic Addresses.

      3. Continue editing the return.

♦ Entity Perfection - Domestic Addresses ♦

  1. Perfect the address when the mailing address (Street or P.O. Box) is not easily identified.

    Exception:

    Do not perfect the address on amended returns (CCC "G" ).

  2. A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

  3. Perfect the address as follows:

    If... And... Then...
    An attachment shows the address was changed,   No perfection is necessary. ISRP will enter the complete address.
    There is an indication on an attachment that the address has been changed,   Edit the new address in the entity section of the return.
    Form 8822, Address Change Requested, or Form 8822-B, Change of Address or Responsible Party - Business , is attached, All apply:
    • Mailing address information is the same,

    • Form 8822 or Form 8822-B, Line 7, does not list a location address,

    • No entry on Form 8822-B, Lines 8 or 9,

    Take no action.
    Form 8822, Address Change Requested, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, Any applies:
    • Mailing address information is different,

    • Form 8822 or Form 8822-B, Line 7, lists a location address,

    • Form 8822-B, Lines 8 or 9, have an entry,

    Detach Form 8822 or Form 8822-B and route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.
    Both a P.O. Box and street address are shown, see Figure 3.11.16-3  
    1. Notate "TC 014" in the upper left margin.

    2. Input TC "014."

    Two street addresses are shown,  
    1. Underline the second street address.

    2. Notate "TC 014" in the upper left margin.

    3. Input TC "014."

    One street address is shown, The taxpayer changes the address to a P.O. Box,
    1. Notate "TC 014" in the upper left margin.

    2. Input TC "014."

    The city and state are not shown on the return, but are shown on an attachment,   Edit the city and state in the entity section of the tax return.
    The ZIP Code is missing or illegible, Is not available from the return or attachments, See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, to determine the ZIP Code.

    Note:

    Edit the 3 digits followed by "01" of the first ZIP Code listed for the applicable state (e.g., "99501" for Alaska).

    Only the first three digits of the ZIP Code can be determined,   Edit "01" for the fourth and fifth digits.
    The "Change of Address" box is checked, An "in-care-of" name is present,
    1. Edit the "%" (percent sign) or "c/o" to the left of the "in-care-of" name (in the first position) followed by the right name.

    2. Correct the address.

    The National Change of Address (NCOA) label is present,   Underline the Name Control.
    It is necessary to edit the street address,   See Document 7475, State and Address Abbreviations, Major City Codes, ZIP Codes, and Countries.
    The address contains information other than a street address or P.O. Box,   Do not perfect. ISRP will enter the complete address.

    Note:

    Always circle the "in-care-of" symbol ("c/o" or "%" ) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) when editing address information.

    Figure 3.11.16-3

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    Please click here for the text description of the image.

  4. The U.S. Postal Service established new address requirements for APO/DPO/FPO addresses. If the old address appears, convert to the new state code abbreviation based on the ZIP Code (e.g., APO New York, New York 091XX would be converted to APO AE 091XX). APO/DPO/FPO addresses are considered domestic addresses. Refer to Conversion Chart below:

    ZIP Code State Code
    340 AA
    090-098 AE
    962-966 AP

♦ Entity Perfection - Foreign Address (OSPC) ♦

  1. A foreign (international) address is any address that is not in the 50 states or the District of Columbia.

  2. Consider returns with APO, DPO, and FPO addresses as considered domestic addresses, see IRM 3.11.16.6.5, Entity Perfection - Domestic Addresses.

  3. Route returns with a foreign address to the Ogden Submission Processing Center (OSPC) for processing. Prepare Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer the return was sent to Ogden.

  4. Consider returns with addresses in the following U.S. Possessions/Territories as foreign for processing purposes. Edit the same way as domestic addresses.

    1. Edit a two-character alpha code for the possession name.

      U.S. Possession / Territory Abbreviation
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Palau PW
      Puerto Rico PR
      U.S. Virgin Islands (U.S.) VI

    2. A ZIP code must be present for U.S. Possessions/Territories. Edit the right ZIP Code if one is not provided, see Exhibit 3.11.16-18, U.S. Possessions ZIP Codes.

  5. All other foreign addresses are edited the same as a domestic address with the following exceptions:

    1. Ensure the foreign country is the last entry in the address.

    2. Circle the foreign country and edit the country code preceded by a "/" and followed by "/$" (e.g., "/GM/$" is edited for Germany). For official foreign country codes, see Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes, and Countries.

    3. Edit a unique country code for returns filed with an address in Canada, see IRM 3.11.16.6.6.1 Country Code - Canada.

      Note:

      Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid (Number 2324-002) provides examples for editing foreign addresses.

    4. Check if the address contains a province, state, or territory for the following foreign countries; Australia, Brazil, Cuba, Italy, Mexico, or The Netherlands.

      Note:

      There may be other countries with provinces, states, and territories not listed above, see Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid (Number 2324-002) for more information.

      If... Then...
      A province, state, or territory is present,
      1. Circle the province, state, or territory name.

      2. Edit the right abbreviation, see Exhibit 3.11.16-15, Province, State and Territory Abbreviations.

      A province, state, or territory is shown in abbreviated format, Continue editing the return.
      A province, state, or territory name is not present, Continue editing the return.

  6. A ZIP Code or state is not required on a foreign address. Foreign addresses use a postal code that is entered before the city or foreign country and is part of the address.

♦ Country Code - Canada ♦
  1. To assist Compliance with workload assignment, returns filed with an address in Canada will be edited using a unique country code based on the province.

    If... Then...
    The foreign address has a Canadian province/territory name, abbreviation, or postal code beginning letter shown in the table below,
    1. See table below to ensure the correct Canadian Province/Territory is present or edited to the return.

    2. Circle the country name.

    3. Edit the right "country" code based on the province/territory preceded by a "/" and followed by a "/$" as the last entry in the address.

    The foreign address does not have a Canadian province/territory name shown on the table below,
    1. Circle the country name.

    2. Edit the country code "/CA/$" as the last entry in the address.

    Canadian Province / Territory Province Abbreviation Postal Code beginning Country Code
    Alberta AB T XA
    British Columbia BC V XB
    Manitoba MB R XM
    New Brunswick NB E XN
    Newfoundland and Labrador NL A XL
    Northwest Territories NT X XT
    Nova Scotia NS B XS
    Nunavut NU X XV
    Ontario ON K, L, M, N, or P XO
    Prince Edward Island PE C XP
    Quebec QC G, H, or I XQ
    Saskatchewan SK S XW
    Yukon YT Y XY

  2. The rest of the foreign address is edited using procedures in IRM 3.11.16.6.6, Entity Perfection - Foreign Address (OSPC).

Tax Period

  1. This section addresses the editing of the period for which the tax return is being filed.

Tax Period - Ending

  1. All returns must have a tax period.

  2. Edit the tax period to the right of the form title in YYMM format.

    If... Then...
    The return is for the current processing calendar year (e.g., 202112), Do not edit the tax period.
    The return is for a prior year, Edit the tax period.
    The taxpayer has notated a tax period other than the preprinted year on the return, Edit the tax period based on the taxpayer’s indication, per paragraph (3).
    The tax period is missing, incomplete, or illegible,
    1. Review the return or attachments for the correct period.

    2. If found, edit the tax period to the right of the form title in YYMM format.

    3. If unable to determine the tax period after researching, process the return for the year currently being processed.

  3. A tax period should end on the last day of a month. (Ignore a minor discrepancy such as October 30 instead of October 31.) The exceptions are a 52/53 week filer, and final and/or short period returns. Correspond using Letter 319C, Return Covers Other Than 12-Month Accounting Period, if the exceptions do not apply. The table below identifies examples of tax periods.

    Tax Period Ends Tax Period
    Oct. 3, 2021 (52-53 week document) 2109
    Oct. 3, 2021 (Final short period return) 2110
    Oct. 25, 2021 (52-53 week document) 2110
    Oct. 25, 2021 (Final short period return) 2110
    Nov. 30, 2021 2111
    Dec. 31, 2021 2112 (No editing required)
    Feb. 28, 2022 2202

  4. Tax periods reported under the 52-53 week rule may end not more than six days before, and not more than three days after, the end of a month. In the edit format, use the numeric designation of the month, the last day of which is closest to the actual ending date.

    If... Then...
    The tax period ending date is not more than three days after the beginning of the month, Edit the previous month.
    (e.g., October 3, use the numeric designation for September, YY09.)
    The tax ending date is not more than six days before the end of the month, Edit the month shown on the return,
    (e.g., October 25, use the numeric designation for October, YY10.)

  5. If the tax period is for more than 12 months or 53 weeks, correspond.

  6. A "Final" short period return ends on the date the taxpayer went out of business. This may be any day of the month. Use the numeric designation of the calendar month in which it ends. If the taxpayer has not indicated in which month the business ended, edit the tax period to be one month before the received date.

  7. Edit the Tax Period Beginning on a "Final" return in MMDDYY format, see IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

  8. On a "Final" return if the tax periods month and year is equal to or later than the received dates month and year (future return), edit the tax period to be one month before the received date, see Figure 3.11.16-4.

    Note:

    If a prepaid credit is claimed on a short period "Final" return, see IRM 3.11.16.7.9, Short Period Returns - With Prepaid Credits.
    Form 1120, Page 3, Schedule J, Line 13, 14 or 17 (Lines 12, 13 or 16 for 2017-2011)

    Figure 3.11.16-4

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    Please click here for the text description of the image.

  9. On a "Final" return, if the received date is after the short period due date but on or before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, edit CCCs "R" and "F."

    Note:

    Also edit CCC "D" if the return is a Balance Due.

  10. The separate short period return of a subsidiary which became affiliated with a "consolidated" group may end on the day preceding such affiliation. As a practical matter, do not question the ending date on any change-of-accounting period return.

  11. Check all tax periods for the Statute of Limitation (two years and nine months from the normal due date of the return), see IRM 3.11.16.3.7, Statute Returns.

Tax Period Beginning - Initial, Final, or Short Period

  1. The Tax Period Beginning has been added to Form 1120, Form 1120-F, Form 1120-FSC, Form 1120-H, Form 1120-L, Form 1120-ND, Form 1120-PC, Form 1120-REIT, Form 1120-RIC and Form 1120-SF.

  2. Edit the Tax Period Beginning to the left of the Form 1120 title area in Month Month Day Day Year Year (MMDDYY) format on an Initial, Final, or Short Period return as follows: See Figure 3.11.16-5 below.

    If... Then...
    The Tax Period Beginning is present, Edit the Tax Period Beginning (MMDDYY).
    The Day is not present in the Tax Period Beginning, Edit "01" as the day (MM01YY).
    The Tax Period Beginning is not present, Editing is not required.

    Figure 3.11.16-5

    This is an Image: 33500002.gif

    Please click here for the text description of the image.

Early Filed Returns - Full Year and Short Period

  1. Never send an early filed return back to the taxpayer.

  2. If the month of the tax period is the same or after the month of the received date, determine how early the return has been filed:

    If... Then...
    • The received date and the tax period ending (TPE) are the same month (e.g., the received date and the TPE are both April), or

    • The received date is before the TPE by four months or less (e.g., the received date is April but the TPE is May, June, or July,

    1. Edit Action Code "480" for:

      • Form 1120

      • Form 1120-C

      • Form 1120-F

      • Form 1120-H

      • Form 1120-L

      • Form 1120-PC

      • Form 1120-REIT

      • Form 1120-RIC

      (Early Filed - Suspense).

    2. All other returns edit CCC "U" and attach Form 4227, Intra-SC Reject or Routing Slip. "Edit Early Filed - Suspense" in the "Other Activity" box.

    3. Leave return in batch.

    The received date is before the TPE by more than four months (e.g., the received date is April but the TPE is August or later),
    1. Edit Action Code "211" or "215" (International Correspondence) for:

      • Form 1120

      • Form 1120-C

      • Form 1120-F

      • Form 1120-H

      • Form 1120-L

      • Form 1120-PC

      • Form 1120-REIT

      • Form 1120-RIC

    2. Edit CCC "U" for Form 1120-FSC, Form 1120-ND, and Form 1120-SF.

    3. Attach an approved Correspondence Action Sheet to request confirmation of the TPE.

    4. Completely edit the return. Edit the future tax period indicated by the taxpayer.

    Note:

    Action Codes are only applicable to Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. Use CCC "U" for other returns in the 1120 series.

Short Period - Editing Proof of Entitlement

  1. A Short Period Return is one which covers a period of less than 12 months or 52-53 weeks.

    • If the Short Period Return is marked "Final," see IRM 3.11.16.7.1, Tax Period - Ending.

    • If the Short Period Return is marked "initial," "first return," "new corporation," etc., or meets any of the identifying conditions for "Initial Return Code," see IRM 3.11.16.9.4, Initial Return Code.

    • Process all other Short Period Returns as a "Change of Accounting Period." In such cases, proof of entitlement to the change is required.

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

  2. Use the table below to identify and edit proof of entitlement.

    Note:

    Research of IDRS using Command Code BMFOLE may be needed for the following chart.

    Proof of Entitlement

    If... And... Then...
    A statement the corporation is changing the tax period under:
    1. Headquarters "Grant Letter."

    2. Revenue Procedure 2006-45 or 2006-46.

    Command Code BMFOLE shows a TC 053 or TC 054,
    (This is an indication that the Form 1128, Application to Adopt, Change, or Retain a Tax Year, or National Office "Grant Letter" has been approved.)
    Continue processing

    Note:

    No CCC “Y” is needed.

    Note:

    Audit Code "3" is also applicable for Form 1120-F, Form 1120-FSC, and Form 1120-SF.
    For Form 1120-F, see IRM 3.11.16.32.14.2, Audit Codes,
    For Form 1120-FSC see IRM 3.11.16.33.16.1, Audit Codes, and
    For Form 1120-SF, see IRM 3.11.16.40.8.1, Audit Codes.

    A statement the corporation is changing the tax period under:
    1. Headquarters "Grant Letter."

    2. Revenue Procedure 2006-45 or 2006-46.

    Command Code BMFOLE shows a TC 059,
    (This is an indication that the Form 1128 or National Office "Grant Letter" has not been approved.)
    The return is unprocessable. Follow the instructions in IRM 3.11.16.7.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    A statement the corporation is:
    1. Coming out of consolidation; or

    2. (Parent) is no longer a consolidated group; or

    3. Filing under "Section 338 Election" or attached Form 8023, Elections Under Section 338 for Corporations Making Qualified Stock Purchases, and tax period begins after the acquisition date.

      Do all the following:
    1. Edit CCC "R" if filed before the specially privileged (full tax year of parent return) due date; and

    2. Edit CCC "Y."


    See Figure 3.11.16-6, Short Period - Editing Proof of Entitlement.
    26 CFR 1.1502-76 - returns may be identified by a notation referencing "Section 1.1502-76," "Changing the tax period to get in step with parent," "Affiliation with a Consolidated Group," or a similar statement on the return or attachment,   See IRM 3.11.16.7.4.1, Short Period Returns - 26 CFR 1.1502-76.
    Notation referring to:
    1. Section 898(c)(1)(A); or

    2. Election Change in Taxable Year under Section 898(c)(2); or

    3. "Section 1398 election" (Bankruptcy Petition has been filed), or

    4. "Second Short Year after Section 1398 Election"

      Edit CCC "Y." Do not correspond.
    Form 1128 attached, Command Code BMFOLE shows a TC 053 or TC 054,
    (This is an indication that the Form 1128 has been approved.)
    Continue processing

    Note:

    No CCC “Y” is needed.

    Form 1128 attached, Command Code BMFOLE shows a TC 059,
    (This is an indication that the Form 1128 has not been approved.)
    The return is unprocessable. Follow the instructions in IRM 3.11.16.7.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    Form 1128 attached, Command Code BMFOLE does not show a TC 053, 054 or 059, See IRM 3.11.16.7.7, Short Period Returns - Editing Form 1128 With no Indication of Approval or Disapproval.
    Notation on Form 1120 or 1120-F indicates: "Section 444 Election Terminated,"   Edit CCC "Y" if the tax return is for a Personal Service Corporation
    • (e.g., Form 1120, Page 1, Box A, Item 3 is marked or Schedule J, Page 3, Line 2 box is marked; or

    • Form 1120-F, Page 2, Question O is marked or Schedule J, Page 5, Line 2 box is marked).

     

    Figure 3.11.16-6

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Short Period Returns - 26 CFR 1.1502-76
  1. 26 CFR 1.1502-76 applies to returns filed by a corporation which becomes a member of a consolidated group during the tax year. These returns may be identified by a notation referencing "Section 1.1502-76," "Changing the tax period to get in step with parent," "Affiliation with a Consolidated Group," or a similar statement on the return or attachment.

    Note:

    It is important to recognize these returns and follow the procedures outlined in this section to ensure the correct penalty and interest are charged, if applicable.

  2. The short period return under 26 CFR 1.1502-76 is not due until the normal full 12-month due date of the short period return or the due date of the consolidated parent return, whichever is earlier.

  3. Always edit CCC "Y" on these returns.

  4. The computer will calculate the due date of the return according to the tax period of the short period return. Since the actual due date of the return under 26 SFR 1.502-76 may be later than the short period return due date, do the following:

    If ... And ... Then ...
    The received date is later than the short period return due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Before the consolidated return due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    Or,
    The normal full 12-month due date of the short period return ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡whichever is earlier,

    Note:

    If the consolidated return due date is unknown, use the normal full 12-month due date of the short period return.

    Edit CCC "R."

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

    Figure 3.11.16-7

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    Please click here for the text description of the image.

Short Period Returns - Missing Proof of Entitlement

  1. If proof of entitlement is missing or the taxpayer states on the return or an attachment that the corporation has filed an application but has not received a response, research IDRS using Command Code BMFOLE for approval or disapproval information and proceed as follows:

    If... Then...
    BMFOLE shows a TC 053, 054, or 055,
    (This is an indication that the Form 1128, Application to Adopt, Change, or Retain a Tax Year or Form 8716, Election To Have a Tax Year Other Than a Required Tax Year, has been approved.)
    Continue processing

    Note:

    No CCC “Y” is needed.

    BMFOLE shows a TC 058 or 059,
    (This is an indication that the Form 1128 or Form 8716 has not been approved.)
    The return is unprocessable, see. IRM 3.11.16.7.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    BMFOLE does not show a TC 053, 054, 055, 058, or 059, Correspond using Letter 319C, Return Covers Other Than 12-Month Accounting Period.

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

Short Period Returns - Editing a Disapproved Application (Form 1128)

  1. If Form 1128 is disapproved, the return is considered unprocessable:

    1. Edit Action Code "211" or "215" (International Correspondence) or CCC "U" and correspond.

    2. In the correspondence, instruct the taxpayer to file a return for the next regular full period due. Request a disposition of any remittance paid with the return or other credits which have posted to the short period module.

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

Short Period Returns - Editing Form 1128 with No Indication of Approval or Disapproval

  1. When a Form 1128 with no indication of approval or disapproval is attached and no proof of entitlement is present, research IDRS using Command Code BMFOLE for approval or disapproval and proceed as follows:

    If... Then...
    BMFOLE shows a TC 053 or 054,
    (This is an indication that Form 1128 has been approved.)
    Continue processing

    Note:

    No CCC “Y” is needed.

    BMFOLE shows a TC 059,
    (This is an indication that Form 1128 has not been approved.)
    The return is unprocessable.
    See IRM 3.11.16.7.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    BMFOLE does not show TC 053, 054, or 059, Take the actions in (2) below.

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

  2. A Form 1128 with neither approval or disapproval, discontinue processing Form 1120. Route Form 1120andForm 1128 to Entity as directed in the paragraphs below.

    1. If Form 1128 is attached to a numbered return, enter Action Code "320" for Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. Edit CCC "U" for all other returns. Attach Form 4227, Intra-SC Reject or Routing Slip, and check the box for Entity Control box. Edit the Form 1120 received date on Form 1128. (Do not detach Form 1128.) Leave the return in the batch and continue processing, see Figure 3.11.16-8.

    2. If Form 1128 is attached to an unnumbered return, edit the Form 1120 received date on Form 1128, attach Form 4227 and route the return to Entity Control. (Do not detach Form 1128.)

    3. Entity will process the Form 1128 and route the return back to C&E with a Form 4227 attached. The Form 4227 will indicate if the Form 1128 is approved, denied or if the Form 1128 was returned to the taxpayer and the words "Process Return" or "Let Unpost."

    Figure 3.11.16-8

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Short Period Returns - Editing Returning Correspondence

  1. If the taxpayer provides acceptable proof, follow instructions in IRM 3.11.16.7.4, Short Period - Editing Proof of Entitlement.

  2. If the taxpayer fails to reply, or does not provide tax period approval, enter CCC "3."

Short Period Returns - With Prepaid Credits

  1. Route to Accounting for possible adjustment action any return meeting both conditions below.

    1. A prepaid credit is claimed.

      Form Type Line Numbers
      Form 1120 Page 3, Schedule J, Line 13, 14 or 17 (Line 12, 13, or 16 for 2017-2011)
      Form 1120-C Line 30a, 30b, or 30e (Line 29a, 29b, or 29e for 2017 and prior)
      Form 1120-F Line 5a, 5b, or 5e
      Form 1120-FSC Line 2a, 2b, or 2e
      Form 1120-H Line 23a, 23b, 23d
      Form 1120-L Line 28a, 28b (reserved), 28c, or 28f (Line 29a, 29b, 29c, or 29g for 2017 and prior)
      Form 1120-ND Line 14a, 14b, or 14e
      Form 1120-PC Line 15a, 15b (reserved), 15c, or 15g (Line 14a, 14b, 14c, or 14g for 2017 and prior)
      Form 1120-REIT Line 25a, 25b, 25e (Line 24a, 24b, or 24e for 2017 and prior)
      Form 1120-RIC Line 29a, 29b, or 29e (Line 28a, 28b, or 28e for 2017 and prior)
      Form 1120-SF Line 16a, 16b, or 16e

    2. The return is a short period (an initial return, a final return or one with a change of accounting period).

  2. Take the following action when routing these returns to Accounting, see Figure 3.11.16-9.

    1. Enter Action Code "342" on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. Edit CCC "U" on all other returns. Attach Form 4227, Intra-SC Reject or Routing Slip check the "Accounting" box and notate "Short period return with ES Credits" .

    2. Continue normal processing.

    3. If the return shows a refund, see IRM 3.11.16.4, Refund Returns (45-Day Jeopardy and High Dollar Refunds).

      Reminder:

      Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

    Figure 3.11.16-9

    This is an Image: 33500012.gif

    Please click here for the text description of the image.

♦ Received Date ♦

  1. The date a document is received in the Campus or IRS Office is the date stamped as the "IRS Received Date."

  2. All Form 1120 series returns require an IRS Received Date.

    If... Then...
    The return is received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the legal or the extended due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡,
    See Exhibit 3.11.16-2, Due Date Chart.
    The return is considered timely.
    The due date falls on a weekend or legal holiday, The return is timely if postmarked by the first business day following the weekend or legal holiday.
    The IRS received date stamp ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the legal or extended due date and the postmark or shipment date is on or before the legal or extended due date, Edit the received date to agree with the postmark or shipment date.

    Note:

    The postmark or shipment date includes returns delivered by:

    • U.S. Postal Service,

    • Private Delivery Services (PDS), e.g., Federal Express Corporation (FedEx) or United Parcel Service (UPS), "designated" by the IRS. See IRM 3.10.72, Receiving, Extracting and Sorting, for a list of designated private delivery services, or

    • Returns with a Foreign Postmark.

    Caution:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    For certified mail only - If a postmark is not present, look for a "USPS.com Track & Confirm" record attached to the return (should be in front of the envelope). Use the "Acceptance" date on the record to determine timeliness and follow normal editing procedures, see Exhibit 3.11.16-19, USPS.com Track and Confirm.
    If the "USPS.com Track & Confirm" record is not attached, take no action.

  3. When a Form 1120 or Form 1120-F is delinquent and the taxpayer explains the return is late due to the rejection of a timely filed electronic return, check the return for a MeF rejection notification.

    Note:

    Taxpayers are instructed to notate in red in the top margin of the return "REJECTED ELECTRONIC RETURN" to indicate the timely filed return can’t be filed electronically. The notation could be anywhere on the return and is not required, but they should attach a copy of the MeF rejection notification.

  4. If a MeF rejection notification is not attached, perfection of the Received Date is not necessary. If a notification is attached, edit the IRS Received Date in MMDDYY format as follows:

    Note:

    The taxpayer has 10 days to resubmit an electronically filed return after being rejected and 10 days to submit a paper return after the last rejection.

    If ... And ... Then ...
    The postmark date is within 10 days of the date of the rejection,   Edit the IRS Received Date to be the date of the rejection.

    Example:

    Postmark date is 03-22-2022 and first rejection is 03-12-2022. Change Received Date to 031222.

    The postmark date is more than 10 days after the date of the rejection,   Leave the IRS Received Date as is.

    Example:

    Postmark date is 03-23-2022 and first rejection is 03-12-2022. Leave the Received Date as is.

    Exception:

    Change the Received Date to the postmark date if the postmark date makes the return timely.

    There are two rejections, Within 10 days of one another and one is within 10 days of the postmark date, Edit the IRS Received Date to be the date of the first rejection.

    Example:

    Postmark date is 03-22-2022, the second rejection is 03-12-2022. The first rejection is 03-09-2022 Change the Received Date to 030922.

    There are two rejections with the time between the first rejection and the second rejection greater than 10 days, The second rejection is within 10 days of the postmark date, Edit the IRS Received Date to be the date of the second rejection.

    Example:

    Postmark date is 03-22-2022, the second rejection is 03-12-2022. The first rejection is 03-01-2022 Change the Received Date to 031222.

    There are two rejections, Not within 10 days of one another and not within 10 days of the postmark date, Leave the IRS Received Date as is.

    Example:

    Postmark date is 03-23-2022, the second rejection is 03-12-2022. The first rejection is 03-01-2022. Leave the Received Date as is.

    Exception:

    Change the Received Date to the postmark date if the postmark date makes the return timely.

  5. The received date may or may not be stamped on the face of the return.

  6. A valid received date stamp may consist of the following:

    • The word "Received"

    • Month (alpha or numeric)

    • Day (for example "1" or "01" )

    • Year - four digits

    • "Area Office," Campus, "Field Office," "Taxpayer Assistance Center (TAC)" plus the City location or functional area within one of these sites (e.g., Compliance Services Collection Operations (CSCO), Examination, Image Control Team (ICT). Correspondence Imaging System (CIS), Accounts Management (AM), etc.).

    Exception:

    Not all IRS offices are designated places for filing, and not all IRS employees are authorized to accept a tax return for processing. If a return has a received date stamp from other than a Taxpayer Assistance Center (TAC), Lockbox, or IRS campus (Compliance, Accounts Management, or Submission Processing (SP)), circle out the invalid received date and edit the correct received date according to instructions below. For example, returns received by the Taxpayer Advocate Service (TAS) or the IRS Office of Chief Counsel are not properly filed and a received date by that office is not the "IRS Received Date."

  7. If the received date stamp is not present or the date is illegible or invalid, edit the received date in "MMDDYY" format in the middle of Page 1 of the tax return. Edit the received date according to the following priority:

    1. The earliest legible postmark date (U.S. Postal Service, Foreign Postmark, or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service Postmark (USPS) or Foreign Postmark date are as follows:

      If... Then...
      An envelope is not attached to the tax return, Use the postmark date stamped on the face of the return.
      A document was returned for insufficient postage, Use the postmark date that coincides with the correct delivery of the return.
      The postmark is missing and the envelope is certified,
      1. Look for the USPS.com Track & Confirm record that was attached to the return (should be in front of the envelope). Use the acceptance date on the record to determine timeliness and follow normal editing procedures, see Exhibit 3.11.16-19, USPS.com Track and Confirm.

      2. If the "USPS.com Track & Confirm" record is not attached, take no action.

      An envelope has a USPS and private metered postmarks, Always use the USPS postmark.
      An envelope has a foreign and private metered postmarks, Always use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private metered postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's Signature date.

    4. Signature date. (Only if within current year.)

    5. Julian control date minus 10 days.

    6. Current date minus 10 days.

  8. Edit the received date as follows.

    1. If... Then...
      A timely received date is the only received date stamped on the return, Do not edit.
      Two or more dates are stamped on the return,
      1. Use the earliest IRS received date stamp.

      2. Circle all other dates (handwritten or stamped) not needed for transcription.

      Note:

      Treat Received Dates that are circled out by another function as if they are not present.

      A Federal return is addressed to the IRS and delivered to a State agency, Use the Postmark Date as the received date.
      A Federal return is addressed to a State agency, Use the IRS date stamp as the received date.
      The only received date on the return is a Taxpayer Advocate Service (TAS) received date, Edit the received date according to (6) instructions above.

      Reminder:

      Check any envelope attached to the return for remittance. If found, hand carry remittance to manager.

  9. If a return is faxed to another area of IRS and then sent to Submission for processing, do not edit the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Edit a Received Date according to normal procedures.

    Caution:

    Do not use the EEFax date as the IRS received date.

Special Processing Codes

  1. This section addresses special processing codes.

♦ Computer Condition Codes ♦

  1. Computer Condition Codes (CCC) identify special conditions or computation for the computer. Computer Condition Codes post to the Master File.

  2. Computer Condition Codes are edited in the center of Lines 1 and 2 of the tax return.

CCC "A" - Form 2220
  1. No editing is required.

♦ CCC "B" - Schedule M-3 ♦
  1. Edit CCC "B" when the corporation checks the Schedule M-3 box on:

    1. Form 1120, Page 1, Box A, 4.

    2. Form 1120-C, Page 1, Box A, 2.

    3. Form 1120-F, Page 1, Schedule M-3 Box

    4. Form 1120-L, Page 1, Box A, 3.

    5. Form 1120-PC, Page 1, Box A, 3.

  2. Edit CCC "B" if Schedule M-3 is attached to Form 1120, Form 1120-C, Form 1120-L, Form 1120-F or Form 1120-PC.

    Note:

    For Form 1120, edit Audit Code "8" if Schedule M-3 is attached, see IRM 3.11.16.10.1, Audit Codes.

CCC "C" - Qualified Derivatives Dealers (Form 1120-F) or Partner’s Additional Reporting Year Tax (Forms 1120-FSC, 1120-ND or 1120-SF)
  1. Edit CCC "C" when either is present:

    • Form 1120-F, Page 2, Question CC is answered "Yes," or both the "Yes" and "No" boxes are checked.

    • Form 8978, Partner’s Additional Reporting Year Tax, is attached to a Form 1120-FSC, Form 1120-ND, or Form 1120-SF and the tax period is 201712 and later.

♦ CCC "D" - Reasonable Cause for Failing to Pay Timely ♦
  1. Do not edit CCC "D" if the taxpayer requests abatement for "Failing to Pay Timely" when the return is submitted. Send Letter 1382C, Penalty Removal Request Incomplete, to inform the taxpayer of the proper procedure to follow to request penalty abatement when a penalty is assessed, see IRM 3.11.16.3.4.2(4), Issuing Correspondence.

  2. Edit CCC "D" when the return is stamped: "DO NOT ASSESS FAILURE TO PAY PENALTY."

    Note:

    Do not enter CCC "D" if the return was prepared by IRS under IRC 6020(b) and the return due date (without regard to extensions) is after July 30, 1996.

  3. Edit CCC "D" on a "Final," Balance Due return if the received date is after the short period due date but on or before the regular full tax period due date≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  4. CCC "D" should be edited when a return has the special due date for "Co-Op" 1120 returns, see IRM 3.11.16.9.1.18, CCC "R" - Reasonable Cause for Failing to Timely File Return.

  5. Edit CCC "D" if a corporation attaches a statement indicating the corporation qualifies for an automatic 2 or 3 - month extension under 26 CFR 1.6081-5 (or regulations under IRC 6081), or the statement or return indicates one of the following:

    • The foreign corporation maintains an office or place of business in the United States.

      Note:

      It is not necessary to edit CCC "D" on Form 1120-F. The "Office or Place of Business Code" establishes the correct due date.

    • The domestic corporation transacts its business and keeps its books and records of account outside the United States and Puerto Rico, or

    • The domestic corporation's principal income is from sources within the possessions of the United States.

    Exception:

    Do not edit CCC "D" if the balance due is paid after the 15th day of the 6th month following the tax period ending date.

  6. Do not edit CCC "D" when pre-computed penalty is shown on the return.

CCC "E" - Potential Identity Theft Filing
  1. Effective January 1, 2017, Computer Condition Code "E" may be edited on Form 1120 series (any year) by the BMF ID Theft Liaison to identify a potential identity theft filing. If CCC "E" has been edited, no action is required by C&E.

    Note:

    CCC "E" may be edited by other functions. C&E will continue to follow procedures in Paragraph (2).

  2. If a tax examiner in Submission Processing (SP) Code and Edit (C&E) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft, provide the whole case to your senior/lead. Your senior/lead will expedite the case to the Planning and Analysis (P&A) staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must indicate that they are a victim of "ID Theft" ; do not send cases that are subject to "Criminal Investigation" (CI), "Examination " (Exam) or "Fraud" review.

  3. If the SP ID Theft Liaison says the return is "ID Theft," the tax examiner may (upon request) edit CCC "E."

♦ CCC "F" - Final Return ♦
  1. Edit CCC "F" when the "Final Return" box is checked or there is another indication the corporation is not liable for filing future returns. Notations may include (but are not limited to):

    • Final

    • Deceased

    • Out-of Business

    • Liquidation

    • Exempt under IRC 501(c)(3)

    • Dissolved

      Note:

      The presence of Form 966, Corporate Dissolution or Liquidation, is an indication of a possible dissolution. If Form 966 is attached, compare tax periods in Box 7A to the Form 1120 being edited. If the same and the entity section of Form 966 is for the parent corporation, edit CCC "F."

    • Cites IRC 708(b)(1)(B)

    • Notates "Filed per Rev. Proc. 2003-84"

  2. Edit the Tax Period Beginning in MMDDYY format per IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

  3. If a prepaid credit* is claimed on a short period "Final" return, enter Action Code "342" or CCC "U" on the return, see IRM 3.11.16.7.9, Short Period Returns - With Prepaid Credits.

    • *(Form 1120, Page 3, Schedule J, Line 13, 14 or 17 (Lines 12, 13 or 16 for 2017-2011)

♦ CCC "G" - Amended Return ♦
  1. See IRM 3.11.16.3.9, Amended Returns.

CCC "H" - Form 1042-S Attached to Form 1120-F
  1. Editing CCC "H" is no longer required.

CCC "I" - Form 6781, Tax Straddles and Future Contracts
  1. CCC "I" is valid for Form 1120, Form 1120-C, Form 1120-F, Form 1120-L, and Form 1120-PC.

  2. Edit CCC "I" when Form 6781, Gains and Losses from Section 1256 Contracts and Straddles, is present.

    Note:

    CCC "I" should be edited as a capital in block style to distinguish it from CCC "1."

CCC "J" - Section 965
  1. The instructions in this section only apply to tax periods 201712 through 202012.

  2. Edit a CCC "J" and Action Code "460" when any of the following conditions apply:

    • Form 965, Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System, is attached.

    • Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts, is attached.

    • IRC 965 Transition Tax Statement (or similar statement), is attached (for TY2017).

    • A significant entry is present on any of the following forms and/or lines.

      Note:

      A significant entry is defined as any amount other than zero.

      Form Lines
      Form 1120
      • Schedule C, Line 15

      • Schedule J, Line 12

      • Schedule J, Line 22

      • Page 1, Line 32

      Form 1120-C
      • Schedule C, Line 15

      • Page 2, Line 29

      • Page 2, Line 30i

      Form 1120-L
      • Page 1, Line 27

      • Page 1, Line 28i

      Form 1120-PC
      • Page 1, Line 14

      • Page 1, Line 15d

      Form 1120-REIT
      • Page 2, Line 24

      • Page 2, Line 25h

      Form 1120-RIC
      • Page 2, Line 28

      • Page 2, Line 29i

  3. Do not issue correspondence on the return. ERS will correspond for any missing information, see IRM 3.11.16.2.12, Section 965 Returns.

CCC "K" - Form 8697
  1. Edit CCC "K" when Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, is attached and shows a balance due in Part I, Line 10 and/or Part II, Line 11. The tax will be claimed on Form 1120, Schedule J, Line 9c. If Form 8697 is missing, correspond for the missing form.

CCC "L" - Treaty Based Positions
  1. Edit CCC "L" when taxpayer writes "Section 6114 Election" on the return or Form 8833, Treaty-Based Return Position Disclosure Under IRC 6114 or 7701(b), is attached.

    Note:

    Edit Audit Code "2" if Form 8833 is attached to Form 1120, Form 1120-PC, Form 1120-REIT, or Form 1120-RIC, see IRM 3.11.16.10.1, Audit Codes.

CCC "M" - Opportunity Zones
  1. Edit a CCC "M" when:

    • Tax period ending is 201712 and later, and

    • Form 8949, Sales and Other Dispositions of Capital Assets, is attached and Form 8949, column (f) has a code "Z" or "Y," see Figure 3.11.16-27.

    Note:

    Tax Cuts and Jobs Act of 2017, P.L. 115-97 (H.R. 1), Section 13823, Opportunity Zones. Taxpayers who elect to defer gain on the sale of an asset by investing in an Opportunity Zone Fund will indicate that they are deferring the gain by entering code "Z" or "Y" in column (f).

CCC "N" - Joint Committee Case
  1. Edit CCC "N," Joint Committee Case, when an unusual credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is claimed on:

    • Form 1120, Page 3, Schedule J, Lines 13 through 22 (Lines 12 through 19 for 2017-2011)

    • Form 1120-L, Page 6, Schedule K, Lines 5a through 5e

    • Form 1120-PC, Page 1, Lines 8a through 8e

    • Form 1120-FSC, Page 1, Lines 2a through 2g

    • Form 1120-SF, Page 1, Lines 16a through 16e

  2. Unusual credits are defined as follows:

    • Form 1120-PC, Line 15h states: By reciprocal for tax paid by Attorney in Fact under Section 835(d).

    • A credit claimed under IRC 1341 or a "Claim of Right" for refund of excessive prior year taxes.

    • Credits claimed under IRC 1383 in a subsequent year for a refund of excessive prior year taxes.

  3. Usual credits are defined as follows:

    • A refundable credit normally found on Form 1120, Page 3, Schedule J, Lines 13 through 22 (Lines 12 through 19 for 2017-2011)

    • Form 7004 payment.

    • Estimated tax payments.

    • Credit from Regulated Investment Company.

    • Fuel Tax Credit present on Schedule J, Line 20b (Line 19b 2017-2011).

    • A refundable credit claimed with or without Form 8288-A, Statement of Withholding on Certain Dispositions by Foreign Persons, Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, or Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, are attached.

      Note:

      Form 8288-A credit must be verified by OSPC Foreign Team.

CCC "O" - Module Freeze
  1. CCC "O" is entered when a Pre-Settlement Manual Refund will be made and a Form 3753, Form 5792, or Form 12857 is attached. Verify that the name control, EIN, and tax period on the return are the same as the data on the form.

    1. Research to determine if "TC 840" (Manual Refund Transaction) has posted:

      If... Then...
      "TC 840" has posted, Edit CCC "O" and continue processing.
      "TC 840" has not posted,
      1. Enter Action Code "341" for:

        • Form 1120

        • Form 1120-C

        • Form 1120-F

        • Form 1120-H

        • Form 1120-L

        • Form 1120-PC

        • Form 1120-REIT

        • Form 1120-RIC

        to issue Manual Refund.

      2. All other returns edit CCC "U" and attach Form 4227, Intra-SC Reject or Routing Slip. Check the "Accounting" box on Form 4227.

  2. Edit CCC "O" if there is an entry on:

    1. Form 1120, Schedule J, Part III, Line 15 (Line 14 for 2017-2011).

    2. Form 1120-C, Line 30c (Line 29c for 2017 and prior).

    3. Form 1120-F, Line 5c.

    4. Form 1120-FSC, Line 2c.

    5. Form 1120-L, Line 28e (Line 29e for 2017 and prior).

    6. Form 1120-ND, Line 14c.

    7. Form 1120-PC, Line 15e (Line 14e for 2017 and prior).

    8. Form 1120-REIT, Line 25c(Line 24c for 2017 and prior).

    9. Form 1120-RIC, Line 29c (Line 28c for 2017 and prior).

    10. Form 1120-SF, Line 16c.

  3. Edit CCC "O" when the Wage and Investment (W&I), Submission Processing (SP), Taxpayer Advocate Service (TAS) Liaison walks a return through C&E.

CCC "P" - Form 1118 - Foreign Tax Credit (Corporations)
  1. Edit CCC "P" when ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on any of the following lines:

    • Form 1120, Schedule J, Line 5a.

    • Form 1120-C, Schedule J, Line 5a.

    • Form 1120-REIT, Schedule J, Line 3a.

    • Form 1120-RIC, Schedule J, Line 3a.

♦ CCC "Q" ♦
  1. No editing required.

♦ CCC "R" - Reasonable Cause for Failing to File a Timely Return ♦
  1. Do not edit CCC "R" when a reason is given for the delay in filing a return. Issue Letter 1382C, Penalty Removal Request Incomplete, and continue editing the return, see IRM 3.11.16.3.4.2(4), Issuing Correspondence.

  2. Special Rules for Form 1120 Cooperatives: Certain non-farm Cooperative ("Co-Op" ) returns are filed on Form 1120 instead of the usual Cooperative Form 1120-C or 990-C. These filers are entitled to a return due date on the 15th day of the ninth month following the close of the taxable year. Both CCC "R" and CCC "D" should be edited to returns identified as 1120 Cooperatives. Indication of this status is made by the taxpayer and may include the word "Cooperative" in the name, along with notations such as:

    • IRC 6072 (d) (2),

    • References to "Subchapter T" of the Internal Revenue Code ("IRC" ),

    • IRC 1381-1388 referenced,

    • IRS Regulations Section 1.6072-2(d) referenced.

      Note:

      If the word "Cooperative" is the only indicator, do not edit CCC "R." It should be used in addition to one or more of the other indicators named above.

  3. Edit CCC "R" if a corporation attaches a statement indicating the corporation qualifies for an automatic 2 or 3 - month extension under 26 CFR 1.6081-5 (or regulations under IRC 6081), or the statement or return indicates one of the following:

    • The foreign corporation maintains an office or place of business in the United States.

      Note:

      It is not necessary to edit CCC "R" on Form 1120-F. The "Office or Place of Business Code" establishes the correct due date.

    • The domestic corporation transacts its business and keeps its books and records of account outside the United States and Puerto Rico, or

    • The domestic corporation's principal income is from sources within the possessions of the United States.

    Exception:

    Do not edit CCC "R" if the return is filed after the 15th day of the 6th month following the tax period ending date.

  4. Edit CCC "R" on a "Final" return if the received date is after the short period due date but on or before the regular full tax period due date≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  5. Edit CCC "R" on the return when any of the following conditions are present:

    • There is an indication such as "DO NOT ASSESS FAILURE TO FILE PENALTY" on a secured return annotated with "599."

    • If an internal use form or routing slip is attached and indicates do not assess failure to file penalty.

      Note:

      All "R" coded returns must have an IRS Received Date. If one is not present, edit the IRS Received Date in the middle of the return.

      Note:

      CCC "R" cannot be used with CCC "4."

CCC "S" - Form 8883, Asset Allocation Statement
  1. Edit CCC "S" when Form 8883 is attached to Form 1120, Form 1120-C, Form 1120-F, Form 1120-FSC, Form 1120-L, Form 1120-PC, Form 1120-REIT, or Form 1120-RIC.

    Reminder:

    Audit Code "3" will also apply when a Form 8883 is attached ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, see IRM 3.11.16.10.1, Audit Codes

CCC "T" - Form 8886, Reportable Transaction Disclosure Statement
  1. Edit CCC "T" when Form 8886 is attached to Form 1120, Form 1120-C, Form 1120-F, Form 1120-FSC, Form 1120-H, Form 1120-L, Form 1120-ND, Form 1120-PC, Form 1120-REIT, Form 1120-RIC, or Form 1120-SF.

    Note:

    Edit Audit Code "1" if Form 8886 is attached, see IRM 3.11.16.10.1, Audit Codes.

CCC "U" - Unprocessable Document
  1. Edit CCC "U" on any Form 1120-FSC, Form 1120-ND, or Form 1120-SF that has an unprocessable condition.

    Note:

    Action Codes are used for unprocessable conditions on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

CCC "V" - Qualifying Therapeutic Discovery Project Credit
  1. Editing CCC "V" is for prior year returns older than 10 years (tax year 2010 (including 2010 fiscal year filers ending in 2011).

♦ CCC "W" - Return Cleared by Statutes ♦
  1. CCC "W" is used when the return was cleared by Statute control, see IRM 3.11.16.3.7, Statute Returns.

CCC "X" - Refund/Settlement Freeze
  1. Edit CCC "X" when the taxpayer indicates on the tax return a request that any balance left over after paying tax and/or penalties to be applied to another account. Take the following action to route the request to Accounts Management.

    1. Prepare Form 3465, Adjustment Request, and indicate in the "Routing" box "Adjustments."

    2. Notate the requested action in the "Remarks" box.

    3. Attach a photocopy of Page 1 of the tax return to Form 3465.

    Reminder:

    Subtract the tax, penalties and interest amounts from the remittance amount if available.

CCC "Y" - Short Period Return for Change of Accounting Period
  1. CCC "Y" is edited for Change of Accounting Period. Enter only for short period returns due to change of accounting period (not due to initial or final filing), see IRM 3.11.16.7.4, Short Period - Editing Proof of Entitlement, through IRM 3.11.16.7.9, Short Period Returns - With Prepaid Credits.

  2. Edit the Tax Period Beginning in MMDDYY format per IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

  3. If a prepaid credit* is claimed on a short period return, enter Action Code "342" or CCC "U" on the return, see IRM 3.11.16.7.9, Short Period Returns - With Prepaid Credit.

    • Form 1120, Page 3, Schedule J, Line 13, 14 or 17 (Line 12, 13, or 16 for 2017-2011) or applicable line on other Form 1120 series.

  4. Edit CCC "Y" when the Wage and Investment (W&I), Submission Processing (SP), Taxpayer Advocate Service (TAS) Liaison walks a return through C&E.

CCC "Z" - Schedule UTP (Form 1120 ), Uncertain Tax Position Statement
  1. Schedule UTP (Form 1120), Uncertain Tax Position Statement, is a high priority form.

  2. Edit CCC "Z" if Schedule UTP is attached to a Form 1120, Form 1120-F, Form 1120-L, or Form 1120-PC.

    Note:

    Do not edit a CCC "Z" if Schedule UTP has no entries.

CCC "1" - Like-Kind Exchange
  1. Edit CCC "1" if Form 8824 is attached.

CCC "2" - Statement of Specified Foreign Financial Assets
  1. Edit CCC "2" if Form 8938, Statement of Foreign Financial Assets, is attached. (Form 1120 only), see IRM 3.11.16.11.32.10, Schedule N, Line 8 - Form 8938, Statement of Specified Foreign Financial Assets.

♦ CCC "3" - "No Reply" to Correspondence ♦
  1. Edit CCC "3" when the tax return is unprocessable and there is a sign that correspondence was sent and no reply received.

♦ CCC "4" - IRC 6020(b) Return ♦
  1. CCC "4" is not valid for Form 1120 series at this time.

CCC "5" - Bank Holding Company Tax Act
  1. Edit CCC "5" when there is a statement electing to make installment payments for a portion of the total tax attributable to the Bank Holding Company Tax Act, see Figure 3.11.16-10.

    Figure 3.11.16-10

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    Please click here for the text description of the image.

CCC "6" - Section 847 Deductions
  1. The instructions for CCC "6" only apply to tax periods 201812 and prior. For tax periods 201901 and later, no action is needed.

  2. Edit CCC "6" when any of the following is present:

    • Form 1120, Form 1120-L, or Form 1120-PC indicates a "Section 847 Deduction." Form 8816, also, indicates a "Section 847 Deduction," see IRM 3.11.16.3.10, IRC 847 Deduction.

    • Form 1120 includes a notation stating "Form 8816" with a corresponding entry for the amount of the deduction on Schedule J, Part III, Line 14 (Part II, Line 13 for 2017-2011).

    • Form 1120-L includes an entry on Line 28b for 2018 (Line 29b and/or 29d for 2017-2011).

    • Form 1120-PC includes an entry on Line 15b for 2018 (Line 14b and/or 14d for 2017-2011).

    • See Figure 3.11.16-11, CCC 6 - Section 847 Deduction.

    Figure 3.11.16-11

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    Please click here for the text description of the image.

CCC "8" - Waiver of Estimated Tax Penalty
  1. Edit CCC "8" when any of the following is present:

    • Form 2220 is attached and Part II, Box 6 or Box 7 is checked, see Figure 3.11.16-12.

    • Form 2220 is attached and any column on Form 2220, Schedule A, page 4, Line 38 has entries.

    Figure 3.11.16-12

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    Please click here for the text description of the image.

CCC "9" - Low-Income Housing Credit
  1. Edit CCC "9" when any of the following conditions exist:

    • Form 1120, Schedule J, Line 9b has a significant entry.

    • Form 1120-C, Schedule J, Line 8 has a significant entry.

    • Form 1120-REIT or Form 1120-RIC, Schedule J, Line 6 has a significant entry.

    • Form 8611 or Form 8693 is attached,

    • Taxpayer notates "Form 8693,"

    • Form 8609 is attached ,

    • Form 8609-A is attached.

    • Form 8586 with entries on Line 1 or 3.

Return Processing Code (RPC)

  1. Return Processing Code (RPC) is an alpha or numeric character used to alert the computer to a special condition or computation.

  2. RPCs are edited on Page 1, in the right margin next to Line 1c of Form 1120.

  3. More than one RPC can be edited and in any order.

  4. Refer to the table below for an explanation of when to edit each RPC.

    RPC Explanation
    A Form 5471, Schedule E, Income, War Profits, and Excess Profits Taxes Paid or Accrued, is attached.
    B Form 5471, Schedule H, Current Earnings and Profits, is attached.
    C Form 5471, Schedule I-1, Information for Global Intangible Low-Taxed Income, is attached.
    D Form 5471, Schedule P, Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations, is attached.
    E Form 8865, Schedule G, Statement of Application for the Gain Deferral Method Under Section 721(c), is attached.
    F Form 8865, Schedule H, Acceleration Events and Exceptions Reporting Relating to Gain Deferral Method Under Section 721(c), is attached.
    1 Form 8991, Tax on Base Erosion Payments of Taxpayers with Substantial Gross Receipts, is attached.
    2 Form 8992, U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI), is attached.
    3 Form 8993, Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI), is attached.
    4 Form 8994, Employer Credit for Paid Family and Medical Leave, is attached.
    6 Form 8996, Qualified Opportunity Fund, is attached.
    7 Form 8990, Limitation on Business Interest Expense IRC 163(j), is attached.
    9 Form 8997, Initial and Annual Statement of Opportunity Fund (QOF) Investments, is attached.

ABLM Code and Schedule M-3 Checkbox

  1. ABLM is not an acronym. The letters are a carryover from when Form 1120 was generic. The ABLM Code identifies a specific type of tax return. The ABLM letters are defined as follows:

    • A - Consolidated Tax Return

    • B - Personal Service Corporation

    • L - Life Insurance Tax Return

    • M - Mutual Fund Tax Return

  2. ABLM Codes are valid for Form 1120, Form 1120-REIT, and Form 1120-RIC.

  3. Edit an ABLM code in the margin by Boxes A - 1, A - 2, and A - 3 to the left of the name line as instructed in paragraphs (4) through (7) below.

  4. There is no need to edit the ABLM Code on Form 1120-C, Form 1120-L or Form 1120-PC because it is computer-generated.

    Note:

    For Form 1120-REIT, and Form 1120-RIC, if no code applies, leave the area blank.

  5. If ABLM Code "010" is entered on Form 1120, the return must be batched as a "Consolidated Return." If not, reject for proper batching. Enter Action Code "610" if the return is numbered.

  6. Only one ABLM Code should be entered; edit in the following priority:

    • 400 - Box A - 3

    • 010 - Box A - 1a or A - 1b

    • 001 - Box A - 2

    Note:

    If ABLM Code "400" is edited on a Consolidated Return, Form 851 processing procedures must also be followed, see IRM 3.11.16.27.3, Form 851 - Affiliations Schedule.

  7. Code ""010" " when any of the following apply (Form 1120 only):

    1. Box A - 1a or Box A - 1b (Box A -1 for 2006 and prior) is checked, see Figure 3.11.16-13 a.

    2. Subsidiaries are listed on Form 851 or Form 1122 is attached.

  8. Code "001" when any of the following apply:

    1. Box A - 2, Page 1, Form 1120 is checked, see Figure 3.11.16-13 b.

    2. Box B - 2, Page 1, Form 1120-REIT is checked.

    3. Box F, Page 1, Form 1120-RIC is checked.

    4. Schedule PH (Form 1120) is attached to Form 1120, Form 1120-REIT, or Form 1120-RIC.

    5. Form 1120, Page 3, Schedule J, Line 8 has an entry.

    6. Form 1120-REIT, Page 3, Schedule J, Line 5 has an entry.

    7. Form 1120-RIC, Page 3, Schedule J, Line 5 has an entry.

    Note:

    If Form 1120, Schedule J, Line 8* has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, correspond. for Schedule PH if not attached, see IRM 3.11.16.11.16, Schedule J, Line 8 - Personal Holding Company Tax.
    *(Form 1120-REIT or Form 1120-RIC, Schedule J, Line 5.)

  9. Code "400" when any of the following apply:

    1. Box A - 3, Page 1, Form 1120 is checked.

    2. The box on Form 1120, Page 3, Schedule J, Line 2 is checked (2017 and prior).

    Note:

    Also edit Personal Service Corporation Code "2" if the box on Form 1120, Page 3, Schedule J, Line 2 is checked (201811 and prior).

Schedule M-3 Checkbox
  1. Edit Computer Condition Code "B" when the box for Schedule M-3 is marked, see Figure 3.11.16-13 c.

    1. Form 1120, Page 1, Box A, 4.

    2. Form 1120-C, Page 1, Box A, 2.

    3. Form 1120-F, Page 1, Schedule M-3 box

    4. Form 1120-L, Page 1, Box A, 3.

    5. Form 1120-PC, Page 1, Box A, 3 (Box A, 2 for 2006).

  2. Edit Computer Condition Code "B" when Schedule M-3 is attached to Form 1120, Form 1120-C, Form 1120-F, Form 1120-L, or Form 1120-PC.

    Note:

    Audit Code , "7" and "8" may also be required for Form 1120. Audit Code "2" may be required for Form 1120-PC, see IRM 3.11.16.10.1, Audit Codes.

    Figure 3.11.16-13

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♦ Initial Return Code ♦

  1. Initial Return Code is valid for Form 1120, Form 1120-REIT, and Form 1120-RIC.

  2. Edit an Initial Return Code "2" in the margin to the right of the Date Incorporated if any of the following conditions are met:

    1. The "Initial return" box under the entity area is checked.

    2. Page 1, Box B (1120-RIC), Box C (1120), Box D (1120-REIT) has a date incorporated which is within 12 months from the tax period ending date, seeFigure 3.11.16-14a.

    3. There is a taxpayer notation of initial filing, such as, , "New Corporation," etc.

    4. The incorporation date is within 24 months from the tax period ending date (or is not shown) and the taxpayer's Balance Sheet, "Beginning of tax year" is blank or zeroes,seeFigure 3.11.16-14"First Return" b.

      Reminder:

      Edit the Tax Period Beginning on an "Initial" Short Period return in MMDDYY format, see IRM 3.11.16.7.2, Tax Period Beginning - Initial, Final, or Short Period.

      Note:

      Do not edit Initial Return Code "2" if the balance sheet is missing or the balance sheet has been dummied.

    Initial Return/ Tax Period Ending 24 Month Rule/24 Month Cutoff Date
    2203 04/01/2020
    2202 03/01/2020
    2201 02/01/2020
    2112 01/01/2020
    2111 12/01/2019
    2110 11/01/2019
    2109 10/01/2019
    2108 09/01/2019
    2107 08/01/2019
    2106 07/01/2019
    2105 06/01/2019
    2104 05/01/2019
    2103 04/01/2019
    2102 03/01/2019
    2101 02/01/2019
    2012 01/01/2019
    2011 12/01/2018
    2010 11/01/2018
    2009 10/01/2018
    2008 09/01/2018
    2007 08/01/2018
    2006 07/01/2018
    2005 06/01/2018
    2004 05/01/2018
    2003 04/01/2018
    2002 03/01/2018
    2001 02/01/2018
    1912 01/01/2018
    1911 12/01/2017
    1910 11/01/2017
    1909 10/01/2017
    1908 09/01/2017

    Figure 3.11.16-14

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Additional Return Perfection

  1. Elements will be edited in the left margin near Line 12 (Line 2 for Form 1120-F, Form 1120-FSC and Line 5 for Form 1120-ND) preceded by the applicable number as follows:

    Element... Edit...
    1 - Form 8844 Indicator "1 - 1."
    See IRM 3.11.16.11.14.2, Form 8844 - Empowerment Zone Employment Credit.
    2 - Audit Code "2 -" followed by the right Audit Code (e.g., "2 - 1" ).
    See IRM 3.11.16.10.1, Audit Codes.
    3 - Missing Schedule Code Normal correspondence procedures will replace Missing Schedule Codes. Do not edit Missing Schedule Codes.
    See IRM 3.11.16.3.4.2, Issuing Correspondence.
    4 - Penalty and Interest Code "4 - 1."
    See IRM 3.11.16.10.2, Penalty and Interest Code.
    5 - Reserve Code "5 - 4." .
    See IRM 3.11.16.10.3, Reserve Code.
    6 - Installment Sale Indicator "6 -" followed by the right Installment Sale Indicator (e.g., "6 - 3" ).
    See IRM 3.11.16.10.4, Installment Sale Indicator (Form 6252).
    7 - Form 1120-F Indicator "7 - 1" if Form 1120-F has both Non-Effectively (Section I) and Effectively (Section II) Connected Income.

    Note:

    Check for proper blocking of returns and re-block as required.
    See IRM 3.11.16.32.14.6, Form 1120-F Indicator.

Audit Codes

  1. Up to 9 Audit Codes can be used. Do not use an Audit Code more than once.

    Note:

    Audit Codes do not need to be edited in a specific order.

  2. Edit a "2 -" followed by the right Audit Code(s) in the left margin near Line 12* (e.g., "2 - 1" ).

    • *(Line 2 for Form 1120-F, Form 1120-FSC and Line 5 for Form 1120-ND)

  3. Audit Code "1" - Disclosure Statement or Inconsistent Treatment. Edit Audit Code "1" if any of the following conditions are present:

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

    2. Form 8275, Disclosure Statement, or Form 8275-R, Regulated Disclosure Statement, is attached, or a statement referring specifically to IRC 6662 (Disclosure).

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

      Note:

      Edit CCC "T" if Form 8886 is attached, see IRM 3.11.16.9.1.20, CCC "T" - Form 8886, Reportable Transaction Disclosure Statement.

  4. Audit Code "2" - International. Edit Audit Code "2" when any of the following conditions are present:

    1. An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ appears on Page 2, Schedule C, for any of the following Lines: 3, 6, 7, 8, 12, 13, 14, 15 16a, 16b, 16c, 17, 18, and/or 19 (Lines 3, 6, 7, 8, 12, 13, 14, 15, and/or 16 for 2017 and prior). (Form 1120-PC, Page 4, Schedule C, Lines 3, 6, 7, 8, 10, 11, 12a, 12b, 12c, 13, and/or 14. (Lines 3, 6, 7, 8, 10, 11, and/or 12 for 2017 and prior).

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

    3. Form 1116, Foreign Tax Credit (Individual, Fiduciary or Nonresident Alien Individual) is attached and reflects ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ foreign tax credit (Part IV, Line 29).

    4. Form 1118, Foreign Tax Credit - Corporations, is attached and reflects ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ foreign tax credit on Form 1120, Schedule J, Line 5a (or applicable line on Form 1120-PC, Form 1120-REIT, or Form 1120-RIC).

    5. Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More, is attached and any of the following are present:
      - Any entry on Part II, Column (c), Lines 2 through 5 or 10 is a negative amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or
      - Any entry on Part III, Column (c), Lines 5 through 7 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or
      - The sum of Part III, Columns (b) plus (c) of any of Lines 9 or 23 - 25 (Lines 8, 23, 24 or 25 for Form 1120-PC) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    6. Schedule N (Form 1120), Foreign Operations of U.S. Corporations, is attached and Questions 1a, 3, 4a (2019 and prior revision), 5, or 7a are answered "Yes."

    7. Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, is attached.

    8. Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner (under IRC 6048(b)), is attached.

    9. Form 5471, Information Return of U.S. Persons with Respect to a Foreign Corporation, is attached, or Schedule N (Form 1120), Foreign Operations of a U.S. Corporations, Line 4a (2019 and prior revision) is marked "Yes."

    10. Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the Internal Revenue Code), is attached.

    11. Form 5713, International Boycott Report, is attached and both questions in 7(f) are answered "Yes."

    12. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualifying Electing Fund, is attached and any line in Part V, Lines 15a though 16f* has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. *(Part IV, Lines 10a - 11f for 2011 and prior)

    13. Form 8832, Entity Classification Election, is attached and either Box 6(d), (e), or (f) is checked.

    14. Form 8833, Treaty-Based Return Position Disclosure Under IRC 6114 or 7701(b), is attached.

    15. Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs), is attached or Schedule N (Form 1120), Foreign Operations of U.S. Corporations, Question 1a is marked "Yes."

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

    17. Form 8902, Alternative Tax on Qualifying Shipping Activities, is attached.

  5. Audit Code "3" - Non-Cash Charitable Contributions and Asset Transfers. Edit Audit Code "3" when any of the following conditions are present:

    1. Form 8283, Noncash Charitable Contributions, is attached and Part I, Question 2, Art (Contribution of $20,000 or more), is checked (Page 2, Part I, Question 4 for 2019 and prior).

    2. Form 8283, Noncash Charitable Contributions, is attached and Part I, Question 3, Column (c) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (Page 2, Part I, Question 5, Column (c) for 2019 and prior).

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

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

      Note:

      It is not necessary to compute the total if more than one Form 8594 is present. If any ONE of the Form 8594 has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, edit Audit Code "3."

  6. Audit Code "4" - Invalid S Election. Edit Audit Code "4" when a Form 1120-S without a valid election is reprocessed as Form 1120 and Form 13596, Reprocessing Returns, is attached.

    Caution:

    If a Form 1120 converted from Form 1120-S is received and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.16.3.8.2, Form 13596 - Reprocessing Returns.

  7. Audit Code""6" " - Form 3115 (Form 1120 only). Edit Audit Code "6" when Form 3115, Application for Change in Accounting Method, is attached.

  8. Audit Code""7" " - International (Form 1120 only). Edit Audit Code "7" when any of the following conditions are present:

    1. An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Form 1120, Page 2, Schedule C for any of the following lines: 3, 6, 7, 8, 12, 13, 14, 15, 16a, 16b, 16c, 17, 18, and/or 19 (Lines 3, 6, 7, 8, 12, 13, 14, 15, or 16 for 2017 and prior).

    2. Form 1116, Foreign Tax Credit, (Individual, Fiduciary or Nonresident Alien Individual) is attached and reflects ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ foreign tax credit on Part IV, Line 33.

    3. Form 1118, Foreign Tax Credit - Corporations, is attached and reflects ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ foreign tax credit on Form 1120, Schedule J, Line 5a.

    4. Form 1120, Schedule M-3, Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More, is attached and any of the following apply:
      - Any entry on Part II, Column (c), Lines 2 through 5 or Line 10 is a negative amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or
      - Any entry on Part III, Column (c), Lines 5 through 7 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or
      - The sum of Part III, Columns (b) plus (c) of any of Lines 9, 23, 24, or 25 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

    5. Form 5713, International Boycott Report, is attached and both questions in 7(f) are not answered "Yes."

    6. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualifying Electing Fund, is attached and Part V, Lines 15a through 16f has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ *(Part IV, Lines 10a - 11f for 2011 and prior.).

  9. Audit Code"8" - Schedule M-3 (Form 1120 only). Edit Audit Code "8" when Schedule M-3 is attached.

Penalty and Interest Code

  1. Edit "4 - 1" in the left margin near Line 12 when precomputed delinquency penalty and/or interest is shown on a return with a received date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

    • Line 2 for Form 1120-F, Form 1120-FSC and Line 5 for Form 1120-ND

  2. This code is valid only within the unextended ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ some other situation, such as an estimated tax penalty, do not Code "4 - 1" and do not edit Condition Code "R."

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Reserve Code

  1. The Reserve Code is "4."

  2. Edit "5 - 4" in the left margin near Line 12 if Form 2220 is attached and Part II, Box 8 is checked for Large Corporation.

♦ Installment Sale Indicator (Form 6252)♦

  1. Form 6252, Installment Sale Income, is used to report the sale of property on the installment plan.

  2. Codes are based solely on taxpayer response to Form 6252, Question 3.

  3. Edit "6 -" followed by the right Installment Sale Indicator code in the left margin near Line 12 when Form 6252 is present (e.g., "6 - 1" ).

    • (Line 2 for Form 1120-F and Form 1120-FSC.)

  4. Valid Installment Sale Indicator codes are as follows:

    Code One Form 6252 More Than One Form 6252
    1 "Yes" response to Question 3 At least one form has a "Yes" response.
    2 "No" response to Question 3 All "No" responses, or a combination of "No" and/or blank responses.
    3 "Yes" and "No" are checked or Question 3 is blank Question 3 is blank on all forms.

    Note:

    See IRM 3.11.16.25, Form 6252 - Installment Sale Income (Form 1120 Only) for sequencing and transcription instructions.

Form 1120-F Indicator

  1. Edit "7 - 1" in the left margin near Line 2 if Form 1120-F has both Non-Effectively (Section I) and Effectively (Section II) Connected Income.

  2. Check for proper blocking of returns and re-block as required, see IRM 3.11.16.32.14.6, Form 1120-F Indicator Code.

Return Processing - Form 1120

  1. This section addresses the editing of specific areas on Form 1120.

  2. If a Form 5472 is attached to a blank (no tax data), Form 1120, do not process, send the Form 1120 and Form 5472 to SOI at the following address:

    Internal Revenue Service
    1973 N Rulon White Blvd.
    PIN Unit, Stop 6112
    Ogden, UT 84201-0012

    Note:

    Consider a return blank if the only money amount is Box D, Total Assets.

    Note:

    Foreign-owned domestic disregarded entities are instructed to attach the Form 5472 to a pro forma Form 1120. These entities are not required to file a Form 1120 and the return should not be processed.

  3. A Form 1120 series with a notation such as "Pro Forma," "Pro Forma Form 1120," "Pro Forma Form 1120 for New York State," or similar statement, the "Pro Forma" return should not be processed.

    If... Then...
    A "Pro Forma" return is attached to a Form 1120 series, Do not detach. Move the "Pro Forma" return to the back of the document.
    A "Pro Forma" return is not attached to a Form 1120 series,
    1. DO NOT edit the return.

    2. Route to Correspondence to be returned to the taxpayer.

    3. Use Letter 3064C, IDRS Special Letter and include the following in the open paragraph;
      "The attached form appears to have been sent to us in error. Please keep it for your tax records."

  4. To convert prior year tax returns, see Exhibit 3.11.16-3, Form 1120 - Prior Year Conversion Chart.

Sequence - Form 1120

  1. Document Perfection is responsible for arranging Form 1120 in the following order when transcription line entries are present:

    • Pages 1, 2, 3, 4, 5, 6

    • Schedule N (Form 1120)

    • Schedule D (Form 1120)

    • Form 4797

    • Form 8949

    • Form 8996

    • Schedule O (Form 1120) (Tax periods 201811 and prior only)

    • Form 4626 (Tax periods 201811 and prior only)

    • Form 8050

    • Form 1125-A

    • Form 4136

    • Form 8978

    • Form 965-B

    • Form 8941

    • Form 5884-B

    • Form 3800

    • Form 6252

    • Form 8997

    Note:

    It is not necessary to sequence the forms or schedules listed above if there are no transcription line entries.

Negative Figures

  1. On Page 1 of the Form 1120:

    1. Do not bracket or "X" the amount on Line 1b if negative.

    2. If editing a negative entry on Lines 1b, 2, 9, 10, 11, 15, 26, and 27, bracket the negative amount.

  2. Line 8 will NEVER be bracketed. "X" any negative entry on Line 8, see IRM 3.11.16.11.4.7, Line 8 - Capital Gain.

  3. Do not bracket Lines 29a and 29b.

  4. "X" any negative transcription entries on Pages 2 and 3 of the Form 1120.

  5. Page 6 (Page 5 for 2017 and prior), "Schedule L, Balance Sheet," see IRM 3.11.16.11.31, Schedule L, Balance Sheet.

  6. Form 4626, Alternative Minimum Tax, (201811 and prior), see IRM 3.11.16.13, Form 4626 - Alternative Minimum Tax.

  7. Form 4136, Credit for Federal Tax Paid on Fuels - "X" any negative entries, see IRM 3.11.16.19, Form 4136 - Credit for Federal Tax Paid on Fuels.

Total Assets - Box D

  1. Total Assets is shown in Box D of Form 1120.

  2. If Total Assets, Box D is blank:

    1. Check the Balance Sheet and edit Total Assets Ending from Schedule L, Line 15, Column (d) to Total Assets, Box D, Page 1. Bracket if negative, see Figure 3.11.16-15.

    2. If "1" is edited on Schedule L, Line 15, Column (d) and Box D is blank, zero, dash, none, or N/A, edit "1" in Box D.

    Figure 3.11.16-15

    This is an Image: 33500018.gif

    Please click here for the text description of the image.

Form 1120, Total Income - Lines 1 through 11

  1. The following section provides editing instructions for Form 1120, Lines 1 through 11. Edit Lines 1 through 11 in dollars only.

  2. If Line 11 is the only entry in the income section or the income section is blank and there is an indication the income items are included on an attachment (e.g., a notation such as "See attached," " See Schedule F," "Statement attached, " etc.), examine the return for more detailed schedules.

    If... And... Then...
    Additional income is found The income is not reflected elsewhere on the return,
    • Edit the income to the right transcription line(s).

    • For Schedule F transfer lines, see Exhibit 3.11.16-17, Schedule F - Transfer Lines.

Line 1 - Gross Receipts or Sales
  1. Line 1a is Gross Receipts or Sales, and Line 1b is Returns and allowances (Do not bracket or "X" amount on Line 1b if negative.)

  2. If Line 1a is blank and:

    1. If Lines 1b and 1c are both blank, but the taxpayer indicates "Gross Profit" on Line 3, add Line 2 and Line 3 and enter on Line 1a. Bracket if negative.

      Exception:

      If Line 2 is blank, see IRM 3.11.16.11.4.2, Line 2 - Cost of Goods Sold, before computing Line 1a.

  3. If Line 1a is blank, and an amount is present on Lines 1b and 1c, add Line 1b and Line 1c and enter the total amount on Line 1a. Bracket if negative.

  4. If Line 1b is blank, check attachments.

    1. If found, enter the amount to Line 1b.

    2. If not found and Line 1a is greater than Line 1c, compute and enter Line 1b (Line 1a minus 1c).

Line 2 - Cost of Goods Sold
  1. If Line 2 is blank, edit from Form 1125-A, Line 8. Bracket if negative.

    If... Then...
    Form 1125-A, Line 8 is blank and Line 6 has an entry, Edit the amount from Line 6, minus any amount on Line 7.
    Form 1125-A, Line 6 is blank and there are entries on Lines 1 through 5, Edit the total of Lines 1 through 5 minus any amount on Line 7.

Line 4 - Dividends and Inclusions
  1. Accept taxpayer's entry.

Line 5 - Interest
  1. Accept taxpayer's entry.

Line 6 - Gross Rents
  1. Accept taxpayer's entry.

Line 7 - Gross Royalties
  1. Accept taxpayer's entry.

Line 8 - Capital Gain
  1. If there is a significant entry on Line 8, and Schedule D (Form 1120) is not attached, correspond.

  2. When Schedule D is attached, compare Form 1120, Line 8 to Schedule D, Line 18:

    If... And... Then...
    The comparison shows the entries are the same, Both entries are positive, Continue processing.
    The comparison shows the entries are different, Both entries are positive, Edit the Schedule D, Line 18 amount to Form 1120, Page 1, Line 8.
    Form 1120, Line 8 is blank, zero or illegible, Schedule D, Line 18 is positive, Edit the Schedule D, Line 18 amount to Form 1120, Page 1, Line 8.

  3. If the comparison shows a negative entry:

    1. "X" the Line 8 amount.

    2. Math verify and perfect Schedule D to ensure the negative figure is correct and intended.

    3. If the negative amount is due to a loss under IRC 582 for worthlessness of bonds, move the amount to Bad Debts (Form 1120, Page 1, Line 15) as a positive figure. Adjust Total Income and Total Deductions as required.

    4. If the negative amount is due to a loss under IRC 582 for the sale or exchange of securities by a bank, etc., move the amount to Other Deductions (Form 1120, Page 1, Line 26) as a positive figure. Adjust Total Income and Total Deductions as required.

      Note:

      All other losses on Schedule D will not be allowed.

Line 9 - Net Gain or Loss from Form 4797
  1. Edit Line 9 as follows:

    Reminder:

    Form 4797 is a transcribed form. Place in sequence order if attached to a Form 1120 and Line 1b and/or 1c is present. See IRM 3.11.16.15, Form 4797 - Sales of Business Property (Form 1120 Only).

    If... Then...
    Line 9, Page 1 has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 4797 is not attached and the taxpayer has not attached Form 4684, Correspond.
    Form 4797 is attached, compare Form 1120, Line 9 with Form 4797, Line 17, If different, edit Form 4797 amount to Form 1120, Line 9. Bracket if negative.
    Form 4797, Line 17 is blank (has not been computed by the taxpayer) and there are entries in Parts II or III of Form 4797, Correspond for completed Form 4797.

  2. Check for taxpayer errors in the transfer of entries from Form 4797 to Page 1, Form 1120. Also check the transfer of data from Line 9, Form 4797 to Line 7, Schedule D.

    If... And... Then...
    Form 1120, Page 1, Line 8 is blank, There is a positive entry on Form 1120, Page 1, Line 9 and Form 4797, Line 9 has a significant positive entry, Arrow Form 1120, Line 9 entry to Line 8 and correspond for Schedule D.
    See Figure 3.11.16-16.
    There is a notation on Form 1120, Page 1, Line 9 that Form 4684 is attached,   Do not correspond. Compare Form 1120, Page 1, Line 9 with Form 4684, Line 31 plus 38a. If different, edit Form 4684 amount to Line 9, Form 1120.

    Figure 3.11.16-16

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    Please click here for the text description of the image.

Line 10 - Other Income
  1. Other income or loss not shown on Lines 1a through 9 is reported on Line 10 of Form 1120.

  2. Edit Line 10 as follows:

    If... Then...
    "Other Income" items are included on Lines 1 through 9,
    • Add all the "Other Income" items and include in Line 10.

    • Bracket if negative.

Line 11 - Total Income
  1. The total income or loss (sum of Lines 3 through 10) is reported on Line 11 of Form 1120.

  2. Edit Line 11 as follows:

    If... Then...
    Line 11 is blank or illegible, but there are entries on Lines 1a through 10,
    • Compute and edit Line 11.

    • Bracket if negative.

    Line 11 is the only entry in the income section,
    • Examine attachments and edit the information to the right transcription lines.

    • Bracket if negative.

    • See Exhibit 3.11.16-17, Schedule F - Transfer Lines.

    The income section is blank and there is an indication the income items are included on an attachment (e.g., "See attached, " "See Schedule F, " "Statement attached," etc.),
    • Examine attachments and edit the information to the right transcription lines.

    • Bracket if negative.

    • See Exhibit 3.11.16-17, Schedule F - Transfer Lines.

    There is an amount present for "Total Income" on Line 11, but the amount is not identified on Lines 1a through 10 or from attachments,
    • Edit the Line 11 amount to Line 10.

    • Bracket if negative.

Form 1120, Deduction Items - Lines 12 through 29

  1. Edit Lines 12 through 29 in dollars only.

  2. If Line 27 is the only entry in the deduction section or the deduction section is blank and there is an indication the deduction items are included on an attachment (e.g., "See attached," "See Schedule F," "Statement attached," etc.), examine the return for more detailed schedules.

    If... And... Then...
    Additional deductions are found The deductions are not reflected elsewhere on the return,
    • Edit the deductions to the right transcription lines (Lines 12 through 26).

    • See Schedule F - Transfer Lines, Figure 3.11.16-17.

    Figure 3.11.16-17

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    Please click here for the text description of the image.

Line 12 - Compensation of Officers
  1. Accept taxpayer's entry.

Line 13 - Salaries and Wages (less employment credits)
  1. Accept taxpayer's entry.

Line 14 - Repairs and Maintenance
  1. Accept taxpayer's entry.

Line 15 - Bad Debts
  1. Accept taxpayer's entry.

Line 16 - Rents
  1. Accept taxpayer's entry.

Line 17 - Taxes and Licenses
  1. Accept taxpayer's entry.

Line 18 - Interest
  1. Accept taxpayer's entry.

Line 19 - Charitable Contributions
  1. Accept taxpayer's entry.

Line 20 - Depreciation
  1. Accept taxpayer's entry.

Line 21 - Depletion
  1. Accept taxpayer's entry.

Line 22 - Advertising
  1. Accept taxpayer's entry.

Line 23 - Pension, Profit-sharing, etc. Plans
  1. Accept taxpayer's entry.

Line 24 - Employee Benefit Programs
  1. Accept taxpayer's entry.

Line 25 - Reserved for Future Use
  1. For prior years, Line 25 was used for the domestic production activities deduction. The deduction has been repealed under IRC 199.

  2. The Domestic production activities deduction is valid for tax periods beginning 01/01/2005 through 01/01/2018. If the tax period beginning date is before 01/01/2005 or after 01/01/2018, delete Line 25 if a significant entry is present.

Line 26 - Other Deductions
  1. Other deductions not shown on Lines 12 through 25 are reported on Line 26 of Form 1120.

  2. Edit Line 26 as follows:

    If... Then...
    "Other Deductions" items are included on Lines 12 through 25,
    1. Add the "Other Deductions" entries and edit the total to Line 26. Bracket if negative.

    2. "X" the "Other Deductions" items from Lines 12 through 25.

Line 27 - Total Deductions
  1. The total deductions (sum of Lines 12 through 26) is reported on Line 27 of Form 1120.

  2. Edit Line 27 as follows:

    If... Then...
    Line 27 is blank or illegible but there are entries on Lines 12 through 26, Add Lines 12 through 26 and enter the total on Line 27 of Form 1120. Bracket if negative.
    Line 27 is the only entry in the deduction section,
    • Examine attachments and edit the information to the right transcription lines.

    • Bracket if negative.

    • See Exhibit 3.11.16-17, Schedule F - Transfer Lines.

    The deduction section is blank and there is an indication the deduction items are included on an attachment (e.g., "See attached," "See Schedule F," "Statement attached," etc.),
    • Examine attachments and edit the information to the right transcription lines.

    • Bracket if negative.

    • See Exhibit 3.11.16-17, Schedule F - Transfer Lines.

    There is an amount present for "Total Deductions" on Line 27, but the amount is not identified on Lines 12 through 26 or from attachments,
    • Edit the Line 27 amount to Line 26 of Form 1120.

    • Bracket if negative.

Lines 29a and 29b - Net Operating Loss and Special Deductions
  1. Never bracket Line 29a or 29b amounts as they are negative fields. Do not "X" these lines if they are bracketed by taxpayer.

  2. If it is obvious from a notation on Line 29b that it includes patronage dividends, edit patronage dividends from Line 29b to Line 26, "Other Deductions," and adjust Line 27, "Total Deductions," see Figure 3.11.16-18.

  3. If Line 29c has an entry and Lines 29a and 29b are blank, look for an entry on Schedule C, Line 24, column (c) (Schedule C, Line 20 for 2017 and prior). If present, enter the amount on Line 29b and edit any difference to Line 29a. If blank or zero, edit the entire Line 29c amount to Line 29a.

    Figure 3.11.16-18

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Tax Computation and Settlement - Lines 31 through 37

  1. Following are instructions for Lines 31 through 37. Edit in dollars only.

Line 31 - Total Tax
  1. If blank, enter amount from Page 3, Schedule J, Line 11 if present.

  2. If pre-computed interest or delinquency penalty or an additional charge is evident, ensure that it has not been included in Line 31.

    If... Then...
    The amount on Line 31 has pre-computed interest or penalty or additional charge,
    1. "X" the Line 31 amount.

    2. Delete the interest, penalty or additional charge from the total.

    3. Edit the correct total tax to the left of the original entry.

Line 32 - Reserved
  1. Line 32 - Net Tax Liability for the Reporting Year (revisions 2018 through 2020),

  2. The instructions in this section only apply to tax periods 201712 through 202012.

  3. If blank enter amount from Schedule J, Part II, Line 12 or from the following lines from Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts:

    Reporting Tax Year Form 965-B
    2017 Part II, Column (k), Line 1
    2018 Part II, Column (k), Line 2
    2019 Part II, Column (k), Line 3
    2020 Part II, Column (k), Line 4

  4. Edit a CCC "J" and Action Code "460."

Line 33 - Total Payments and Credits (Schedule J, Part III, Line 23)
  1. The instructions in this section only apply to tax periods 201712 through 202012.

  2. If blank, enter amount from Page 3, Schedule J, Line 23 (Line 21 for 2017-2011) if present.

Backup Withholding
  1. "X" any entry identified by the taxpayer as "Backup Withholding" and edit it to Part III, Schedule J, Line 18 (Part II, Line 17 for 2017-2011).

  2. If the taxpayer has claimed backup withholding ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 1099 is not attached, correspond using Letter 118C, Corporate Return Incomplete for Processing: Form 1120, Form 1120 Series, Form 1120-S.

FIRPTA, Form 1042-S, Form 8805 and Form 8288-A Credits
  1. If Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, Form 8805, Foreign Partners Information Statement of Section 1446 Withholding Tax, or Form 8288-A, Statement of Withholding on Certain Dispositions by Foreign Persons, credit is claimed, route to OSPC.

  2. If Form 8288-A withholding is claimed, OSPC will:

    If ... Then ...
    Form 8288-A or substantial evidence is attached,

    Example:

    Substantial evidence includes closing documents or settlement statement which shows the amount of tax withheld.

    1. Use Form 13698, International Credit(s) Verification Slip, to request verification of credit from the Foreign Team.

    2. If the credits are verified from the FIRPTA database by the Foreign Team, "X" the amount entered by the taxpayer and edit the verified FIRPTA/8288-A credit from Form 13698 to the bottom center of Form 1120, Page 1. See Figure 3.11.16-19, FIRPTA and Form 1042-S Credit.

    3. If FIRPTA/8288-A credits are not verified, disallow.

    4. If another credit is claimed on the same line with the Form 8288-A credit, adjust the line total to only reflect the other credit.

    Form 8288-A or substantial evidence is not attached,

    Example:

    Substantial evidence includes closing documents or settlement statement which shows the amount of tax withheld.

    Correspond.

  3. If Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, withholding is claimed, OSPC will:

    If ... Then ...
    The Form 1042-S credit is claimed on any other credit line, "X" the credit and add to Schedule J, Line 20a (Line 19a for 2017-2011).
    See Figure 3.11.16-20.
    The taxpayer's name is not listed as the recipient in Box 13a of the Form 1042-S,

    Note:

    Box 13a cannot be a withholding rate pool,

    "X" the amount.
    The withholding amounts on Form 1042-S do not equal the amount of the credit, "X" the amount.
    Form 1042-S is not attached, Correspond.

    Exception:

    If a letter is attached, signed by the Competent Authority, accept the letter as proof of Form 1042-S withholding and do not correspond for the missing Form 1042-S.

  4. If Form 8805 withholding is claimed, OSPC will:

    If ... Then ...
    The Form 8805 credit is claimed on any other credit line, Edit the credit to Schedule J, Line 20a (Line 19a for 2017-2011).
    Form 8805 is not attached, Correspond.

    Figure 3.11.16-19

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    Figure 3.11.16-20

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Line 34 - Estimated Tax Penalty
  1. Estimated tax penalty must be edited when either:

    1. An additional penalty is precomputed on the return, or

    2. Form 2220, Underpayment of Estimated Income Tax by Corporations, is attached to the return, and shows liability for estimated tax penalty.

  2. To edit Line 34 (Line 33 for 2017 and prior), do the following:

    1. If the taxpayer follows the instructions on Form 2220, the applicable amount must be shown on Form 2220, Page 2, Line 38, and on Form 1120, Line 34 (Line 33 for 2017 and prior) or equivalent lines on other forms. The taxpayer may also have increased Form 1120, Line 35 (Line 34 for 2017 and prior) or decreased Line 36 (Line 35 for 2017 and prior). Do not adjust this amount.

    2. If Form 1120, Line 34 (Line 33 for 2017 and prior) is blank, edit the amount from Form 2220, Page 2, Line 38 to Form 1120, Line 34 (Line 33 for 2017 and prior).

    3. If Form 2220, Page 2, Line 38 is blank and Form 1120, Line 34 (Line 33 for 2017 and prior) is also blank, review the Form 2220 to determine the taxpayer's method of computation. If there are entries on Form 2220, Line 37, Columns (a) through (d), compute the total amount and enter on Form 1120, Line 34 (Line 33 for 2017 and prior), see Figure 3.11.16-21.

      Note:

      If Form 2220 is attached some conditions may require CCC "8" and/or Reserve Code "4."

    Figure 3.11.16-21

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Lines 35 and 36 - Amount Owed/Overpayment
  1. Lines 35 and 36 (Lines 34 and 35, for 2017 and prior) are edited as positive only. If the taxpayer enters a negative amount, do not bracket.

  2. If both lines 35 or 36 (Lines 34 and 35 for 2017 and prior) are blank, edit as follows:

    Form 1120 Revision Action
    2021
    1. Add Lines 31 and 34.

    2. Subtract Line 33.

    3. Edit the positive result on Line 35 or the negative result (do not bracket) on Line 36.

    2020 through 2018
    1. Add Lines 31, 32 and 34.

    2. Subtract Line 33.

    3. Edit the positive result on Line 35 or the negative result (do not bracket) on Line 36.

    2017 and prior
    1. Add Lines 31 and 32..

    2. Subtract Line 33.

    3. Edit the positive result on Line 34 or the negative result (do not bracket) on Line 35.

  3. If pre-computed interest or delinquency penalty or an additional charge is evident, ensure that it has not been included in Line 35 or reduced Line 36 (Lines 34 and 35 for 2017 and prior).

    If... Then...
    The amount on Line 35 (Line 34 for 2017 and prior) has pre-computed interest or penalty or additional charge,
    1. "X" Line 35 amount.

    2. Delete the interest, penalty or additional charge from the amount owed.

    3. Edit the correct amount owed to the left of the original entry.

    The amount on Line 36 (Line 35 for 2017 and prior) is reduced by pre-computed interest or penalty or additional charge,
    1. "X" Line 36 (Line 35 for 2017 and prior) amount.

    2. Compute the Overpayment amount without the interest, penalty or additional charge.

    3. Edit the correct Overpayment to the left of the original entry.

Line 37 - Credit to Estimated Tax
  1. Line 37 (Line 36 for 2017 and prior)- (Center) Overpayment Credit to Estimated Tax.

♦ Signature ♦

  1. A signature and jurat are required on all returns except the following:

    • Returns prepared under IRC 6020(b). These returns must be signed by a Compliance Function representative, see IRM 3.11.16.3.6.1, IRC 6020(b) Prepared by Collections.

      Note:

      Accept electronic or typed Revenue Officer (RO) signatures as valid on the return.

    • Returns prepared by Examination, for example Substitute for Return.(SFR) or "SUBSTITUTE RETURN," see IRM 3.11.16.3.6.3, Examination Prepared Returns - SFR or Substitute for Return.

    • Dummy returns prepared by IRS.

    • Returns filed under IRC 501(d) (Religious or Apostolic Organization).

    • Returns attached to taxpayer response to IRS correspondence containing a jurat and the taxpayer’s signature. (See paragraph (5) below.)

    • Re-entry returns originally filed electronically ("E-File" ). These returns may be identified by the presence of Mod E-file printouts or TRPRT prints in lieu of an actual return.

      Note:

      If the TRPRT print states "TRPRT Print Do Not Process" in the top margin, circle the words "Do Not Process."

    • Form 1120-X, with a signature on the line designated for the taxpayer's signature is attached to Form 1120. Form 1120-X must be for the same tax period as Form 1120.

  2. Do not correspond for a signature on "CIS" tax returns with a Form 13596, Reprocessing Returns, attached. For processing instructions, see IRM 3.11.16.3.4.3, Correspondence Imaging System (CIS) Returns.

  3. If a signature is missing, correspond:

    Note:

    See IRM 3.11.16.3.4.2, Issuing Correspondence, for returns that are incomplete and appear to be duplicate filings.

    If... Then...
    • The return is not signed on the line designated for the taxpayer's signature,

    or
    • The jurat is not present on the line designated for the taxpayer's signature (a non-standard tax return),

    or
    • Only the Entity information is present and there are no attachments having tax data,

    1. Edit:

      • Action Code "225" (Correspondence for Signature only) or "226" (International Correspondence for Signature only) for Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT and Form 1120-RIC.

      • CCC "U" for all other 1120 series. Attach Form 4227, Intra-SC Reject or Routing Slip, notating "Signature missing."

    2. Leave in batch and continue editing.

    Note:

    Paper returns sent in by the filer that states their return was rejected through the E-file system require a signature. Form 8879-C or Form 8879-I are not acceptable signature substitutes for a paper return.

  4. If the jurat is altered or stricken (crossed out), see IRM 3.11.16.2.6, Frivolous Arguments.

  5. Accept a "signature declaration" (a signature with jurat obtained through IRS correspondence) if attached to the tax return.

    1. If the "signature declaration" is altered or stricken (crossed out), see IRM 3.11.16.2.6, Frivolous Arguments.

    2. If the taxpayer responds with a self-prepared "signature declaration," it must have the same language as the jurat on the tax return: e.g., "UNDER PENALTIES OF PERJURY, I DECLARE THAT I HAVE EXAMINED THIS RETURN INCLUDING ACCOMPANYING SCHEDULES AND STATEMENTS, AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, IT IS TRUE, CORRECT, AND COMPLETE."

    3. Form 8879-C or Form 8879-I are not acceptable signature substitutes for a paper return.

  6. Tax examiners are not handwriting experts. IRC 301.6064-1 allows IRS to presume that the signature on the tax return, statement or other document is the true signature of the person who actually signed the document.

    Note:

    Do not accept a “✓” or “X” on the signature line as a valid taxpayer signature.

  7. The following types of signatures are not valid for corporate returns:

    • Faxed signatures

      Exception:

      Tax return information can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances where contact with the taxpayer has been made and documented, faxed signatures are acceptable.

    • Electronic signatures

    • Docusign digital signatures

    • Typed font Signature

    Exception:

    If one of the following returns are mailed between August 28, 2020 through December 31, 2021, accept a digital signature.

    • Form 1120-C

    • Form 1120-H

    • Form 1120-IC-DISC

    • Form 1120-FSC

    • Form 1120-L

    • Form 1120-ND

    • Form 1120-PC

    • Form 1120-RIC

    • Form 1120-REIT

    • Form 1120-SF

  8. Correspond one time for the signature.

♦ Paid Preparer Checkbox Indicator ♦

  1. The Paid Preparer Checkbox is located next to the taxpayer signature area. It indicates whether the taxpayer has elected to allow the Paid Preparer to answer questions about the return as it is processed.

  2. No action is required on amended returns.

  3. Take the following actions when an entry is present in the Paid Preparer Checkbox:

    If... Then...
    Only the "Yes" box is checked, Take no action.
    The "No" box is checked;
    • neither box is checked; or

    • both boxes are checked,

    Circle the Paid Preparer's Phone Number if present.

♦ Paid Preparer Section ♦

  1. The Paid Preparer section is located below the Signature area at the bottom of Form 1120.

♦ Paid Preparer Tax Identification Number (PTIN) ♦
  1. The Paid Preparer's Social Security Number (SSN) or Preparer's Tax Identification Number (PTIN) is located to the right of the Preparer's Signature in the PTIN box at the bottom-right corner of Form 1120.

  2. No action is required on amended returns.

  3. A valid PTIN begins with a "P," followed by an eight digit number (e.g., PXXXXXXXX). Circle the SSN/PTIN if it is invalid, all zeros or all nines.

♦ Paid Preparer EIN ♦
  1. The Preparer's EIN is located below the PTIN box at the bottom-right corner of Form 1120.

  2. No action is required on amended returns.

  3. The Preparer's EIN is a nine digit number. Circle the EIN if all zeroes or all nines.

♦ Paid Preparer Phone Number ♦
  1. The Paid Preparer's Phone Number is located below the Paid Preparer's EIN at the bottom right hand corner of Form 1120.

  2. If the return is amended, no action is required.

  3. If the Preparer's Phone Number is more than 10 digits, no action is required.

  4. If the Preparer's Phone Number is illegible or less than 10 digits, circle the Phone Number.

Schedule C, Page 2 - Dividends, Inclusions and Special Deductions

  1. If an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on any of Lines 3, 6, 7, 8, 12, 13, 14, 15, 16a, 16b, 16c, 17, 18, and/or 19, edit Audit Code "2" .

    Note:

    For 2017 and prior, Schedule C, Lines 3, 6, 7, 8, 12, 13, 14, 15, and/or 16.

  2. If an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on any of Lines 3, 6, 7, 8, 12, 13, 14,15, 16a, 16b, 16c, 17, 18, and/or 19, edit Audit Code "7" .

    Note:

    For 2017 and prior, Schedule C, Lines 3, 6, 7, 8, 12, 13,14, 15, and/or 16,

Schedule J, Page 3 - Controlled Group Code / Personal Service Corporation Code / Tax Computation

  1. The instructions in this section only apply to tax periods 201811 and prior.

  2. Edit Personal Service Corporation Code "2" above the checkbox on Line 1, Page 3, Schedule J if the Qualified Personal Service Corporation box located on Page 3, Schedule J, Line 2 is checked.

    Note:

    If the box on Schedule J, Line 2 is checked, edit ABLM Code "400" on Form 1120, Page 1, see IRM 3.11.16.9.3, ABLM Code and Schedule M-3 Checkbox.

  3. Personal Service Corporation Code "2" takes priority over Controlled Group Codes "4" and "1" (described below).

  4. If both the Schedule J, Line 2 box and the Schedule J, Line 1 box are checked, edit Personal Service Corporation Code "2" and delete Schedule O (Form 1120) if significant entries are present.

  5. Edit Controlled Group Code "4" above the checkbox on Line 1, Page 3, Schedule J when ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ at least one of the following is present:

    1. The box on Page 3, Schedule J, Line 1 is checked.

    2. There is an indication that the taxpayer is a member of a controlled group as defined in IRC 1561 or IRC 1563.

    3. Schedule O (Form 1120), Box 3a, 3b, 3d, or 5b is checked.

    4. An allocation/apportionment schedule is attached. Some examples of the title of these schedules may be "apportionment plan," "apportionment consent plan," "consent to apportionment," "controlled group tax apportionment plan," "surtax apportionment plan," or "allocation schedule." Any attachment labeled as "controlled group tax calculation statement" is NOT an apportionment plan and should not be used to edit tax bracket amounts on Schedule O, see Figure # 3.11.16-22 #.

      Note:

      If there is any doubt whether an attachment is a "Surtax Apportionment Plan," refer the document to the lead tax examiner.

  6. Edit Controlled Group Code "1" above the checkbox on Line 1, Page 3, Schedule J when ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ any of Code "4" conditions in paragraph (5)a through (5)d are present, see Figure # 3.11.16-23 #.

  7. If Controlled Group Code "4" or "1" is edited, process Schedule O (Form 1120), see IRM 3.11.16.11.33, Schedule O (Form 1120) - Consent Plan and Apportionment Schedule for a Controlled Group.

  8. If neither Controlled Group Code "4" or "1" is edited, delete Schedule O (Form 1120) if significant entries are present.

    Figure 3.11.16-22

    This is an Image: redimage.gif

    Figure 3.11.16-23

    This is an Image: redimage.gif

Schedule J, Line 3 - Alternative Minimum Tax or Tax on Base Erosion Payments

  1. Follow the instructions below for Schedule J, Line 3:

    If ... And ... Then ...
    Tax period is 201811 and prior, Schedule J, Line 3 is blank and Form 4626 is attached with an amount on Line 14, Edit the amount from Line 14, Form 4626 to Schedule J, Line 3.
    Tax period is 201811 and prior, Schedule J, Line 3 has a significant entry and Form 4626 is not attached, Correspond.
    Tax period is 201812 and later, Schedule J, Line 3 is blank and Form 8991, Tax on Base Erosion Payments of Taxpayers with Substantial Gross Receipts, is attached, Do the following:
    1. Edit RPC "1"

    2. Edit the amount from Form 8991, Line 5e to Schedule J, Line 3.

    Tax period is 201812 and later, Schedule J, Line 3 has a significant entry and Form 8991 is not attached, Correspond.

Schedule J, Lines 5a and 5b - Credits

  1. The following general instructions apply to Schedule J, Lines 5a and 5b only:

    1. If supporting documentation is missing for one or more credits ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, correspond.

Schedule J, Line 5a - Form 1118, Foreign Tax Credit
  1. If Schedule J, Line 5a, Foreign Tax Credit has an entry, check for Form 1118 or similar statement:

    If... Then...
    The entry on Line 5a is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 1118 is missing, Correspond.
    The entry on Line 5a is ≡ ≡ ≡ ≡ ≡ ≡ ≡ Edit CCC "P."
    There is an entry on Line 5a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Edit Audit Code "2."
    There is an entry on Line 5a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Edit Audit Code "7."

Schedule J, Line 5b - Form 8834 Credit and Form 5735
  1. Schedule J, Line 5b, includes credits from Form 8834, Qualified Electric Vehicle Credit, and/or a write-in credit from Form 5735, American Samoa Economic Development Credit . If the Line 5b entry or the write-in entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present, take the following action:

    If... And... Then...
    The entry is for Form 8834
    (Form 5735 is not indicated)
    Form 8834 is missing, Correspond.
    The entry is for Form 5735
    (Form 5735 is indicated)
    Form 5735 is missing, Correspond.

Schedule J, Line 5c - General Business Credits

  1. If Form 3800 is required but missing, correspond. Form 3800 is required when a 2008 or subsequent tax return has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Schedule J, Line 5c.

  2. Review the Schedule J, Line 5c for the following conditions:

    If... And... Then...
    Schedule J, Line 5c is blank, Form 3800 has an entry on Line 38, Edit the Line 38 amount to Schedule J, Line 5c.
    Schedule J, Line 5c has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 3800 is not attached, Correspond.
    Schedule J, Line 5c and Form 3800, Line 38 do not match The difference is not supported by another credit, Edit the lesser of Schedule J, Line 5c and Line 38 to Schedule J, Line 5c.

  3. Correspond when a business credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is not supported by the applicable form or if supporting documentation is missing for an unidentified amount on Schedule J, Line 5c.

    Exception:

    If Part III Box C, D, or G are checked, do not correspond.

    Exception:

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

  4. The following are the General Business credits claimed on Form 3800 and reported on Form 1120, Schedule J, Line 5c:

    Note:

    These lines are transcription lines, except Line 3.

    Line Credit Title
    1a Form 3468 Investment Credit
    1b N/A Reserved
    1c Form 6765 Credit for Increasing Research Activities
    1d Form 8586 Low-Income Housing Credit (carryforward only)
    See IRM 3.11.16.11.14.1, Form 8586, Low-Income Housing Credit, for more instructions.
    1e Form 8826 Disabled Access Credit
    1f Form 8835 Renewable Electricity, Refined Coal, and Indian Coal Production Credit
    1g Form 8845 Indian Employment Credit
    1h Form 8820 Orphan Drug Credit
    1i Form 8874 New Markets Tax Credit
    1j Form 8881 Credit for Small Employer Pension Plan Startup Costs
    1k Form 8882 Credit for Employer-Provided Childcare Facilities and Services
    1l Form 8864 Biodiesel and Renewable Diesel Fuels Credit
    1m Form 8896 Low Sulfur Diesel Fuel Production Credit
    1n Form 8906 Distilled Spirits Credit
    1o Form 8907 (Historical) Nonconventional Source Fuel (carryforward only)
    1p Form 8908 Energy Efficient Home Credit
    1q Form 8909(Historical) Energy Efficient Appliance (carryforward only)
    1r Form 8910 Alternative Motor Vehicle Credit
    1s Form 8911 Alternative Fuel Vehicle Refueling Property Credit
    1t Form 8830 Enhanced Oil Recovery Credit
    1u Form 8923 Mine Rescue Team Training Credit
    1v Form 8931 (Historical) Agricultural Chemicals Security (carryforward only)
    1w Form 8932 Credit for Employer Differential Wage Payments
    1x Form 8933 Carbon Oxide Sequestration Credit
    1y Form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit
    1z N/A Qualified Plug-in electric vehicle (carryforward only)
    1aa Form 5884-A Employee Retention Credit
    1bb N/A General Credits from an Electing Partnership (carryforward only)
    1zz Form 8904 Credit for Oil and Gas Production from Marginal Wells
    3 Form 8844 Form 8844, Empowerment Zone Employment Credit
    See IRM 3.11.16.11.14.2, Form 8844, Empowerment Zone Employment Credit, for more instructions.
    4a Form 3468 Investment Credit (Part III)
    4b Form 5884 Work Opportunity Credit
    4c Form 6478 Biofuel Producer Credit
    4d Form 8586 Low-Income Housing Credit
    See IRM 3.11.16.11.14.1, Form 8586, Low-Income Housing Credit, for more instructions.
    4e Form 8835 Renewable Electricity, Refined Coal, and Indian Coal Production Credit
    4f Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips
    4g Form 8900 Qualified Railroad Track Maintenance Credit
    4h Form 8941 Credit for Small Employer Health Insurance Premiums
    See IRM 3.11.16.11.14.3, Form 8941, Credit for Small Employer Health Insurance Premiums, for more instructions.
    4i Form 6765 Credit for Increasing Research Activities
    4j Form 8994 Employer Credit for Paid Family and Medical Leave
    See IRM 3.11.16.11.14.4, Form 8994, Employer Credit for Paid Family and Medical Leave, for more instructions.
    4z N/A Other

    Note:

    Line 1zz is used to report the carryforward of certain credits.

Form 8586, Low-Income Housing Credit
  1. Form 8586, Low-Income Housing Credit, must be filed with Corporate tax returns when claiming the Low-Income Housing credit.

  2. When an amount is present on Form 3800, Part III, Line 1d or Line 4d or Form 1120, Schedule J, Line 5c for Form 8586, take the following actions:

    If... Then...
    Low-Income Housing credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8586 is not attached, Correspond.

    Exception:

    If Form 3800, Part III Box C, D, or G are checked, do not correspond.

    Exception:

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

    • Form 8586 is attached with an entry on Line 1 or 3 , or

    • Form 8609 is attached or

    • Form 8609-A is attached,

    Enter CCC "9."

Form 8844, Empowerment Zone Employment Credit
  1. Form 8844 is a high priority form.

  2. Form 8844 is required if:

    1. Form 3800, Part II Line 22 or Part III, Line 3 has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

    2. Form 1120, Schedule J, Line 5c has an entry indicating Form 8844 is attached and Form 8844 credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is claimed.

  3. Edit "1 - 1" in the left margin of Form 1120, near Line 12 when the Form 8844 is indicated on:

    1. Form 1120, Page 3, Schedule J, Line 5c.

    2. Form 1120-C, Page 4, Schedule J, Line 5c.

    3. Form 1120-F, Page 5, Schedule J, Line 5b.

    4. Form 1120-L, Page 4, Schedule K, Line 5c.

    5. Form 1120-PC, Page 1, Line 8c.

    6. Form 1120-REIT, Page 3, Schedule J, Line 3c.

    7. Form 1120-RIC, Page 2, Schedule J, Line 3c.

    8. Form 3800, Part III, Line 3 has an entry.

  4. Edit a "1 - 1" in the left margin of Form 1120, near Line 12 if Form 8844 is attached even if dollar amounts are not present.

    • (Line 2 for Form 1120-F.)

  5. When an amount is present on Form 3800, Part II Line 22 or Part III, Line 3 or Form 1120, Schedule J, Line 5c for Form 8844, take the following actions:

    If... Then...
    Empowerment Zone Employment credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8844 is not attached, Correspond.

    Exception:

    If Form 3800, Part III Box C, D, or G are checked, do not correspond.

    Exception:

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

    Note:

    Editing "1 - 1" in the left margin of Form 1120, Line 12 allows Statistics of Income (SOI) a means of monitoring this credit. (HIGH PRIORITY)
    (Line 2 for Forms 1120-F)

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

  2. If an amount is present on Form 3800, Part III, Line 4h or Form 1120, Schedule J, Line 5c for Form 8941:

    If... Then...
    Form 8941 is not attached, Correspond.

    Exception:

    If Form 3800, Part III Box C, D, or G are checked, do not correspond.

    Exception:

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

    Form 8941 is present, Place in sequence order if significant entries are present.
    See IRM 3.11.16.22, Form 8941 - Credit for Small Employer Health Insurance Premiums, for Form 8941 editing instructions.

Form 8994, Employer Credit for Paid Family and Medical Leave
  1. Form 8994, Employer Credit for Paid Family and Medical Leave, must be filed with corporate tax returns when claiming the Employer Credit for Paid Family and Medical Leave credit.

  2. If Form 8994 is attached, edit RPC "4" .

  3. If an amount is present on Form 3800, Part III, Line 4j or Form 1120, Schedule J, Line 5c for Form 8994:

    If ... Then ...
    Form 8994 is not attached, Correspond.

    Exception:

    If Form 3800, Part III Box C, D, or G are checked, do not correspond.

    Exception:

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

Schedule J, Line 5d - Form 8827, Credit for Prior Year Minimum Tax - Corporations
  1. If Schedule J, Line 5d has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8827 is not attached, correspond.

Schedule J, Line 5e - Form 8912, Credit to Holders of Tax Credit Bonds
  1. When Schedule J, Line 5e has an entry for Form 8912 , take the following action:

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Form 8912is not attached, Correspond.

Schedule J, Line 6 - Total Credits

  1. When editing Line 6, take the following action:

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

Schedule J, Line 8 - Personal Holding Company Tax

  1. If Schedule J, Line 8, Personal Holding Company Tax, has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Schedule 1120-PH is not attached, correspond.

    Note:

    A significant entry on Schedule J, Line 8 would also require editing an ABLM Code, see IRM 3.11.16.9.3, ABLM Code and Schedule M-3 Checkbox.

Schedule J, Line 9a through 9f - Other Taxes

  1. This section has instructions for Schedule J, Lines 9a through 9f.

Schedule J, Line 9a - Recapture of Investment Credit (Form 4255)
  1. If an amount is present on Schedule J, Line 9a, Recapture of Investment Credit (Form 4255) or Form 4255 is attached:

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Form 4255 is not attached, Correspond.
    Form 4255 is attached and Line 9a is blank, Edit the amount from Line 20, Form 4255 to Schedule J, Line 9a, Form 1120.

Schedule J, Line 9b - Recapture of Low-Income Housing Credit (Form 8611)
  1. If an amount is present on Schedule J, Line 9b, Recapture of Low-Income Housing Credit, or Form 8611 is attached:

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Form 8611 is not attached, Correspond.
    Form 8611 is attached and Line 9b is blank,
    • Edit the amount from Line 14, Form 8611 to Schedule J, Line 9b. (Dotted portion of Schedule J, Line 7 of Form 1120-REIT.)

    More than one Form 8611 is attached,
    1. Combine Form 8611, Line 14.

    2. Edit the total to Schedule J, Line 9b. (Dotted portion of Schedule J, Line 7 of Form 1120-REIT.)

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

    1. Schedule J, Line 9b has an amount; or

    2. Form 8611 or Form 8693 is attached; or

    3. The taxpayer notes "Form 8693."

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

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Form 8697 is not attached, Correspond for missing Form 8697.
    Form 8697 is attached and the tax from Part I, Line 10 or Part II, Line 11 is shown on Schedule J, Line 9c, Edit CCC "K."
    Form 8697 is attached and Schedule J, Line 9c is blank,
    • Edit the amount from Form 8697, Part I, Line 10 or Part II, Line 11 to Schedule J, Line 9c.

    • Edit CCC "K."

Schedule J, Line 9d - Interest due under the look-back method (Form 8866)
  1. Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method, is attached.

    If ... Then ...
    Form 8866, Line 9 has an entry, Edit tax period and EIN on Form 8866. Detach Form 8866 and route to AM.
    Form 8866, Line 10 has an entry, Edit the Line 10, amount to Schedule J, Line 9d.
Schedule J, Line 9e - Alternative Tax on Qualifying Shipping Activities (Form 8902)
  1. If an amount is present on Schedule J, Line 9e, Alternative Tax on Qualifying Shipping Activities, or Form 8902 is attached:

    If... Then...
    Form 8902 is attached, Edit Audit Code "2."
    Form 8902 is attached and Schedule J, Line 9e is blank,
    • Edit the amount from Line 30, Form 8902 to Schedule J, Line 9e.

Schedule J, Line 9f - IRC 453A Tax
  1. No editing required

Schedule J, Line 9g - Other
  1. No editing required

Schedule J, Line 11 - Total Tax

  1. Form 1120, Schedule J, Part I, Line 11 may have "add on" taxes that will be identified by an explanation in the dotted portion to the left of Line 11.

    1. If the only entry on Form 1120, Schedule J, Part I, is Line 11, edit the amount to Schedule J, Line 2.

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

Reserved

  1. Line 12- Schedule J, Part II, Line 12 - Net 965 Tax Liability Paid for the Reporting Year (revisions 2018 through 2020),

  2. The instructions in this section only apply to tax periods 201712 through 202012.

  3. If blank, enter from the following lines from Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts:

    Reporting Tax Year Form 965-B
    2017 Part II, Column (k), Line 1
    2018 Part II, Column (k), Line 2
    2019 Part II, Column (k), Line 3
    2020 Part II, Column (k), Line 4

  4. Edit CCC "J" and Action Code "460."

Schedule J, Part III Lines 13 - 23

  1. This section has instructions for Schedule J, Part III, Lines 13 through 23 (Line 22 for 2017-2011).

Schedule J, Part III, Line 14 - Estimated Tax Payments
  1. IRC 847 Deduction - The instructions in this section only apply to tax periods 201812 and prior. For tax periods 201901 and later, no action is needed.

  2. If the tax period is 201812 and prior and the taxpayer notates "Section 847" or reports SETP on Schedule J, Part III, Line 14 (Line 13 for 2017 -2011) or "Form 8816" is attached, see IRM 3.11.16.3.10, IRC 847 Deduction.

Schedule J, Part III, Line 16 - Payments
  1. If Schedule J, Part III, Line 16 (Line 15 for 2017-2011) is blank, add Lines 13 (Line 12 for 2017-2011) and 14 (Line 13 for 2017-2010). Subtract Line 15 (Line 14 for 2017-2011) and enter the total amount on Line 16 (Line 15 for 2017-2011). If there is an entry on Line 15 (Line 14 for 2017-2011), see IRM 3.11.16.9.1.15, CCC "O" - Module Freeze.

Schedule J, Part III, Line 17 - Tax Deposited with Form 7004
  1. Accept taxpayer's entry.

  2. If the taxpayer indicates a Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback, credit on Line 17 (Line 16 for 2017-2011), disallow and delete amount of credit from Line 17 (Line 16 for 2017-2011).

Schedule J, Part III, Line 18 - Withholding
  1. If the taxpayer has claimed backup withholding ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Schedule J, Part III, Line 18 (Line 17 for 2017-2011) and Form 1099 is not attached, correspond using Letter 118C, Corporate Return Incomplete for Processing: Form 1120, Form 1120 Series, Form 1120-S.

Schedule J, Part III, Line 19 - Total Payments
  1. If Line 19 (Line 18 for 2017-2011) is the only entry for Lines 13 through 19 (Lines 12 through 18 for 2017-2011), arrow the amount to Line 16 (Line 15 for 2017-2011).

Schedule J, Part III, Line 20a - Regulated Investment Co. Credit, Form 2439
  1. Compare Form 1120, Schedule J, Line 20a (Line 19a for 2017-2011) to Form 2439, Line 2:

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Form 2439 is missing, Correspond.
    Form 2439 shows a lesser amount, Place an "X" to the left of the entry on Schedule J, Part III, Line 20a (Line 19a for 2017 - 2011) Edit the lesser amount to the left of the "X."
    Form 2439 shows a larger amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Correspond.

Schedule J, Part III, Line 20b - Fuel Tax Credit, Form 4136
  1. If Line 20b (Line 19b for 2017 - 2011) has a significant entry and Form 4136 is not present, correspond for the missing Form 4136.

  2. For processing instructions, see IRM 3.11.16.19, Form 4136 - Credit for Federal Tax Paid on Fuels.

Schedule J, Part III, Line 20c - Reserved for Future Use
  1. Schedule J, Line 20c is "Reserved for future use" on the 2020 and later revisions of Form 1120.

  2. For 2019 through 2012 revisions, if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Form 8827 must be attached to substantiate the credit. Correspond for missing forms to substantiate the credit.

  3. For 2011 and prior, if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ either Form 3800 or Form 8827 must be attached to substantiate the credit. Correspond for missing forms to substantiate the credit.

Schedule J, Part III, Line 20d - Other
  1. Accept taxpayer entry.

Schedule J, Part III, Line 22 - Reserved
  1. Line 22- Schedule J, Part III, Line 22 (revisions 2018 through 2020),

  2. The instructions in this section only apply to tax periods 201712 through 202012.

  3. The amount on Schedule J, Part III, Line 22 is edited from Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts, as follows:

    Reporting Tax Year Form 965-B
    2017 Part II, Column (d), Line 1
    2018 Part II, Column (d), Line 2
    2019 Part II, Column (d), Line 3
    2020 Part II, Column (d), Line 4

  4. Edit CCC "J" and Action Code "460."

Schedule J, Part III, Line 23 - Total Payments and Credits
  1. If Line 23 (Line 21 for 2017- 2011) is the only entry for Lines 13 through 23 (Lines 12 through 21 for 2017 - 2011), arrow the amount to Line 16 (Line 15 for 2017- 2011).

Accounting Method Code

  1. The Accounting Method Code is transcribed from the taxpayers response to the boxes on Form 1120, Schedule K, Line 1.

  2. No editing is necessary for C&E.

Schedule K, Line 2a - NAICS Code

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

  2. The NAICS Code is a four or six digit code on Schedule K, Line 2a of Form 1120.

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

    Exception:

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

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

    If... Then...
    A legible six digit NAICS Code is shown on Schedule K, Line 2a, No editing is necessary.
    A legible four digit NAICS Code is shown on Schedule K, Line 2a, No editing is necessary.
    There is more than one NAICS Code on Schedule K, Line 2a, Circle all but the first NAICS Code listed.
    Schedule K, Line 2a is blank, illegible, or other than four or six digits. Refer to Schedule K, Lines 2b and 2c, if present, If NAICS code cannot be determined edit NAICS Code "999000"

Schedule K, Question 3

  1. If Schedule K, Question 3 meets one of the following conditions, a Name Control and EIN must be edited.

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

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

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

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

    Question 3 is checked "Yes" or both the "Yes" and "No" boxes are checked, The name and/or EIN is different from the return name and/or EIN, Underline the Name Control and TIN on Line 3.

    Note:

    If something other than a corporation name and/or EIN is present on Line 3, circle that information.

    Question 3 is checked "Yes" or both the "Yes" and "No" boxes are checked, There is no Name and/or EIN present on Line 3,
    1. Check attachments for name control and/or EIN.

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

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

    Note:

    If something other than a corporation name and/or EIN is present on Line 3, circle that information.

    Question 3 is checked "No" or neither box is checked, A corporation name and/or EIN is present (must be different than that on the return),
    1. Underline the Name Control on Line 3.

    2. Underline the TIN on Line 3.

    Note:

    If something other than a corporation name and/or EIN is present on Line 3, circle that information.

    Question 3 is answered "No" or neither box is checked, A corporation name and EIN are not present, No editing is necessary.
    Question 3 is answered "No" or neither box is checked, A corporation name and EIN are the same as the return name and/or EIN, Circle the name and/or EIN.

Schedule K, Line 7c - Number of Form 5472

  1. No entry is required for Schedule K, Line 7c unless Form 5472 is present.

  2. Edit Line 7c as follows:

    If... And... Then...
    A number is present for Schedule K, Line 7c,   No editing required.
    Schedule K, Line 7c is blank, Form(s) 5472 is attached, Edit the number of Forms 5472 in the dotted line area of Line 7c.
    Form 5472 is attached, Schedule K is not present Dummy a Schedule K and edit the number of Forms 5472 to Schedule K, Line 7c.

    Note:

    If a Form 5472 is attached to a blank (no tax data), Form 1120, do not process, send the Form 1120 and Form 5472 to SOI at the following address:

    Internal Revenue Service
    1973 N Rulon White Blvd.
    PIN Unit, Stop 6112
    Ogden, UT 84201-0012

    Note:

    Foreign-owned domestic disregarded entities are instructed to attach the Form 5472 to a pro forma Form 1120. These entities are not required to file a Form 1120 and the return should not be processed.

Schedule K, Line 12 - NOL Carryover

  1. Accept taxpayer's entry.

Schedule K, Question 13

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

Schedule K, Question 16

  1. Data will enter a "1" if the "Yes" box is checked.

  2. No editing is necessary.

Schedule K, Question 17

  1. Data will enter a "1" if the "Yes" box is checked.

  2. No editing is necessary.

Schedule K, Question 18

  1. Data will enter a "1" if the "Yes" box is checked.

  2. No editing is necessary.

Schedule K, Question 25 (Form 8996 - Qualified Opportunity Fund)

  1. If Form 1120, Schedule K, Question 25, "Is the corporation attaching Form 8996 to certify as a Qualified Opportunity Fund" is answered "Yes," search attachments for Form 8996. If Form 8996 is attached with an amount in Part III, Line 15 , edit the amount to Schedule K, Question 25.

    Form 8996 Revisions

    Prior Year Revision Line
    2020 and later Part III, Line 15
    2019 Part III, Line 14
    2018 and 2017 Part III, Line 13
     

  2. See IRM 3.11.16.17, Form 8996 - Qualified Opportunity Fund, for transcription lines.

  3. If Form 8996, Qualified Opportunity Fund, is attached, edit Return Processing Code (RPC) "6," see IRM 3.11.16.9.2, Return Processing Code (RPC), for more information.

Schedule L, Balance Sheet

  1. This section provides instructions for processing the Balance Sheet. The Balance Sheet is found on Form 1120, Page 6 (Page 5 for 2017 and prior).

Blank or Missing Schedule L
  1. Use the following chart for a Balance sheet that is blank or missing and there is no attachment present with Balance Sheet entries.

    Note:

    The following chart is listed in "Priority" order.

    If ... And ... Then ...
    The return is "Amended,"   Do not correspond
    The return is "Final,"   Do not correspond
    There are no "significant entries" on Form 1120, Page 1, Lines 1 through 27,   Do not correspond
    Form 1120, Page 1, Box D is less than $250,000, or Total Receipts (Line 1a plus Lines 4 through 10) are less than $250,000,   Do not correspond
    The "Yes" box is checked on Form 1120, Schedule K, Question 13, Form 1120, Page 1, Box D is $250,000 or more, or Total Receipts (Line 1a plus Lines 4 through 10) are $250,000 or more, Do not correspond. Edit a "1 " to Schedule L, Line 15(d).

    Note:

    Dummy a Schedule L if necessary.

    The "cash" box on Schedule K is checked or the taxpayer has notated "Single Entry" , "See Books," "Balance Sheet not available," or similar entry, Form 1120, Page 1, Box D is $250,000 or more, or Total Receipts (Line 1a plus Lines 4 through 10) are $250,000 or more, Do Not correspond. Edit a "1" to Schedule L, Line 15(d).

    Note:

    Dummy a Schedule L if necessary.

    Form 1120, Page 1, Box D is $250,000 or more, or Total Receipts (Line 1a plus Lines 4 through 10) are $250,000 or more,   Correspond for Schedule L.
  2. If Schedule L is required and blank or missing, but an attachment is present with significant Schedule L amounts, edit the applicable line entries from the attachment. If necessary insert a blank Schedule L to edit the applicable entries. Then follow the instructions in IRM 3.11.16.11.31.1, Editing a Balance Sheet with Significant Entries.

    Figure 3.11.16-24

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    Please click here for the text description of the image.

Editing a Balance Sheet with Significant Entries
  1. To determine if editing a Balance Sheet that has significant entries is necessary follow the chart below:

    Note:

    The following chart is listed in "Priority" order.

    If ... And ... Then ...
    The return is "Amended,"   No action is required. The Balance sheet will not be transcribed.
    The return is "Final,"   Delete the Balance Sheet.
    There are no "significant entries" on Form 1120, Page 1, Lines 1 through 27,   Delete the Balance Sheet.
    The "Yes" box is checked on Form 1120, Schedule K, Question 13, Form 1120, Page 1, Box D is $250,000 or more, or Total Receipts (Line 1a plus Lines 4 through 10) are $250,000 or more, Delete the Balance Sheet.
    None of these conditions exist,   Continue editing the Balance Sheet.
  2. Place Page 6 (Page 5 for 2017 and prior), Schedule L in sequence order when the Balance Sheet is required.

  3. Edit Balance Sheet amounts in dollars only.

  4. The following lines are transcribed fields:

    Note:

    Letters in brackets "( )" designate columns.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    3. Edit lines as follows:

    If ... And ... Then ...
    There is no entry on Line 2a, Column (c), Line 2b, Column (c) has an entry,
    • Add Line 2b(c) to Line 2b(d) and edit the total to Line 2a, Column (c).

    • Bracket if negative.

    There is no entry on Line 2a, Column (c), Line 2b, Column (c) is blank,
    • Edit the Line 2b(d) amount to Line 2a(c) if present.

    • Bracket if negative.

    There is no entry on Line 10b, Column (d),  
    • Compute and enter Line 10b, Column (d) by subtracting the Line 10b, Column (c) amount from Line 10a, Column (c).

    • Positive only.

    There is no entry on Line 15, Column (b), Lines 2b, 10b, 11b, and 13b, Column (b) are blank, Use right Column (a) entries (if present) to compute Column (b) entries.
    There is no entry on Line 15, Column (b), Entries are present on Lines 1 through 14, Column (b),
    • Add Lines 1 through 14, Column (b) and edit the total to Line 15, Column (b).

    • Bracket if negative.

    There is no entry on Line 15, Column (d), Lines 2b, 10b, 11b, and 13b, Column (d) are blank, Use right Column (c) entries (if present) to compute Column (d) entries.
    There is no entry on Line 15, Column (d), Entries are present on Lines 1 through 14, Column (d),
    • Add Lines 1 through 14, Column (d) and edit the total to Line 15, Column (d).

    • Bracket if negative.

    After computing Balance Sheet, Line 15, Column (d) is still blank, zero, dash, "none" or "N/A," Form 1120, Page 1, Box D is $250,000 or more, or Total Receipts (Line 1a plus Lines 4 through 10) are $250,000 or more,
    1. Edit a "1" on Line 15(d).

    If Line 22b, Column (d) is blank,  
    • Add Line 22a, Column (c) and Line 22b, Column (c) and edit the total to Line 22b, Column (d).

    • Positive only.

    There is no entry on Line 28, Column (d),  
    • Compute and enter Line 28, Column (d) by adding Lines 16 through 27, Column (d).

    • Positive only.

Schedule N (Form 1120) - Foreign Operations of U.S. Corporations

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

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

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

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

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

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

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

Schedule N, Line 1 - Form 8858, Foreign Disregarded Entities
  1. Beginning tax period 2004 Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs), will be required to be filed by U.S. persons that are tax owners of Foreign Disregarded Entities.

  2. Edit Audit Code "2" if:

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

    2. Form 8858 is present.

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

  2. If Form 8865, Schedule G is attached, edit RPC "E."

  3. If Form 8865, Schedule H is attached, edit RPC "F."

  4. Edit Line 2 as follows:

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

  5. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Form 8865 is attached, see IRM 3.11.16.10.1, Audit Codes.

Schedule N, Line 3 - Form 8865 Question
  1. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Schedule N, Question 3 is answered "Yes" or Form 8865 is attached, see IRM 3.11.16.10.1, Audit Codes.

Schedule N, Lines 4a and 4b- Form 5471, Controlled Foreign Corporation
  1. Line 4a is “Reserved for future use.”

    1. For prior year returns (2019 and prior revisions), edit Audit Code "2" if Schedule N, Question 4a is answered "Yes."

  2. Line 4b - Edit Audit Code "2" if Form 5471 is attached, see IRM 3.11.16.10.1, Audit Codes.

  3. Edit RPC codes as follows:

    If ... Then ...
    Form 5471, Schedule E, Income, War Profits, and Excess Profits Taxes Paid or Accrued, is attached. Edit RPC "A"
    Form 5471, Schedule H, Current Earnings and Profits, is attached. Edit RPC "B"
    Form 5471, Schedule I-1, Information for Global Intangible Low-Taxed Income, is attached. Edit RPC "C"
    Form 5471, Schedule P, Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations, is attached. Edit RPC "D"

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

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

    If... And... Then...
    A number is present for Schedule N, Line 4b,   Take no further action.
    Schedule N, Line 4b is blank, Form(s) 5471 is attached, Edit the number of Forms 5471 in the dotted line area of Question 4b.

    Note:

    Document Perfection is responsible for determining the number of any and all Form(s) 5471 received, whether attached to a parent return in a consolidated group, or found as an attachment to a subsidiary return.

    Form 5471 is attached, Schedule N is not present, Dummy a Schedule N and edit the number of Forms 5471 to Schedule N, Line 4b.

Schedule N, Line 5 - Form 3520 Question
  1. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Schedule N, Question 5 is answered "Yes" or Form 3520 is attached, see IRM 3.11.16.10.1, Audit Codes.

Schedule N, Line 6b - Foreign Country Code
  1. Edit Schedule N, Line 6b as follows:

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

    Exception:

    Edit Country Code "OC" if the foreign country is not listed in Document 7475 or a U.S. Possession is listed on Box A.

    No Foreign Country is present or "US," "USA," "America" or similar reference to the United States is present, and Box 6a is checked "Yes," Edit Country Code, "OC. "
    More than one Foreign Country is present, Edit the Country Code of the first Foreign Country shown.

    Note:

    Use "UK" for England, Northern Ireland, Scotland, and Wales. Also, "Holland" is not an official country name, but is part of The Netherlands, "NL."

Schedule N, Line 7a - Form 8873 Question
  1. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Schedule N, Question 7a is answered "Yes," see IRM 3.11.16.10.1, Audit Codes.

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

    Note:

    Input of Command Code (CC) REQ77 with IDRS Transaction Code TC 971 and right IDRS Action Code (depending on which election has been made) may be needed when Form 8873 is present, see IRM 3.11.16.12, Form 8873 - Extraterritorial Income Exclusion.

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

    If... And... Then...
    A number is present for Schedule N, Question 7b, Form(s) 8873 is attached, Process Form 8873.
    • See IRM 3.11.16.12, Form 8873 - Extraterritorial Income Exclusion.

    A number is present for Schedule N, Question 7b, Form(s) 8873 are not attached, Take no further action.
    Schedule N, Line 7b is blank, Form(s) 8873 is attached,
    1. Edit the number of Forms 8873 in the dotted line area of Question 7b.

    2. Process Form 8873.

      • See IRM 3.11.16.12, Form 8873 - Extraterritorial Income Exclusion.

    Form 8873 is attached, Schedule N is not present,
    1. Dummy a Schedule N and edit the number of Forms 8873 to Line 7b of Schedule N.

    2. Process Form 8873.

      • See IRM 3.11.16.12Form 8873 - Extraterritorial Income Exclusion.

Schedule N, Line 7c - Total Extraterritorial Income Exclusion
  1. No entry is required for Schedule N, Line 7c unless Form 8873 is present.

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

    If... And... Then...
    An amount is present for Schedule N, Question 7c, Form 8873 is attached, Process Form 8873.
    • See IRM 3.11.16.12, Form 8873 - Extraterritorial Income Exclusion.

    An amount is present for Schedule N, Question 7c, Form 8873 is not attached, Take no further action.
    Schedule N, Line 7c is blank, Form(s) 8873 is attached,
    1. Compute the total amount of extraterritorial income exclusion from Line 52 and edit to the area provided on Line 7c.

    2. Process Form 8873.

      • See IRM 3.11.16.12, Form 8873 - Extraterritorial Income Exclusion.

    Form 8873 is present with a significant entry on Line 52, Schedule N is not attached,
    1. Dummy a Schedule N and compute the total amount of extraterritorial income exclusion from all attached Forms 8873. Edit the total to the area provided on Schedule N, Line 7c.

    2. Process Form 8873.

      • See IRM 3.11.16.12, Form 8873 -Extraterritorial Income Exclusion.

    Reminder:

    Form 8873, Extraterritorial Income Exclusion, requires TC "971" input, see IRM 3.11.16.12, Form 8873 - Extraterritorial Income Exclusion.

Schedule N, Line 8 - Form 8938, Statement of Specified Foreign Financial Assets
  1. For Tax Year (TY) 201901 and later, Form 8938, Statement of Foreign Financial Assets, will be transcribed into the General Purpose Program (GPP) database.

    Note:

    These instructions only apply to Form 1120.

  2. Process Form 8938 with the following criteria:

    1. The Tax Period Beginning on Form 1120 is 201801 or later and,

    2. Form 8938 is a 2019, 2020, or 2021 revision and,

    3. Form 8938 has significant entries.

  3. If Form 8938 is attached, but does not meet the above criteria, edit CCC "2" and continue normal processing of the Form 1120. Do not sequence the form to the back of the return, or place the form in a designated basket.

  4. If Form 8938 is attached and meets the criteria in paragraph (2), process Form 8938 per the instructions below:

    1. Completely edit Form 1120.

    2. Edit CCC "2."

    3. Pull the Form 8938 from the return and sequence to the back of the last page of Form 1120 (after schedules and attachment pages), attaching the Form 8938 so that it is back- to- back with the parent return.

    4. Place the Form 1120 in a designated basket.

    5. Only one Form 8938, Pages 1 and 2, can be processed. If multiple Forms 8938 are attached, select the form that has the highest account value in Part V, Line 23 (Line 4 for revision 2020 and prior); or highest asset value in Part VI, Line 32 (Line 4 for revision 2020 and prior) and delete the others.

      Note:

      The Form 8938 can have multiple "Additional or Continuation Statements." Do not confuse the multiple additional or continuation statements with multiple Forms 8938.

  5. Form 1120 with Form 8938 attached must be batched separately. The transcription of Form 8938 will occur under Program Code 43300 after the parent Form 1120 has been transcribed using normal procedures.

Schedule O (Form 1120) - Consent Plan and Apportionment Schedule for a Controlled Group

  1. The instructions in this section (paragraphs 2 through 4) only apply to tax periods 201811 and prior. If a Schedule O is attached to a Form 1120 for tax period 201812 and later, do the following:

    If ... Then ...
    Schedule O is in sequence order, Line through Schedule O, Parts II and III (old revision), Part II (new revision).
    Schedule O is not in sequence order, No action needed.

  2. This section includes instructions for processing Schedule O (Form 1120).

  3. Schedule O (Form 1120) replaces the Controlled Group tax computation previously included on Schedule J, Lines 2a(1) through 2b(2) for 2005 and prior tax returns.

  4. If Controlled Group Code "1" or "4" is edited on a prior year return, dummy a Schedule O and edit significant positive amounts as follows:

    1. Schedule J, Line 2a(1) to Schedule O, Part II, Line 1, Column (c).

    2. Schedule J, Line 2a(2) to Schedule O, Part II, Line 1, Column (d).

    3. Schedule J, Line 2a(3) to Schedule O, Part II, Line 1, Column (e).

    4. Schedule J, Line 2b(1) to Schedule O, Part III, Line 1, Column (f).

    5. Schedule J, Line 2b(2) to Schedule O, Part III, Line 1, Column (g).

Schedule O, Part II, Line 1 - Taxable Income Apportionment
  1. The instructions in this section only apply to tax periods 201811 and prior.

  2. Edit Schedule O, Part II, Line 1 as follows:

    If... And... Then...
    Schedule O is attached and the parent corporation's taxable income apportionment amounts are present in Part II The amounts are entered on Line 1, "X" any negative entries on Line 1, Columns (c), (d), or (e).
    Schedule O is attached and the parent corporation's taxable income apportionment amounts are present in Part II The amounts are entered on a line other than Line 1,
    1. Line out Line 1 and renumber the parent corporation taxable income apportionment amounts as Line "1."
      See Figure 3.11.16-25

    2. "X" any negative entries on Line 1, Columns (c), (d), or (e).

    A Controlled Group Code was edited; there are no entries on any of Schedule O, Part II, Line 1, Columns (c), (d), and (e), or Schedule O is missing,

    Note:

    A taxpayer may be a member of a controlled group with an allocation of zero ("0" ) in each of the three taxable income brackets. In this case no entry will be necessary on Line 1, Part II, Columns (c), (d), and (e).

    Taxable income brackets are found on an attachment,
    (See Note below for examples.)
    Edit the positive taxable income bracket amounts to Schedule O, Line 1, Columns (c), (d), and (e).

    Note:

    Dummy a Schedule O if needed.


    See Figure 3.11.16-25.
    A Controlled Group Code was edited; there are no entries on any of Schedule O, Part II, Line 1, Columns (c), (d), and (e), or Schedule O is missing,

    Note:

    A taxpayer may be a member of a controlled group with an allocation of zero ("0" ) in each of the three taxable income brackets. In this case no entry will be necessary on Line 1, Part II, Columns (c), (d), and (e).

    No taxable income brackets are found, Correspond for taxable income bracket amounts.
    • Exception: Do not correspond if:

      1. There is no indication of an income tax liability on Form 1120, Schedule J, Line 2, or

      2. The taxable income on Form 1120, Page 1, Line 30 is zero (0), or a negative amount, or

      3. Schedule O (Form 1120), Page 1, Box 3c or Box 4a is checked.

    No Controlled Group Code was edited, see IRM 3.11.16.11.11(4), Schedule J, Page 3 - Controlled Group Code / Personal Service Corporation Code / Tax Computation.   Delete Schedule O.

    Figure 3.11.16-25

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    Please click here for the text description of the image.

    Figure 3.11.16-26

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    Please click here for the text description of the image.

  3. Entries may be indicated on an attached allocation/apportionment schedule. Some examples of the title of these schedules may be:

    • "apportionment plan"

    • "apportionment consent plan"

    • "consent to apportionment"

    • "controlled group tax apportionment plan"

    • "surtax apportionment plan"

    • "allocation schedule"

    • The attachment may identify the amounts by the tax rate and/or taxable income bracket. Column (c) is the $50,000 taxable income bracket taxed at 15 percent, Column (d) is the $25,000 taxable income bracket taxed at 25 percent and Column (e) is the $9,925,000 taxable income bracket taxed at 34 percent.

  4. Any attachment labeled as "controlled group tax calculation statement" is NOT an apportionment plan and should not be used to edit tax bracket amounts on Schedule O.

Schedule O, Part III, Line 1 - Income Tax Apportionment
  1. The instructions in this section only apply to tax periods 201811 and prior.

  2. Edit Part III, Line 1 as follows:

    If... And... Then...
    The parent corporation's income tax apportionment amounts are present in Part III The amounts are entered on Line 1, "X" any negative entries on Line 1, Columns (f) and (g).
    The parent corporation's income tax apportionment amounts are present in Part III The amounts are entered on a line other than Line 1,
    1. Line out Line 1 and renumber the parent corporation income tax apportionment amounts as Line "1" .

    2. "X" any negative entries on Line 1, Columns (f) and (g).

    A Controlled Group was edited Part III, Line 1, Column (f) is blank, Check attachments for possible entry (additional 5 percent tax):
    1. If found, edit the positive amount to Line 1, Column (f).

    2. If not found, continue processing.

    A Controlled Group was edited Part III, Line 1, Column (g) is blank, Check attachments for possible entry (additional 3 percent tax):
    1. If found, edit the positive amount to Line 1, Column (g).

    2. If not found, continue processing.

Form 8873 - Extraterritorial Income Exclusion

  1. Document Perfection is responsible for processing Part I of Form 8873, "Elections and Other Information." Elections are identified by inputting Command Code FRM77 with Transaction Code "971" and IDRS Action Code "361," "362," or "363" depending on which election has been made.

    Note:

    "Action Codes" referenced in the Form 8873 instructions are IDRS Action Codes, not to be confused with ERS Action Codes. IDRS Action Codes should only be edited as part of the Action Trail (e.g., TC 971-361).

  2. It is necessary to process all Forms 8873 attached to a return, including those attached to subsidiary returns on a consolidated return.

  3. If Part I, Lines 1 - 3 of the Form 8873 are not checked, then no TC "971" needs to be edited.

Part I, Line 1 - IRC 942(a) (3) Election

  1. If the box is marked for Part I, Line 1 of Form 8873, enter TC "971" with IDRS Action Code "361." Use the current date for the Effective Date.

    Note:

    Edit Action Trail (e.g., "TC 971-361" ) in the lower left margin going vertically up the side of the return.

Part I, Line 2 - Extraterritorial Income Exclusion in Lieu of Election

  1. If the box is marked for Part I, Line 2 of Form 8873 enter TC "971" with IDRS Action Code "362." Use the current date for the Effective Date.

    Note:

    Edit Action Trail (e.g., "TC 971-362" ) in the lower left margin going vertically up the side of the return.

Part I, Line 3 - Domestication Election

  1. If the box is marked for Part I, Line 3 of Form 8873 enter TC "971" with IDRS Action Code "363." Use the current date for the Effective Date.

    Note:

    Edit Action Trail (e.g., "TC 971-363" ) in the lower left margin going vertically up the side of the return.

Form 4626 - Alternative Minimum Tax

  1. The instructions in this section only apply to tax periods 201811 and prior.

  2. Taxpayers may sometimes include more than one Form 4626 with the return. If more than one Form 4626 is present, compute the totals and edit the right transcription lines.

  3. If Form 4626 is attached, perfect the following lines, as necessary:

    1. Line 3 - Pre-adjustment Alternative Minimum Taxable Income (AMTI). If there is no entry on Line 3, but any of Lines 1 or Lines 2a through 2o have an entry, compute Line 3. Bracket if negative.

    2. Line 4e - Adjusted current earning (ACE) adjustment. Accept taxpayer's entry.

    3. Line 6 - Alternative tax net operating loss deduction. Accept positive taxpayer's entry. "X" negative entry.

    4. Line 11 - Alternative minimum tax foreign tax credit. Accept positive taxpayer's entry. "X" negative entry.

Schedule D - Capital Gains and Losses

  1. Edit the Schedule D as follows:

    If... Then...
    All the following conditions apply:
    1. Form 1120 is for 201212 tax year or later and

    2. The Schedule D is a 2012 or later revision and

    3. Significant entries are present on one or more of the transcription lines or checkbox is marked.

      • Transcription lines for 2019 and subsequent:

        • Checkbox above Part I,

        • Part I, Line 1a, Columns (d) and (e), Lines 1b - 3, Columns (d), (e), and (g),

        • Part II, Lines 8a, Columns (d) and (e), Lines 8b - 10, Columns (d), (e), and (g),

        • Line 14.

      • Transcription lines for 2013 through 2018:

        • Part I, Line 1a, Columns (d) and (e), Lines 1b -3, Columns (d), (e), and (g),

        • Part II, Lines 8a, Columns (d) and (e), Lines 8b - 10, Columns (d), (e), and (g),

        • Line 14

      • Transcription lines for 2012:

        • Lines 1-3 Columns (d) and (e),

        • Lines 8-10 Columns (d) and (e),

        • Line 14

    1. Place Schedule D in sequence order

    2. Edit Schedule D in dollars only.

    3. For 2012 revisions: "X" any negative transcription entries and change Line 1 to 1b and Line 8 to 8b.

    4. For 2013 revisions and subsequent: "X" any negative transcription entries, except Lines 1b(g), 2(g), 3(g), 8b(g), 9(g) and 10(g). These lines can be positive or negative.

    Criteria above is not met Cross out or slash the Schedule D.

Form 4797 - Sales of Business Property (Form 1120 Only)

  1. Line 1b - No editing necessary.

  2. Line 1c - No editing necessary.

Form 8949 - Sales and Other Dispositions of Capital Assets

  1. Form 8949, Sales and Other Dispositions of Capital Assets, is valid for tax periods ending 201712 and later, see Figure 3.11.16-27.

  2. If the taxpayer entered a "Z" or "Y" in any of the rows in either Part I, Line 1, Column (f), or Part II, Line 1, Column (f), of Form 8949, do the following:

    1. Place the form in sequence order. If there are more than one Form 8949 attached, sequence the Form 8949 with the edited data.

    2. Edit a CCC "M."

    3. If the taxpayer entered a "Z" in any of the rows in either Part I, Line 1, Column (f), or Part II, Line 1, Column (f), of Form 8949, edit as follows:

      If ... Then ...
      EIN is present in Column (a), Underline the EIN.
      No EIN is present in Column (a) or is illegible, No action is needed.
      A Date Acquired is present in Column (b) and the day, month, and year are present, Underline the Date Acquired.
      A Date Acquired is present in Column (b) and the day, month, and year are not present, No action is needed.
      A dollar amount is present in Column (g), Underline the dollar amount.
      No dollar amount is present in Column (g), No action is needed.
      If more than one row has a "Z" in Column (f), Edit "Z-1" to the right margin of Part I, Line 1, Row 1.

    4. If the taxpayer entered a "Y" in any of the rows in either Part I, Line 1, Column (f), or Part II, Line 1, Column (f), of Form 8949, edit as follows:

      If ... Then ...
      EIN is present in Column (a), Underline the EIN.
      No EIN is present in Column (a) or is illegible, No action is needed.
      Date Sold or Disposed of is present in Column (c) and the day, month, and year are present, Underline the Date Sold or Disposed of.
      Date Sold or Disposed of is present in Column (c) and the day, month, and year are not present, No action is needed.
      A dollar amount is present in Column (g), Underline the dollar amount.
      No dollar amount is present in Column (g), No action is needed.
      If more than one row has a "Y" in Column (f), Edit "Y-1" to the right margin of Part I, Line 1, Row 1.
      If "Z-1" is edited, Edit "Y-1" under "Z-1."

    Figure 3.11.16-27

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    Please click here for the text description of the image.

Form 8996 - Qualified Opportunity Fund

  1. Form 8996 is valid for tax periods ending 201712 and later, see Exhibit 3.11.16-13, Form 8996 - Prior Year Conversion Chart, and the table below for Form 8996 revision line numbers:

    Form 8996 Revisions

    2021 and later 2020 2019 2018 and 2017
    Line 5 Line 5 Line 5 N/A
    Line 6 N/A N/A N/A
    Line 7 Line 7 Line 6 Line 5
    Line 8 Line 8 Line 7 Line 6
    Line 10 Line 10 Line 9 Line 8
    Line 11 Line 11 Line 10 Line 9
    Line 14 Line 14 Line 13 Line 12
    Line 15 Line 15 Line 14 Line 13
  2. Place Form 8996 in sequence order if significant entries are present on any of the lines in paragraphs (3) through (9) below:

    Note:

    Only Part III, Lines 14 and 15 require editing.

  3. Part I, Line 5 - checkbox is checked.

  4. Part I, Line 6 - Reserved for Future Use.

  5. Part II, Line 7 - Total qualified opportunity zone property held by the taxpayer on the last day of the first 6-month period of the taxpayer’s tax year.

  6. Part II, Line 8 - Total assets held by the taxpayer on the last day of the first 6-month period of the taxpayer’s tax year.

  7. Part II, Line 10 - Total qualified opportunity zone property held by the taxpayer on the last day of the taxpayer’s tax year.

  8. Part II, Line 11 - Total assets held by the taxpayer on the last day of the taxpayer’s tax year.

  9. Part III, Line 14 - Perfect line 14 as follows:

    1. Edit the percent on Line 14 in 0.00 format. For example, edit 50 percent as 0.50.

    2. If the entry is greater than 1.00, "X" the entry on Line 14. For example, the entry is 1.23 or 1.23 percent.

  10. Part III, Line 15 - Perfect Line 15 as follows:

    1. If Form 8996, Part III, Line 15 is blank and Part IV, Line 8 has an amount, edit Part IV, Line 8 to Part III, Line 15 in dollars and cents.

  11. Edit Return Processing Code (RPC) "6," see IRM 3.11.16.9.2, Return Processing Code (RPC), for more information.

  12. See the following IRM references:

    • Form 1120 - IRM 3.11.16.11.30, Schedule K, Question 25 (Form 8996 - Qualified Opportunity Fund)

    • Form 1120-F - IRM 3.11.16.32.23, Page 3, Question II (Form 8996 - Qualified Opportunity Fund)

    • Form 1120-REIT - IRM 3.11.16.38.29, Schedule K, Question 12 (Qualified Opportunity Fund - Form 8996)

Form 1125-A - Cost of Goods Sold

  1. Place Form 1125-A in sequence order if significant entries are present on Lines 1, 6, or 7.

  2. Edit Form 1125-A in dollars only.

  3. Line 1 is "Inventory at Beginning of Year." If Line 1 is blank, edit from the taxpayer's attachment, see Figure 3.11.16-28.

  4. Line 6 is "Total Cost of Goods." If Line 6 is blank, do one of the following:

    1. Add Lines 1 through 5 and edit the total to Line 6, or

    2. Perfect from attachments if possible for a Line 6 total, see Figure 3.11.16-28, or

    3. Edit the positive amount from line 2, page 1 of Form 1120 to line 6 of Form 1125-A.

  5. Line 7 is "Inventory at End of Year." If Line 7 is negative "X" the amount. If Line 7 is blank, enter from taxpayer's attachment, see Figure 3.11.16-28.

  6. Forms 1125-A must be dummied if missing and if Lines 1, 6, and/or 7 can be edited. Use instruction in 2-5 above to edit lines. Place Form 1125-A in sequence order.

    Figure 3.11.16-28

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    Please click here for the text description of the image.

Form 4136 - Credit for Federal Tax Paid on Fuels

  1. If Form 4136 is missing and a significant entry is present on any of the lines below, correspond for the missing Form 4136.

    • Form 1120 - Schedule J, Part III, Line 20b (Line 19b for 2017-2011)

    • Form 1120-C - Line 30f (Line 29f for 2017 and prior)

    • Form 1120-F - Page 1. Line 5g

    • Form 1120-FSC - Page 1, Line 2f

    • Form 1120-H - Page 1, Line 23f

    • Form 1120-L - Page 1 Line 28g (Line 27g for 2017 and prior)

    • Form 1120-PC - Page 1 Line 15i (Line 14i for 2017 and prior)

    • Form 1120-REIT - Page 2, Line 25f (Line 24f for 2017 and prior)

    • Form 1120-RIC - Page 2, Line 29g (Line 28g for 2017 and prior)

  2. If a fuel credit claim is found on other than the right line on the return, and Form 4136 is attached, adjust incorrect entry before editing fuel tax credits.

  3. If fuel tax credit is claimed and Form 4136 is attached, compute as follows:

    If ... And ... Then ...
    Form 4136, Column (d) is blank, There is an entry in Column (c) Multiply the entry in Column (c) by the rate in Column (b)
    Column (d) should equal Line 17 of Form 4136
    Perfection is not possible   Correspond, see Figure 3.11.16-29.

    Figure 3.11.16-29

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  4. C&E is no longer required to renumber the lines on prior year Form 4136 to current year format. Column (d) credit amounts are transcribed using the corresponding Credit Reference Number (CRN) in Column (e).

Form 8978 - Partner’s Additional Reporting Year Tax

  1. Form 8978 is valid for tax periods ending 201712 and later.

  2. Place Form 8978 in sequence order if significant entries are present on any of the lines in paragraphs (3) through (5) below:

    Note:

    No editing is required.

  3. Part I, Line 14 - Total additional reporting year tax.

  4. Part II, Line 16 - Total penalties.

  5. Part III, Line 18 - Total interest.

Form 965-B - Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts

  1. Form 965-B is valid for tax periods ending 201712 and later.

  2. Place Form 965-B in sequence order if a significant amount (other than the pre-printed year) is present on any of the following lines:

    1. Part I, Lines 1 through 5, col (a), Year of Section 965(a) Inclusion or Liability Assumed.

    2. Part I, Lines 1 through 5, col (h), Net 965 Tax Liability Transferred (Out) Transferred (In), or Subsequent Adjustments, if any.

    3. Part I, Lines 1 through 5, col (i), Tax Identification Number of buyer/transferee or Seller/transferor.

  3. Edit "1" in the right margin of Part I if more than five lines of entries are present.

Form 8941 - Credit for Small Employer Health Insurance Premiums

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

  2. Line A: To determine if correspondence is needed for the SHOP (Small Business Health Options Program) checkbox (Line A, Form 8941) for 2014 and later, follow the table below:

    Note:

    This chart is only applicable for the Form 1120.

    If... Then...
    Line A, Only "Yes" box or"No" box is checked, No correspondence is needed
    Line A, Neither the "Yes" box or the "No" box is checked, Correspond using Letter 118C.
    Line A, Both the "Yes" box and the "No" box is checked, Correspond using Letter 118C.

  3. Line C: To determine if correspondence is needed for the checkboxes on Line C (2016 and later), follow the table below:

    Note:

    This chart is only applicable for the Form 1120.

    If... Then...
    Line C, Only "No" box is checked, No correspondence is needed
    Line C, Only "Yes" box is checked, Correspond using Letter 118C.
    Line C, Neither the "Yes" box or the "No" box is checked, Correspond using Letter 118C.
    Line C, Both the "Yes" box and the "No" box is checked, Correspond using Letter 118C.

  4. For prior year conversion instructions, see Exhibit 3.11.16-12, Form 8941 - Prior Year Conversion Chart.

Form 5884-B - New Hire Retention Credit

  1. For 2010 and 2011 place Form 5884-B in sequence order if a significant entry is present on Line 10 or 11.

  2. Form 201212 and later follow the chart below to edit a Form 5884-B with a significant amount on any line.

    If... And... Then...
    A significant amount is on the Form 5884-B Form 3800, Part III, Line 1aa has an amount,
    1. "X" the Form 5884-B

    2. "X" the amount on Form 3800, Part III, Line 1aa

    3. Subtract the amount of Form 3800, Part III, Line 1aa from Form 3800, Part II, Line 35.

    A significant amount is on the Form 5884-B, Form 3800, Part III, Line 1aa does not have and amount, "X" the Form 5884-B.

Form 3800 - General Business Credit

  1. Form 3800, General Business Credit, must be filed with corporate tax returns when an amount is present on Schedule J, Line 5c - General Business Credit.

  2. Place Form 3800 in sequence order if significant entries are present.

  3. If an amount is present on Form 3800, Part III, Line 1a Column (c) through Line 4z Column (c) follow the instructions below:

    If... And... Then...
    Credit claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the corresponding form is not attached, Part III, Box C, D, or G are checked; No action is needed.
    Credit claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the corresponding form is not attached, Column (b) has an EIN listed; No action is needed. The credit is from a pass-through entity and the form is not required.

    Exception:

    If a credit is claimed on Lines 1a and/or 4a Form 3468must be attached and if a credit is claimed on line 1l Form 8864must be attached.

    Credit claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the corresponding form is not attached, Column (b) does not have an EIN listed; Correspond.

  4. If multiple copies of Form 3800, Page 3, are attached follow the instructions below:

    If... And... Then...
    More than one copy of Form 3800, Page 3, is attached, Box I is checked on one copy of Page 3,
    1. Place copy with Box I checked behind Form 3800, Page 2.

    2. Staple all copies of Page 3 together.

    More than one copy of Page 3, Form 3800 is attached, Box I is checked on more than one copy of Page 3,
    1. Place first copy of Page 3 with Box I checked behind Page 2, Form 3800.

    2. Staple all copies of Page 3 together.

    More than one copy of Form 3800, Page 3, is attached, Box I is not checked on any copy of Page 3, Staple all copies of Page 3 together.

Form 6252 - Installment Sale Income (Form 1120 only)

  1. Form 6252 is valid for tax periods ending 201712 and later.

  2. Place Form 6252 in sequence order if the form is attached to a Form 1120 and significant entries are present on any of Lines 1, 2a, 2b, 7, 19, 21 or 23.

    Note:

    Part II, Line 19 is the only line that requires editing, however, an Installment Sale Indicator must be determined from Line 3, see IRM 3.11.16.10.4, Installment Sale Indicator (Form 6252).

  3. Only one Form 6252 can be processed. If multiple forms are attached, process the first one with significant transcription entries and delete the others.

    Caution:

    Multiple Forms 6252 must be used to determine the Installment Sale Indicator.

  4. Line 1 - Description of Property - Taxpayer may enter a code and a description of installment sale property as described below: (No editing necessary)

    Code Description of property
    1 Sale property is timeshares or residential lot
    2 Sale by an individual of personal use property (within the meaning of section 1275(b)(3))
    3 Sale of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5))