3.11.16 Corporate Income Tax Returns

Manual Transmittal

November 07, 2017

Purpose

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

Material Changes

(1) Minor editorial changes have been made throughout this IRM (e.g., line number updates, spelling, punctuation, links, etc.). Other significant changes to this IRM are shown below

(2) IRM 3.11.16.1 - Program Scope - Added Internal Controls to this section. As a result, some information may have been moved or rearranged.

(3) IRM 3.11.16.1.11(1) - IRM Deviation Procedures - Corrected the title per feedback during IRM Review.

(4) IRM 3.11.16.1.12(1) and (2) - Taxpayer Advocate Service (TAS) - Moved information from paragraphs (1) and (2) into paragraphs (1) through (5).

(5) IRM 3.11.16.1.13 (4)Table - Edit Marks - Added "example" in first row, editing the "X" when correcting taxpayer entries and created new row for" slash(/)" edit mark. (IPU 17U0315 issued 02-15-2017)

(6) IRM 3.11.16.1.17(2) - Criminal Investigation (CI) Referral - Added instructions to edit Action Code 341 and reference IRM 3.11.16.3, Refund Returns (45 Day Jeopardy and $100 Million or more Refunds). (Start-Up IPU 17U0006 01-02-2017)

(7) IRM 3.11.16.1.17(3) - Criminal Investigation (CI) Referral - Added instructions to send Form 1120-RIC or Form 1120-REIT with Form 2438 or Form 2439 attached.

(8) IRM 3.11.16.1.17(4)3) - Criminal Investigation (CI) Referral - Added mail stop for Kansas City Submission Processing Center (KCSPC).

(9) IRM 3.11.16.1.19(2) - BMF Identification (ID) Theft - Added CCC "E" to Identity Theft instructions. Effective for Forms: 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-REIT, 1120-RIC, and 1120-SF. (Start-Up IPU 17U0006 01-02-2017)

(10) IRM 3.11.16.2.1(6) - Action Codes - Deleted "Exception" in paragraph (4)6) and added table in new paragraph (5).

(11) IRM 3.11.16.2.1(4)6) - Action Codes - Added row and explanation for Action Code "440" and "450" .

(12) IRM 3.11.16.2.3(1) - Treatment of All Unprocessable Tax Returns - Deleted Cincinnati Submission Processing Center since both Cincinnati and Kansas City Submission Processing Center will begin processing BMF returns in 2018.

(13) IRM 3.11.16.2.4(1) Correspondence - Changed verbiage in second bullet.

(14) IRM 3.11.16.2.4.3(4) - Correspondence Imaging System (CIS) Returns - Rearranged table information in paragraph (4) for better clarity.

(15) IRM 3.11.16.2.4.4(3) Caution - Use of Fax for Taxpayer Submissions - Changed IRM 11.3.2.6.1 reference to IRM 11.3.2.7.1. (IPU 17U0315 issued (02-15-2017)

(16) IRM 3.11.16.2.4.4(3) - Use of Fax for Taxpayer Submissions - Changed "Caution" to Paragraphs (4) and (5) and added bullet lists.

(17) IRM 3.11.16.2.6.1(2)b) Note - IRC 6020(b) - Prepared by Collections - Changed verbiage in "Note" .

(18) IRM 3.11.16.2.7 - Statute Returns - Deleted "Exception" and added information into paragraph (3).

(19) IRM 3.11.16.2.8.2(5) Caution - Form 13596 – Reprocessing Returns - Added "No other editing is required." to paragraph (5).

(20) IRM 3.11.16.3(1) - Refund Returns (45 Day Jeopardy and $100 Million or more Refunds) - Added reference to IRM 3.11.1.9, BMF Identification (ID) Theft and added instructions to copy the return and send to Criminal Investigation. (Start-Up IPU 17U0006 01-02-2017)

(21) IRM 3.11.16.4.5(2) - Minimum Edit - Deleted Note and added paragraph (2).

(22) IRM 3.11.16.5.1(1) - Bankruptcy - Added, "route to Entity Control using Form 13934, Merge Sheet)" as part of local procedures.(IPU 17U1118 07-10-2017 and IPU 17U1149 issued 07-14-2017)

(23) IRM 3.11.16.5.2(3) - Entity Perfection - Employer Identification Number (EIN) - Added "route to Entity Control using Form 13934, Merge Sheet)" as part of local procedures. (IPU 17U1118 07-10-2017 and IPU 17U1149 issued 07-14-2017)

(24) IRM 3.11.16.5.3(4)(5) - Entity Perfection - Name Control - Added "route to Entity Control using Form 13934, Merge Sheet)" as part of local procedures. (IPU 17U1118 07-10-2017 and IPU 17U1149 issued 07-14-2017)

(25) IRM 3.11.16.5.5(3) - Entity Perfection - Domestic Address - Added "route to Entity Control using Form 13934, Merge Sheet)" as part of local procedures. (IPU 17U1118 07-10-2017 and IPU 17U1149 issued 07-14-2017 )

(26) IRM 3.11.16.6.4(1) - Short Period – Editing Proof of Entitlement - Deleted "Exception" in paragraph (1).

(27) IRM 3.11.16.7(2) - Received Date - Added "Note" to paragraph (2) defining delivery services. (IPU 17U0039 issued 01-04-2017)

(28) IRM 3.11.16.7(2) Table - Received Date - Added reference to IRM 3.10.72, Receiving, Extracting and Sorting to mention "designated" Private Delivery Services (PDS).

(29) IRM 3.11.16.8.1.4(1) - CCC "D" – Reasonable Cause for Failing to Pay Timely - Added IRM reference to "Issuing correspondence."

(30) IRM 3.11.16.8.1.5 - BMF Identification (ID) Theft - Added new section for CCC "E" for Identity Theft. Also, IRM 3.11.16.24.7, Form 1120-C, IRM 3.11.16.25.11, Form 1120-F, IRM 3.11.16.26.7, Form 1120-FSC, IRM 3.11.16.27.6, Form 1120-H, IRM 3.11.16.28.6, Form 1120-L, IRM 3.11.16.29.8, Form 1120-ND, IRM 3.11.16.30.7, Form 1120-PC, IRM 3.11.16.31.7, Form 1120-REIT, IRM 3.11.16.32.7, Form 1120-RIC, and IRM 3.11.16.33.7, Form 1120-SF. (Start-Up IPU 17U0006 01-02-2017)

(31) IRM 3.11.16.8.1.11(1) - CCC "L" - Treaty Based Positions - Added: "Taxpayer writes Section 6114 Election on the return" to Computer Condition Code (CCC) "L" . (IPU 17U0404 issued 03-02-2017)

(32) IRM 3.11.16.8.1.12 - CCC "N" - Joint Committee Case - Deleted Form 1120-F from the forms with a valid CCC "N" . (IPU 17U0213 issued 01-31-2017)

(33) IRM 3.11.16.8.1.16(1) - CCC "R" – Reasonable Cause for Failing to File a Timely Return - Added IRM reference to "Issuing correspondence."

(34) IRM 3.11.16.8.1.16(5) - CCC "R" – Reasonable Cause for Failing to File a Timely Return - Added a "Note" , CCC "R" cannot be used with CCC "4" .

(35) IRM 3.11.16.8.1.26(1) - CCC "2" – Statement of Specified Foreign Financial Assets - Changed instruction to include prior year returns for Form 8938/CCC "2" . (IPU 17U0466 issued 03-08-2017)

(36) IRM 3.11.16.8.1.27(1) - CCC "3" – "No Reply" to Correspondence - Added information to the sentence for No Reply.

(37) IRM 3.11.16.8.1.32 - CCC "9" – Low-Income Housing Form - Added line numbers for Form 1120-C, Form 1120-REIT and Form 1120-RIC.

(38) The following IRM references have been changed to delete Missing Schedule Codes (MSC) and are replaced with Correspond.

  • IRM 3.11.16.8.2 - ABLM Code and Schedule M-3 Checkbox

  • IRM 3.11.16.9(1) - Additional Return Perfection

  • IRM 3.11.16.9.2 - Missing Schedule Code (MSC)

  • IRM 3.11.16.10.4.8(1) - Line 9 - Net Gain or Loss from Form 4797

  • IRM 3.11.16.10.12(2) - Schedule J, Line 3 - Alternative Minimum Tax

  • IRM 3.11.16.10.13(1)a)b) - Schedule J, Lines 5a and 5b - Credits

  • IRM 3.11.16.10.13.1(1) - Schedule J, Line 5a - Form 1118, Foreign Tax Credit

  • IRM 3.11.16.10.13.2(1)(2) - Schedule J, Line 5b - Form 8834 Credit and Form 5735

  • IRM 3.11.16.10.14 through IRM 3.11.16.10.14.39 - General Business Credits

  • IRM 3.11.16.10.16(1) - Schedule J, Line 8 - Personal Holding Company Tax

  • IRM 3.11.16.10.17.1(1) - Schedule J, Line 9a - Recapture of Investment Credit (Form 4255)

  • IRM 3.11.16.10.17.2(1) - Schedule J, Line 9b - Recapture of Low-Income Housing Credit (Form 8611)

  • IRM 3.11.16.19(4) - Form 3800 - General Business Credit

  • IRM 3.11.16.24.12.3 - Missing Schedule Code (MSC)

  • IRM 3.11.16.24.20(2)(3)(4)(6)(7)(9) - Schedule J, Lines 2 through 8

  • IRM 3.11.16.24.32(3) - Form 3800 - General Business Credit

  • IRM 3.11.16.25.14.3 - Missing Schedule Code (MSC)

  • IRM 3.11.16.25.21(4)(5) - Page 4, Section II - Income and Deductions

  • IRM 3.11.16.25.22(2) - Page 5, Schedule J —Tax Computation Tax Preference Code and Page 5, Schedule J —Lines 3, 5a, 5b, 5c, and 5d

  • IRM 3.11.16.25.28(3) - Form 3800 - General Business Credit

  • IRM 3.11.16.26.16.2 - Missing Schedule Code (MSC)

  • IRM 3.11.16.27.7.2 - Missing Schedule Code (MSC)

  • IRM 3.11.16.27.11(1) - Tax and Payments - Lines 21 through 26

  • IRM 3.11.16.28.10.3 - Missing Schedule Code (MSC)

  • IRM 3.11.16.28.17(2) - Schedule K, Line 3 - Alternative Minimum Tax

  • IRM 3.11.16.28.18(2)(3)a) - Schedule K, Lines 5a through 5c

  • IRM 3.11.16.28.26(3) - Form 3800 - General Business Credit

  • IRM 3.11.16.29.9.2 - Missing Schedule Code (MSC)

  • IRM 3.11.16.30.11.3 - Missing Schedule Code (MSC)

  • IRM 3.11.16.30.13(2) - Line 6, Tax Preference Code

  • IRM 3.11.16.30.14(2)(4)a) - Lines 8a through 8c

  • IRM 3.11.16.30.31(3) - Form 3800 - General Business Credit

  • IRM 3.11.16.31.10.3 - Missing Schedule Code (MSC)

  • IRM 3.11.16.31.19(1) - Schedule J, Line 3a - Foreign Tax Credit, Form 1118

  • IRM 3.11.16.31.20(1) - Schedule J, Line 3b - Form 8834 Credit

  • IRM 3.11.16.31.21(2) - Schedule J, Line 3c - General Business Credits

  • IRM 3.11.16.31.33(3) - Form 3800 - General Business Credit

  • IRM 3.11.16.32.10.3 - Missing Schedule Code (MSC)

  • IRM 3.11.16.32.18(1) - Schedule J, Line 3a - Form 1118

  • IRM 3.11.16.32.19(1) - Schedule J, Line 3b —Form 8834, Qualified Electric and Plug-in Electric Vehicle Credit

  • IRM 3.11.16.30.20(2) - Schedule J, Line 3c - General Business Credits

  • IRM 3.11.16.32.21(1) - Schedule J, Line 3d - Form 8827

  • IRM 3.11.16.32.22(1) - Schedule J, Line 5 - Schedule PH

  • IRM 3.11.16.32.23(1)a)(2)a) - Schedule J, Line 6 - Recapture Taxes (Form 4255, Form 8611 and Recapture of Indian Employment Credit)

  • IRM 3.11.16.31.33(3) - Form 3800 - General Business Credit

(39) IRM 3.11.16.9.3(2) - Penalty and Interest Code - Deleted last sentence in paragraph (2).

(40) IRM 3.11.16.10(2) - Return Processing - Form 1120 - Added instructions to send Form 5472 attached to a blank Form 1120 to Statistics of Income (SOI) for data capture. (IPU 17U0338 issued 02-22-2017)

(41) IRM 3.11.16.10.6.5(1)(2) - FIRPTA, Form 1042-S, and Form 8288-A Credits - Added Form 8805, Foreign Partners Information Statement of Section 1446 Withholding Tax to instructions.

(42) IRM 3.11.16.10.7 - Signature - Added instructions (paragraph (7)) for invalid signatures.

(43) IRM 3.11.16.10.9.1(3) - Paid Preparer Social Security Number (SSN) or Preparer's Tax Identification Number (PTIN) - Deleted paragraph (3) to be consistent with BMF Consistency template.

(44) IRM 3.11.16.10.11(1)(4) and (5)Schedule J, Page 3 - Controlled Group Code / Personal Service Corporation Code / Tax Computation - Deleted prior year reference in paragraph (1) and added location information to paragraphs (4) and (5).

(45) IRM 3.11.16.10.14.6 - Form 6765, Credit for Increasing Research Activities - Added Form 3800, Part III, Line 4i to Form 6765, Credit for Increasing Research Activities. (IPU 17U0613 issued 04-03-2017)

(46) IRM 3.11.16.10.14.10 - Form 8830, Enhanced Oil Recovery Credit - Added instructions for Form 8830.

(47) IRM 3.11.16.10.14.25 - Form 8904, Oil and Gas Production from Marginal Wells - Added instructions for Form 8904.

(48) IRM 3.11.16.10.14.27(1) - Form 8907, Nonconventional Source Fuel Credit - Added "Note" .

(49) IRM 3.11.16.10.14.33(1) - Form 8931, Agricultural Chemicals Security Credit - Added "Note" .

(50) IRM 3.11.16.10.18(1)a - Schedule J, Line 11 – Total Tax - Added Part I to Form 1120, Schedule J in paragraph (1). (IPU 17U1030 issued 06-19-2017)

(51) IRM 3.11.16.10.19.7(2) - Schedule J, Part II, Line 19b – Fuel Tax Credit, Form 4136 - Deleted paragraph sending return to Criminal Investigation. Also, IRM 3.11.16.24.15(6)b), Form 1120-C, IRM 3.11.16.25.15(9)b), Form 1120-F, IRM 3.11.16.26.18(5)b), Form 1120-FSC, IRM 3.11.16.27.11(5)b), Form 1120-H, IRM 3.11.16.28.13(8)b)), Form 1120-L, IRM 3.11.16.31.14(6)b), Form 1120-REIT and IRM 3.11.16.32.15(6)b)Form 1120-RIC. (IPU 17U0937 issued 05-31-2017)

(52) IRM 3.11.16.10.20(2) - Schedule K, Line 2a - NAICS Code - Added four digits to paragraph (2).

(53) IRM 3.11.16.10.20(4) Table - Schedule K, Line 2a - NAICS Code - Deleted sequential numbers from table. Sequential numbers are valid. Also, IRM 3.11.16.24.21(4), Form 1120-C, IRM 3.11.16.25.13(4), Form 1120-F and IRM 3.11.16.26.8(5), Form 1120-FSC.

(54) IRM 3.11.16.10.22 - Schedule K, Line 7c - Number of Form 5472 - Added "Note" to send Form 5472 attached to a blank Form 1120 to Statistics of Income (SOI) for data capture. (IPU 17U0338 issued 02-22-2017)

(55) IRM 3.11.16.10.26.10(3) - Schedule N, Line 8 - Statement of Specified Foreign Financial Assets - Added additional instructions for processing Form 8938. (IPU 17U0155 issued 01-23-2017)

(56) IRM 3.11.16.10.26.10 - Schedule N, Line 8 - Statement of Specified Foreign Financial Assets - Changed instruction to include prior year returns for Form 8938/CCC "2" . (IPU 17U0466 issued 03-08-2017)

(57) IRM 3.11.16.10.27.1(1) Note - Schedule O, Part II, Line 1 – Taxable Income Apportionment - Deleted Note and added paragraphs (2) and (3), plus bullet list.

(58) IRM 3.11.16.10.27.1(1) Table - Schedule O, Part II, Line 1 – Taxable Income Apportionment - Added IRM reference to last row.

(59) IRM 3.11.16.11(1) Note - Form 8873 — Extraterritorial Income Exclusion - Clarified Note .

(60) IRM 3.11.16.12(3) Form 4626 - Alternative Minimum Tax - Deleted paragraph (3), prior year instructions are more than 10 years old.

(61) IRM 3.11.16.17(2) - Form 8941 - Credit for Small Employer Health Insurance Premiums - Deleted Paragraph (2) and added an IRM reference to the exhibit in new paragraph (4).

(62) IRM 3.11.16.19 - Form 3800 General Business Credit - Moved Form 3800 Prior Year Conversion Chart to Exhibit 3.11.16-13.

(63) IRM 3.11.16.24.13(3) - Income - Lines 1a through 10 - Added correspondence instructions for Schedule D and Form 4797.

(64) IRM 3.11.16.24.26.1(1) Note - Taxable Income Apportionment – Part II, Line 1 - Deleted Note and added paragraphs (2) and (3), plus bullet list.

(65) IRM 3.11.16.24.26.1(1) Table - Taxable Income Apportionment – Part II, Line 1 - Added IRM reference to last row.

(66) IRM 3.11.16.25(4)a) - Return Processing — Form 1120-F (OSPC Only) - Added current and prior year page numbers. (IPU 17U1076 issued 06-28-2017)

(67) IRM 3.11.16.25.14.7 - Form 1120-F Indicator Code - Added prior year instructions. (IPU 17U1076 issued 06-28-2017)

(68) IRM 3.11.16.25.16(2) Table - Line 5i - Computation of Tax Due or Overpayment - deleted instructions to place return in basket for Foreign Payments Practice (FPP) review and added instructions to edit Action Code "440" . (IPU 17U0213 issued 01-31-2017)

(69) IRM 3.11.16.25.16(2) Table - Line 5i - Computation of Tax Due or Overpayment - Added instructions not to correspond if the difference in Line 5i and the withholding documents is due to rounding. (IPU 17U1076 issued 06-28-2017)

(70) IRM 3.11.16.25.16(2)&(3) Table - Line 5i - Computation of Tax Due or Overpayment - Added instructions to correspond using Action Code" 211" if the address is domestic. (IPU 17U1076 issued 06-28-2017)

(71) IRM 3.11.16.25.22(2) - Page 5, Schedule J — Tax Computation Tax Preference Code and Page 5, Schedule J — Lines 3, 5a, 5b, 5c, 5d and 8 - Changed title and added correspondence instructions for Form 4255 and Form 8611

(72) IRM 3.11.16.26.18(6) Table - Tax Data Perfection, Page 1- Tax and Payments - Clarified instructions in table, first "if" and "then" box. (IPU 17U0213 issued 01-31-2017)

(73) IRM 3.11.16.26.21(1) - Schedule J, Page 5, Tax Preference Code and Foreign Tax Credit - Changed section title and added instructions to correspond for Form 1118, Foreign Tax Credit .(IPU 17U1288 issued 08-30-2017)

(74) IRM 3.11.16.28.6(2) - Computer Condition Codes - Added Computer Condition Code (CCC) "6" to Form 1120-L to match Functional Specification Package (FSP). (IPU 17U0937 issued 05-31-2017)

(75) IRM 3.11.16.28.6(2) - Computer Condition Codes - Added Computer Condition Code (CCC) "N" to Form 1120-L to match Functional Specification Package (FSP). (IPU 17U0213 issued 01-31-2017)

(76) IRM 3.11.16.28.6(2) - Computer Condition Codes - Deleted Computer Condition Code (CCC) "K" to Form 1120-L to match Functional Specification Package (FSP).

(77) IRM 3.11.16.28.11(1) - Income Section - Added section and correspondence instructions for Schedule D.

(78) IRM 3.11.16.28.15(1) - Schedule B - Added section and correspondence instructions for Schedule D.

(79) IRM 3.11.16.28.18(1) - Schedule K, Lines 5a through 5c - Added instructions to correspond for Form 1118, Foreign Tax Credit. (IPU 17U1288 issued 08-30-2017)

(80) IRM 3.11.16.28.18(5) - Schedule K, Lines 5a through 9 - Changed title and added correspondence instructions for Form 4255, Form 8611 and Form 8912

(81) IRM 3.11.16.28.18(5) - Schedule K, Lines 5a through 5c - Added "Reminder" to reference CCC "N" and Audit Code "4" instructions. (IPU 17U0213 issued 01-31-2017)

(82) IRM 3.11.16.28.27(1)(2)(3) - Annual Statement Form 1120-L - Revised paragraphs (1), (2) and (3) to clarify type of annual statement needed and change correspondence criteria. (IPU 17U1195 issued 07-28-2017)

(83) IRM 3.11.16.29.8(1) - Computer Condition Codes - Deleted Computer Condition Codes "L" , "N" and "S" from Form 1120-ND to match Functional Specification Package (FSP). (IPU 17U0404 issued 03-02-2017)

(84) IRM 3.11.16.29.11(1) - Tax Data Perfection, Page 1 - Added correspondence instructions for Schedule D.

(85) IRM 3.11.16.30.7(1) - Computer Condition Codes - Added Computer Condition Code (CCC) "6" to Form 1120-PC to match Functional Specification Package (FSP). (IPU 17U0937 issued 05-31-2017)

(86) IRM 3.11.16.30.7(1) - Computer Condition Codes - Added Computer Condition Code (CCC) "N" to Form 1120-PC to match Functional Specification Package (FSP).

(87) IRM 3.11.16.30.14(1) - Lines 8a through 8c - Added instructions to correspond for Form 1118, Foreign Tax Credit. (IPU 17U1288 issued 08-30-2017)

(88) IRM 3.11.16.30.14(6) - Lines 8a through 12 - Changed title and added correspondence instructions for Form 4255, Form 8611 and Form 8912

(89) IRM 3.11.16.30.14(6) - Lines 8a through 8c - Added "Reminder" to reference CCC "N" and Audit Code "3" instructions. (IPU 17U0213 issued 01-31-2017)

(90) IRM 3.11.16.30.15(7) Table - Lines 13 through 18 - Tax Computation and Payments Changed Line 29i to 14i.

(91) IRM 3.11.16.30.17(2) - Schedule A, Page 2, Line 3b - Interest Exempt Under IRC 103 - Added paragraph (2) for instructions to dummy a page 2 if necessary.

(92) IRM 3.11.16.30.17 - Schedule A, Page 2, Line 3b - Interest Exempt Under IRC 103 - Changed title to Schedule A, Page 2, Added correspondence instructions for Schedule D and Form 4797 and deleted IRM 3.11.16.30.18 and combined information into IRM 3.11.16.30.17.

(93) IRM 3.11.16.30.25(1)(2)(3) - Annual Statement Form 1120-PC - Revised paragraphs (1), (2) and (3) to clarify type of annual statement needed and change correspondence criteria. (IPU 17U1195 issued 07-28-2017)

(94) IRM 3.11.16.31(4) - Added "See also" reference to "Criminal Investigation (CI) Referral" instructions.

(95) IRM 3.11.16.31.12(6) - Page 1 – Gross Income Items, Lines 1 through 8 - Added instructions to correspond for Form 4797.

(96) IRM 3.11.16.31.16 - Reserved - Deleted CCC "9" information. Instructions in IRM 3.11.16.31.7.

(97) IRM 3.11.16.31.25(1) - Schedule K, line 5b and Line 5c - Added "margin" to Line 5b instructions.

(98) IRM 3.11.16.31.27.1(1) Note - Taxable Income Apportionment – Part II, Line 1 - Deleted Note and added paragraphs (2) and (3), plus bullet list.

(99) IRM 3.11.16.31.27.1(1) Table - Taxable Income Apportionment – Part II, Line 1 - Added IRM reference to last row.

(100) IRM 3.11.16.32(4) - Added "See also" reference to "Criminal Investigation (CI) Referral" instructions.

(101) IRM 3.11.16.32.12(6) - Page 1 - Gross Income Items, Lines 1 through 8 - Added instructions to correspond for Form 4797.

(102) IRM 3.11.16.32.17(1) - Schedule J - Lines 2b through 2e - Changed line name.

(103) IRM 3.11.16.32.25(1) - Schedule K, line 5b(2) - Added "margin" to Line 5b(2) instructions.

(104) IRM 3.11.16.32.27.1(1) Note - Taxable Income Apportionment – Part II, Line 1 - Deleted Note and added paragraphs (2) and (3), plus bullet list.

(105) IRM 3.11.16.32.27.1(1) Table - Taxable Income Apportionment – Part II, Line 1 - Added IRM reference to last row.

(106) IRM 3.11.16.33.12(4) - Tax Computation - Lines 15 through 20 - Added "Reminder" to reference CCC "N" and Audit Code "3" instructions. (IPU 17U0213 issued 01-31-2017)

(107) IRM 3.11.16.33.14(5) - Additional Information, Page 2 - Added "Note" .

(108) IRM 3.11.16.34(2) - Form 4876-A - Election To Be Treated as an Interest Charge DISC/Scope (CSPC Only) - Added paragraph (2), instructions for Form 9100, Notice of Late Election.

(109) IRM 3.11.16.34.2(3) - Filing Requirements - Added paragraph (3), instructions for Form 9100, Notice of Late Election.

(110) IRM 3.11.16.36 - Form 8404, Interest Charge on DISC-Related Deferred Tax Liability - Added section for Form 8404.

(111) Exhibit 3.11.16-2 - Due Date Charts - Changed information in the Table heading and calendar year row to change from a 5-month extension to a 6-month extension for calendar year returns, Form 1120. (IPU 17U0315 issued 02-15-2017)

(112) Exhibit 3.11.16-2 - Due Date Charts - Update table with current dates.

(113) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added Kansas City addresses throughout routing guide.

(114) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added instructions for "Requests for Installment agreements" .

(115) Exhibit 3.11.16-18(2) - Routing Guide for Attachments - Added Accounts Management (AM) instructions for Letter 112C. (IPU 17U1278 issued 08-28-2017)

(116) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added instructions for "Requests for money transfers" .

(117) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added Form 5472 information to Pro-Forma row.

(118) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added Schedule D.

(119) Exhibit 3.11.16-18 - Routing Guide for Attachments - Deleted Form TDF 90-22.1 from Routing Guide. (IPU 17U0613 issued 04-03-2017)

(120) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added reference for Form 1042-S. (IPU 17U0213 issued 01-31-2017)

(121) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added header for Form 1120.

(122) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added Form 1125-A to Routing Guide.

(123) Exhibit 3.11.16-18Routing Guide for Attachments - Changed forms involved and added IRM references for each form and added "See also" reference to "Criminal Investigation (CI) Referral" instructions for Form 2438 or Form 2439 if attached to Form 1120-RIC or Form 1120-REIT.

(124) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added physical address for private delivery services for Form 3115. (IPU 17U0613 issued 04-03-2017)

(125) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added Form 1120-F to Form 4797 instructions.

(126) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added "Note" under Form 5472 to send Form 5472 attached to a blank Form 1120 to Statistics of Income (SOI) for data capture. Also added information under "Pro Forma, Form 1120" row. (IPU 17U0338 issued 02-22-2017)

(127) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added Kansas City Submission Processing Center to Form 1042, Form 8288 and Form 8828-B, since both Cincinnati and Kansas City Submission Processing Centers will begin processing BMF returns in 2018.

(128) Exhibit 3.11.16-18 - Routing Guide for Attachments - Changed "ALL" to Form 1120, Form 1120-C, Form 1120-REIT and Form 1120-RIC to Form 8693.

(129) Exhibit 3.11.16-18 - Routing Guide for Attachments - Clarified instructions for Form 8833.

(130) Exhibit 3.11.16-18 - Routing Guide for Attachments - Changed instruction to include prior year returns for Form 8938/CCC "2" . (IPU 17U0466 issued 03-08-2017)

(131) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added Form 9100, Notice of Late Election.

(132) Exhibit 3.11.16-18 - Routing Guide for Attachments - Added Form 14039-B, Business Identity Theft Affidavit to routing guide. (Start-Up IPU 17U0006 01-02-2017)

(133) Exhibit 3.11.16-22 - Form 8404, Interest Charge on DISC-Related Deferred Tax Liability - added exhibit for Form 8404.

(134) Exhibit 3.11.16-23 - Terms/Definitions/Acronyms - Added exhibit for Terms, Definitions and Acronyms.

(135) IRM references updated throughout the IRM.

(136) Figures revised throughout the IRM.

(137) Exhibits revised throughout the IRM.

(138) Tables revised throughout IRM for 508 Compliance.

(139) Old prior year line numbers deleted throughout the IRM.

Effect on Other Documents

IRM 3.11.16 dated October 14, 2016 (effective January 1, 2017) is superseded. The following IRM Procedural Updates (IPUs), issued from January 2, 2017 through September 2, 2017, have been incorporated into this IRM: 17U0006 (issued 01-03-2017), 17U0039 (issued 01-04-2017), 17U0155 (issued 01-23-2017), 17U0213 (issued 01-31-2017), 17U0315 (issued 02-16-2017), 17U0338 (issued 02-22-2017), 17U0404 (issued 03-01-2017), 17U0466 (issued 03-08-2017), 17U0613 (issued 04-03-2017), 17U0937 (issued 05-31-2017), 17U1030 (06-19-2017), 17U1076 (06-28-2017). 17U1118 (issued 07-10-2017), 17U1149 (issued 07-17-2017), 17U1195 (issued 07-28-2017), 17U1278 (issued 08-28-2017) and 17U1288 (issued 08-29-2017).

Audience

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

Effective Date

(01-01-2018)

Linda J. Brown
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. This IRM section provides 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-LU.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 contained 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. The purpose of Document Perfection is to code and edit (perfect) 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. It is not the purpose of Code and Edit to mathematically verify or to 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)

    • IRC 6213(b)

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 contained 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 3.11.16-23, 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. 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.

  2. 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 - RRA Section 3705(a)♦

  1. The Internal Revenue Service Restructuring and Reform Act of 1998, Section §3705(a), provides identification requirements for all IRS employees working tax related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face-to-face and written contact. In addition a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

  2. All IRS employees who communicate, by telephone, correspondence, or face-to-face, with taxpayers, or their personal representatives, on tax related matters are required to provide (at a minimum) the following information:

    1. Telephone Contact – Their title (e.g., Mr., Mrs., Ms., Miss), their last name, and ID card number (badge).

    2. Face-to-Face – This information should be their title (e.g., Mr., Mrs., Ms., Miss), provided as appropriate during the conversation, their last name and badge identification (ID Card) number.

    3. Correspondence – All correspondence must include a telephone number that taxpayers can call for answers to any questions they may have. In addition, manually generated and handwritten correspondence must have the employee’s title (e.g., Mr., Mrs., Ms., Miss), last name, and Integrated Data Retrieval System (IDRS) number, letter system number, or their badge identification (ID card) number.

    4. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID card) number must be used. Toll-free employees may also provide their location for identification purposes. Faxes to taxpayers on tax related matters are considered manually-generated correspondence and must include the required information.

    5. Correspondence, whether sent directly to the taxpayer or to the taxpayer's personal representative, must contain the required information.

    6. When a taxpayer requests to speak with a specific employee who previously handled their inquiry or request, or complains about the level of service previously provided, every attempt should be made to resolve the taxpayer's inquiry. If the issue cannot be resolved, the employee should refer the inquiry using established procedures to his or her manager.

    7. Correspondex letters will require a specific employee name and telephone number only if the employee initiating the correspondence is in the best position to respond to any questions that the taxpayer may have about the correspondence, or the employee is asking the taxpayer to provide additional case-related information.

    8. Otherwise, if the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

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

    10. 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) their badge identification (ID card) number on the first contact.

    Note:

    The Taxpayer Bill of Rights (TBOR) was adopted by IRS in June 2014 and provides that taxpayers have the right to receive prompt, courteous and professional assistance in their dealings with the IRS. They are to be spoken to in a way that is easily understood and any correspondence from the IRS must be clear and understandable. They have the right to speak to a supervisor whenever quality service is not received.

♦ BMF Consistency ♦

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

  2. Topics for the BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and Paper Processing Branch, BMF Code and Edit (C&E) /Error Resolution System (ERS).

  3. BMF Consistency subsections are identified by a "♦" (diamond) before and after the title.

  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. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2.4, When Procedures Deviate from the IRM, and elevated through appropriate channels for executive approval.

♦ Taxpayer Advocate Service (TAS) ♦

  1. Per the Taxpayer Bill of Rights (TBOR), taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to provide information timely.

  2. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels. For additional information on the Taxpayer Bill of Rights, visit http://taxpayeradvocate.irs.gov/About-TAS/Taxpayer-Rights.

  3. Refer taxpayers to TAS when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), 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. "Same day" includes cases that can be resolved in 24 hours, as well as cases where steps can be taken within 24 hours to begin resolving the issue. (See also IRM 13.1.7.4, Same Day Resolution by Operations.)

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

♦ TAS Service Level Agreements (SLAs) ♦
  1. The National Taxpayer Advocate (NTA) has reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SB/SE) Division, Tax Exempt and Government Entities (TE/GE), Criminal Investigation (CI), Appeals, and Large Business and International (LB&I) that outline the procedures and responsibilities for the processing of 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 located at http://tas.web.irs.gov/policy/sla/default.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). The editing can be entered in brown, red, orange, purple, or green pencil/pen.

  2. The only items edited on the tax return are those to be transcribed except where specific instructions require editing of a non-transcribed item. Lines are left blank if the entry would be a zero amount unless otherwise instructed.

  3. The original entry on a tax return is never obliterated, altered, or erased 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. For a description of specific edit marks, see the table below:

    Edit Mark Description
    "X" An X is used to delete tax data or to indicate that an item is not to be transcribed. For example, If deleting an original taxpayer entry, edit an X to the left of the entry to be deleted. Edit the correct entry to the left or above the X
    / A slash / can be used when deleting a form or schedule not being transcribed.
    "/ /$" "/ /$" is used in the entity area to identify the beginning and ending of a Foreign Country Code.

    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 that an entry is not to be transcribed. Also used to delete entity data or a received date.

    Note:

    If the taxpayer circles an entry, edit the entry.

    Underline Indicates an entry is to be transcribed (e.g., name control, tax period, etc.).
    Arrow Indicates the correct placement of a misplaced entry. An arrow may be used if the misplaced item is close to the correct line and there is no question where the entry belongs.

    Note:

    A double arrow may be used if the same figure is to be transcribed in two different places (along with any required transcription data between the two arrows).

    Check Mark Indicates that an entry has been 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. It will be necessary to 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 considered valid entries except when specific instructions require editing of an entry.
    Edit Marks Made by Other IRS Functions 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

    Photocopied Returns Re-edit or underline any valid, black edit marks. See IRM 3.11.16.2.4.3, Correspondence Imaging System (CIS) Returns, and IRM 3.11.16.2.8Re-Entry Document Procedures
    Rocker Indicates the amount paid when drawn under a remittance amount.

♦ Frivolous Arguments ♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form, or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 25.25.10, Frivolous Return Program, shown in Exhibit 3.11.16-16, Potential Frivolous Arguments for Examination Review.

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

    If... Then...
    The tax return meets any of the conditions identified as a frivolous return. See Exhibit 3.11.16-16, Potential Frivolous Arguments for Examination Review,

    Exception:

    If the return shows Action Code "331" , and has a Form 4227 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., indicated by an Action Code "331" , and a Form 4227 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 indicating a frivolous return.

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ " ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

♦ Foreign Currency ♦

  1. For tax returns completed in other than United State (U.S.) currency, process as filed. However, if corresponding for missing/incomplete item(s), include in the letter to resubmit in U.S. currency.

♦ Protective Claims ♦

  1. Returns marked as "Protective Claim" , "Protective Refund" , "Protective Claim for Refund" , or similar statement will be removed from the batch and routed to Accounts Management. Notate "Protective Claim" in the remarks box of Form 4227.

    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. For returns with refund claims of $100,000,000 or more, do the following:

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    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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    6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Other CI Referral Criteria:

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

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

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

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  4. For all other CI Referral criteria listed in paragraph (3), do the following:

    1. Make a copy of the return.

    2. Attach Form 4227 to the copy.

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

      Cincinnati Ogden Kansas City
      Mail Stop 83G, Criminal Investigation (CI) 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.

  5. If CI has stamped the return, no further CI action is required.

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

♦ Examination(Exam) Funny Box ♦

  1. The primary objective in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination will provide support and assist Submission Processing (SP) with any questionable return identified during processing. Exam has a vast multitude of programs and tolerance criteria already identified in various IRM sections. Exam does not restrict SP with the flexibility to refer questionable returns other than what is currently identified in various IRMs.

♦ BMF Identification (ID) Theft ♦

  1. BMF identification theft is increasing. 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 Analyst (P&A) staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must identify that they are a victim of "ID Theft" ; do not send cases that are subject to Criminal Investigation (CI), Examination (Exam) or "Fraud" review.

  2. Effective January 1, 2017, Computer Condition Code "E" may be edited on Form 1120 (any year) by the BMF ID Theft Liaison to identity a potential identity theft filing. See IRM 3.11.16.8.1.5, CCC "E" - Potential Identity Theft Filing, for additional 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 will set the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory.

  2. When necessary, a three digit Action Code will be assigned by the tax examiner. 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. 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 the Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, or 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 the Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, or Form 1120-RIC.

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

    3. See IRM 3.11.16.2.1(8), Action Codes for suspense periods.

    Action Codes have different priorities,
    1. Edit the Action Code with the higher priority on the Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, or 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.

  6. 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.

  7. Edit the following Action Codes when a return cannot be perfected:

    Action Code Description
    "211" (First Correspondence) or "215" (International Correspondence)
    • Return is illegible, incomplete, or contradictory and therefore cannot be processed.

    • 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 Forms 1120-F.
    "480" (Early Filed – Suspense)
    • The return is an early-filed (future) return.

    "610" (Renumbered non-remittance) or
    "611" (Renumbered with-remittance)
    • A return is mis-blocked (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 that must be forwarded to Ogden Submission Processing Center (OSPC).

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

  9. 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
    (MeF only)
    Entity Control - Form 1120 with Form 851 attached 20
    331 Frivolous Review 3
    341 Manual Refund 10
    342 Credit Verification 10
    343 Black Liquor 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) 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
    480 Early Filed Suspense 150
    610 Renumber - Non-Remittance 0
    611 Renumber - Remittance 0
    640 Void 0
    650 International 0

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. 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 is attached.

      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 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 appropriate 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 additional 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 us?

    2. Is the taxpayer waiting for an action to be taken by us?

    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 such as, 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.

    Note:

    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 appears to be a duplicate, give the return to the lead. The lead will initiate research for a Transaction Code (TC) 150 and/or any other research necessary to determine if the return should continue to be processed or other actions taken. A duplicate 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 that are not addressed in this subsection or in other areas of the IRM.

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

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

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

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

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

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

  4. Examine the return so that all of the conditions can be included in the same correspondence.

    If... And... Then...
    Correspondence is needed A response is required,
    1. Complete an approved Correspondence Action Sheet indicating the letter number (86C, 118C, etc.), Master File Tax (MFT), and the appropriate paragraphs.

      Note:

      Within these paragraphs, there may be fill-ins that the tax examiner will be required to enter, such as, tax period, form 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, or 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.

    Correspondence is needed A response is not required,
    1. Complete an approved Correspondence Action Sheet indicating the letter number (86C, 118C, etc.), Master File Tax (MFT), and the appropriate paragraphs.

      Note:

      Within these paragraphs, there may be fill-ins that the tax examiner will be required 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 the front of the photocopy. Be sure the name and address show clearly 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 may be additional letters that are exclusive to the tax examiner's campus. These letters are for specific forms or conditions where it was deemed necessary for processing. The tax examiner should go to their lead or manager for copies of these letters to facilitate processing.

♦ 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 identified 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 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 appropriate routing slip).

    The CIS return has a Form 13596 attached and the return is incomplete (e.g. missing signature, schedules, or forms), There is an indication on the return that correspondence has been 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 attached The return is incomplete (e.g., missing signature, schedules, or forms), Follow normal correspondence procedures.
♦ Use of Fax for Taxpayer Submissions ♦
  1. 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. 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://irweb.irs.gov/AboutIRS/co/dese/memo/48254.aspx.

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

  3. Code and Edit tax examiners will indicate the fax paragraph on the approved Correspondence Action Sheet to advise taxpayers of the option to fax their response.

  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 21.1.3.2.4Additional Taxpayer Authentication

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

    • IRM 11.3.2.7.1, Leaving Information on Answering Machines/Voice Mail

    • IRM 11.3.1.11, Facsimile Transmission of Tax Information

C/SC Letters

  1. Listed below are letters and a form which are provided by the Headquarters for Submission Processing Center use in corresponding for items listed in this IRM. It is expected that tax examiners or their supervisors (or delegates) will have access to and be familiar with the Submission Processing Center Correspondex Handbook for selection of appropriate letters.

    1. Letter 86(C/SC/SP) - Letter referring taxpayer inquiry/forms to another office.

    2. Letter 118(C) - Letter requesting missing schedules or documents.

    3. Letter 143(C) - Letter advising taxpayer that we have received tax form and need additional information in order to complete action on it. (Also use this letter for missing signature only.)

    4. Letter 319(C/SC) - Letter advising taxpayer that IRS cannot process return because it shows an improper tax period or a period of more than 12 months or a period less than 12 months without an explanation.

    5. Letter 105(C) - Letter disallowing Federal Telephone Excise Tax Credit, explaining appeal rights and procedures.

    6. Form 6800 - Request for Missing Information or Papers to Complete Your Tax Return or Form 8038-CP.

♦ Compliance Secured/Prepared Returns ♦

  1. Compliance functions (Collections and Examination) secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

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

    2. Secured tax returns are notated with "TC 59X" or "ICS" (Integrated Collections System) or are notated "Process as original" with an attached Form 13133, Expedite Processing Cycle. The "Delinquent Return" box on Form 13133 should be checked.

    Note:

    If "RD" 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 fails to 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 3.11.16.7, Received Date

    2. Returns must be signed by Compliance Function representative. If not signed, route to Compliance using Form 4227.

      Note:

      Starting July 1st, 2013, the Revenue Officers (RO) electronic or typed signature will be accepted as a valid signature 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 cannot be processed (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 a penalty or penalties should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.16.8.1, Computer Condition Codes for additional 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 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 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 cannot be processed (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 a penalty or penalties should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.16.8.1, Computer Condition Codes for additional 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. Statute returns must be routed to the Statute Control Unit daily or more often if needed.

  3. Do not route to Statute Control Unit for clearance, edit CCC "W" , and continue processing if any of the following conditions are present:

    • Compliance IRC 6020(b) returns.

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

    • Returns with "TC 59X" or "ICS" notated on the face of the return.

    • Returns that are 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 a Form 12412, Operations Assistance Request (OAR) is received from TAS and the return is a potential statute control return but is not stamped "Cleared by Statute" , give the return to your lead. The lead will contact the TAS employee listed on the OAR for rejection of the return 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.

  5. Statute returns are unprocessable until they are 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, and Form 1120-RIC.

    2. All other returns edit CCC "U" and attach Form 4227. Check the "Statute Control" box on Form 4227.

    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 and check the box for "Statute Control" .

  6. Edit a CCC "W" if the tax return has been cleared by the Statute Control Unit. Statutes will stamp or indicate clearance on the front of the return.

  7. Statute may stamp a return as "No Statute Issue" . 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 3.11.16.2.7Statute Returns.

♦ Form 3893 – Re-Entry Document Control ♦
  1. Form 3893, Re-Entry Document Control is used to reinput a return that has not posted to an account or 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 if a request for reasonable cause is attached.

  6. If the return was 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 was 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 appropriate 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 3.11.16.7, Received Date.
    Multiple Received Dates are present, Circle all but the earliest date.
  10. When additional information is still needed to make the return processable, prepare an approved Correspondence Action Sheet or Form 4227 for the appropriate 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 if a request for reasonable cause is attached.

  5. If the return was 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 you receive a Form 1120 converted from Form 1120S, ensure that the following items are present: EIN, name control, 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 was 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 appropriate 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 appropriate 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 3.11.16.7, 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 additional information is still needed to make the return processable, prepare an approved Correspondence Action Sheet or Form 4227 for the appropriate 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 (information may be useful to Accounts Management)

    • Detach any unrelated documents and route them to the appropriate function using Form 4227. Edit an Action Trail on the return.

    Note:

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

  3. If there is an indication the return is amended and:

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

    2. Process the return as an original.

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

    2. Process the return as an original.

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

    2. See IRM 3.11.16.2.8.1, Form 3893 - Re-Entry Document Control or IRM 3.11.16.2.8.2,Form 13596 - Reprocessing Returns.

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

    2. No other codes may be used 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 3.11.16.5.3, Entity Perfection - Name Control

    2. EIN. See IRM 3.11.16.5.2, Entity Perfection - Employer Identification Number (EIN)

    3. Tax period. See IRM 3.11.16.6, Tax Period

    4. CCC "G" . See Exception above

    5. Received date. See IRM 3.11.16.7, Received Date

    6. Signature. See IRM 3.11.16.10.7, Signature

IRC 847 Deduction

  1. IRC 847 (2) requires certain insurance companies to make Special Estimated Tax Payments (SETP) in the amount equal to the tax benefit derived from the additional deduction permitted under IRC 847 Deduction.

  2. SETP are reported on Form 1120, Consolidated Form 1120, Form 1120-L, and Form 1120-PC.

    Note:

    Consolidated Form 1120 returns with a subsidiary Form 1120-PC or Form 1120-L can claim SETP credits.

  3. The SETP payment is found 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 II, Line 13 (Page 1, Line 32b for 2010 and prior revisions) 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 is attached.
    Form 1120-L Page 1, Lines 29b and/or 29d and/or Form 8816 is attached.
    Form 1120-PC Page 1, Lines 14b and/or 14d (for 1999 and prior, Lines 16b and/or 16d) 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 your 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 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. A "Prompt Determination" is requested under IRC 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.

Form 8913 - Credit for Federal Telephone Excise Tax Paid Only Tax Return

  1. For corporation returns claiming ONLY a refund of the Federal Telephone Excise Tax Credit (Form 8913) and no other income or deduction entries are present on the corporate return, edit the following:

    1. Entity area. See IRM 3.11.16.5.

    2. Tax period. See IRM 3.11.16.6.

    3. Action code "420" . (CCC "U" for Forms 1120-FSC/ND/SF.)

    4. Received date. See IRM 3.11.16.7.

    5. Initial return code (Form 1120, Form 1120-REIT, and Form 1120-RIC). See IRM 3.11.16.8.3.

    6. Signature. See IRM 3.11.16.10.7.

    7. Form 8050 (Form 1120, place in sequence order if entries are present).

    8. Form 8913 (place in sequence if Line 15, Column (d) or (e) contain a significant entry).

♦ Refund Returns (45 Day Jeopardy and $100 Million or more Refunds) ♦

  1. Document Perfection is responsible for identifying refunds and for initiating requests for 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 refund is $100,000,000 or more.

    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 $25,000 or more,

    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, 1120-C, 1120-F, 1120-H, 1120-L, 1120-PC, 1120-REIT, and 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 $100,000,000 or more,

    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 and check the "Reject Correction" box.

      4. Make a copy of the return for Criminal Investigation (CI). See IRM 3.11.16.1.17, Criminal Investigation (CI) Referral.

      5. 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 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 return for Criminal Investigation (CI). See IRM 3.11.16.1.17, Criminal Investigation (CI) Referral.

    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 1120S to Form 1120

  1. If a taxpayer filed Form 1120S 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 1120S to a Form 1120. No action is required for Document Perfection.

    Caution:

    If you receive a Form 1120 converted from Form 1120S and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.16.2.8.2, Form 13596 - Reprocessing Returns for additional 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 appropriate transcription lines of both the income and deduction sections. This does not apply to Consolidated – Mixed Component returns.

    Exception:

    See instructions for Minimum Edit, IRM 3.11.16.4.5.

    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 3.11.16.10.25, 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 19. 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 appropriate 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, 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 contains the following:

    • Employer Identification Number (EIN)

    • Name

    • "In-care-of" Name

    • Address

♦Bankruptcy♦

  1. If the Form 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-PC, 1120-REIT, 1120-RIC, 1120-ND, or 1120-IC-DISC 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, Merge Sheet.

♦ 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 You can determine the correct EIN 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, Merge Sheet 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, and Form 1120-RIC. All other returns edit CCC "U" .

      2. Leave return in batch.

      The EIN contains any of the following conditions and cannot 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, Merge Sheet.

      The EIN contains any of the following conditions and cannot 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, and 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, Merge Sheet.

      "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, and 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, Merge Sheet.

    • *(For Form 1120-C - Box D(3), Form 1120-F - Box Name or address change, Form 1120-FSC - Box F(2), 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, Merge Sheet.

      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, and 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 located in the proper location.

    If... Then...
    The "in-care-of" name is located on the street address line preceding the street address, No editing is required.
    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. A change in the "in-care-of" name can be determined by any of the following:

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

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

    • An indication that the "in-care-of" name is changed (e.g., the taxpayer crossed out the original "in-care-of" name and added the new name or has entered a new "in-care-of" name in brackets)

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

      2. Correct the address. See IRM 3.11.16.5.5, Entity Perfection – Domestic Addresses.

      3. Continue editing the return.

♦ Entity Perfection – Domestic Addresses ♦

  1. Perfection of the address is necessary 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. The procedures for perfection of returns indicating an address change are as follows:

    If... And... Then...
    The address contains information other than a street address or P.O. Box,   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 of the following applies:
    • Mailing address information is the same,

    • No location address is listed on Form 8822 or Form 8822-B, Line 7,

    • 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 of the following applies:
    • Mailing address information is different,

    • Location address is listed on Form 8822 or Form 8822-B, Line 7,

    • An entry is listed on Form 8822-B, Lines 8 or 9,

    Detach Form 8822 or Form 8822-B and route to Entity Control following local procedures using Form 13934, Merge Sheet.
    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 appropriate 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.

    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. Returns with APO, DPO, and FPO addresses are considered domestic addresses. See IRM 3.11.16.5.5, Entity Perfection – Domestic Addresses.

  3. Route returns with a foreign address to the Ogden Submission Processing Center (OSPC) for processing. Prepare Letter 86C to inform the taxpayer the return has been sent to Ogden.

  4. Returns with addresses in the following U.S. Possessions/Territories are considered to be a foreign for processing purposes but are edited in the same way as domestic addresses.

    1. A two-character alpha code must be edited 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 appropriate ZIP Code if one is not provided. See Exhibit 3.11.16-20, U.S. Possessions ZIP Codes.

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

    1. The foreign country must be 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, ZIP Codes, and Countries.

    3. A unique country code will be edited for returns filed with an address in Canada. See IRM 3.11.16.5.6.1Country Code – Canada.

      Note:

      Submission Processing BMF Foreign Address Job Aid (Number 2324-002) provides examples for editing foreign addresses.

    4. If the foreign address is from Australia, Brazil, Canada, Cuba, Italy, Mexico, or The Netherlands, check if the address contains a province, state, or territory.

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

      2. Edit the appropriate abbreviation. See Exhibit 3.11.16-17, 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. In an effort 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 contains 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 appropriate "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 contain 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 3.11.16.5.6, 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., 201712), 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. The table below identifies examples of tax periods.

    Tax Period Ends Tax Period
    Oct. 3, 2017 (52-53 week document) 1709
    Oct. 3, 2017 (Final short period return) 1710
    Oct. 25, 2017 (52-53 week document) 1710
    Oct. 25, 2017 (Final short period return) 1710
    Nov. 30, 2017 1711
    Dec. 31, 2017 1712 (No editing required)
    Feb. 28, 2018 1802
  4. Tax periods reported under the 52-53 week rule may end not more than 6 days before, and not more than 3 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 3 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 6 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 prior to the received date.

  7. Edit the Tax Period Beginning on a "Final" return in MMDDYY format. See IRM 3.11.16.6.2.

  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 prior to the received date. See Figure 3.11.16-4.

    Note:

    If a prepaid credit* is claimed on a short period "Final" return, see IRM 3.11.16.6.9, Short Period Returns – With Prepaid Credits.
    *(Form 1120, Page 3, Schedule J, Line 12, 13 or 16 (2010 and prior revision Form 1120, Page 1, Line 32a, 32b, or 32e) or applicable line on other Form 1120 series.)

    Figure 3.11.16-4

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  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). Refer to IRM 3.11.16.2.7, Statute Returns.

Tax Period Beginning - Initial, Final, or Short Period

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

  2. Edit the Tax Period Beginning to the left of the Form 1120 title area in 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

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    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 prior to 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, and Form 1120-RIC. (Early Filed - Suspense).

    2. All other returns edit CCC "U" and attach Form 4227. "Edit Early Filed - Suspense" in the "Other Activity" box.

    3. Leave return in batch.

    The received date is prior to 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, and 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 3.11.16.6.1, Tax Period - General.

    • 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 3.11.16.8.3, 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 3.11.16.6.2.

  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 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 3.11.16.25.14.2Audit Codes,
    For Form 1120-FSC see, IRM 3.11.16.26.16.1, Audit Codes, and
    For Form 1120-SF see, IRM 3.11.16.33.8.1Audit 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 3.11.16.6.6, 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. Changing the tax period to "get in step with" Parent (may note "affiliation with a consolidated group" ); or

    4. Filing under "Section 338 Election" or attached Form 8023and tax period begins after the acquisition date.

      Do all of 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.
    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 3.11.16.6.6, 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 3.11.16.6.7, 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 – Regulation 1.1502–76
  1. Regulation section 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 statement referencing "Changing the tax period to get in step with parent" or "Affiliation with a Consolidated Group" .

  2. The short period return has the same due date as the consolidated return of the parent. This is sometimes referenced on the return as a "specially privileged" due date. It is important to recognize these returns and follow the procedures outlined in this section in order to suppress the penalties for late filing and late payment of tax that would otherwise be assessed.

  3. When processing a short period return under Regulation 1.1502-76, it is necessary to do all of the following:

    1. Edit Computer Condition Codes "R" if filed before the specially privileged (full tax year of parent return) due date.

    2. Edit Computer Condition Code "Y"

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.6.2.

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 or Form 8716 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 3.11.16.6.6, Short Period Returns – Editing a Disapproved Application (Form 1128).
    BMFOLE does not show a TC 053, 054, 055, 058, or 059, Correspond using Letter 319.

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.6.2.

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 3.11.16.6.2.

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 3.11.16.6.6, 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 3.11.16.6.2.

  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 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 3.11.16-7.

    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 returned and the words "Process Return" or "Let Unpost" .

    Figure 3.11.16-7

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Short Period Returns – Editing Returning Correspondence

  1. If the taxpayer provides acceptable proof, follow instructions in IRM 3.11.16.6.4, 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 12, 13 or 16* (2010 and prior revisions Page 1 Line 32a, 32b, or 32e)
      Form 1120-C Line 29a, 29b, or 29e
      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 29a, 29b, 29c, or 29g
      Form 1120-ND Line 14a, 14b, or 14e
      Form 1120-PC Line 14a, 14b, 14c, or 14g
      Form 1120-REIT Line 24a, 24b, 24e
      Form 1120-RIC Line 28a, 28b, or 28e
      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 3.11.16-8.

    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, 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 3.11.16.3, Refund Returns – 45 Day Jeopardy / Million Dollar Refunds.

      Reminder:

      Edit the Tax Period Beginning in MMDDYY format on Short Period Returns per IRM 3.11.16.6.2.

    Figure 3.11.16-8

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♦ 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. A received date is required on all Form 1120 series returns.

    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, 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 that has been attached to the return (should be before the envelope). Use the "Acceptance" date on the record to determine timeliness and follow normal editing procedures. See Exhibit 3.11.16-21.
    If the "USPS.com Track & Confirm" record is not attached, no action is required.

  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 cannot 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 03-22-2018 and first rejection is 03-12-2018. Change Received Date to 031218.

    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 03-23-2018 and first rejection is 03-12-2018. 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 03-22-2018, the second rejection is 03-12-2018. The first rejection is 03-09-2018 Change the Received Date to 030918.

    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 03-22-2018, the second rejection is 03-12-2018. The first rejection is 03-01-2018 Change the Received Date to 031218.

    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 03-23-2018, the second rejection is 03-12-2018. The first rejection is 03-01-2018. 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 contains 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 has been attached to the return (should be before the envelope). Use the Acceptance date on the record to determine timeliness and follow normal editing procedures. See Exhibit 3.11.16-21.

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

      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, No editing is required.
      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:

      Received dates that have been circled out by another function should be treated 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:

      If an envelope is attached to the return, check the envelope for a remittance. If found, hand carry the remittance to the manager.

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

    Note:

    The EEFax Date cannot legally be used as an IRS Received Date.

Special Processing Codes

  1. This section addresses special processing codes.

♦ Computer Condition Codes ♦

  1. Computer Condition Codes (CCC) are used to identify a special condition 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, 1120-C, 1120-L, Form 1120-F or 1120-PC.

    Note:

    For Form 1120, edit Audit Code "8" if Schedule M-3 is attached. See IRM 3.11.16.9.1, Audit Codes.

CCC "C" –
Invalid Form 8834, Form 8910, or Form 8936
  1. CCC "C" is an invalid code which will force the return to error correction.

  2. Edit CCC "C" if Form 8834, 8910, or 8936 include an invalid vehicle year or an invalid in-service date. For invalid vehicle year and invalid in-service date see IRM 3.11.16.10.14.11, IRM 3.11.16.10.14.30 and IRM 3.11.16.10.14.36.

♦ 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 to inform the taxpayer of the proper procedure to follow to request penalty abatement, if, and when a penalty is assessed. See IRM 3.11.16.2.4.2(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 3.11.16.8.1.16, 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 section 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 (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 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 in accordance with Rev. Proc. 2003-84"

  2. Edit the Tax Period Beginning in MMDDYY format per IRM 3.11.16.6.2.

  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 3.11.16.6.9, Short Period Returns – With Prepaid Credits.

    • *(Form 1120, Page 3, Schedule J, Line 12, 13 or 16 (2010 and prior revision Form 1120, Page 1, Line 32a, 32b, or 32e) or applicable line on other Form 1120 series.)

♦ CCC "G" – Amended Return ♦
  1. See IRM 3.11.16.2.9Amended Returns.

CCC "H" - Form 1042-S Attached to Form 1120-F
  1. CCC "H" is only valid for Form 1120-F. See IRM 3.11.16.25.30Form 1042-S Recipient Copy (Form 1120-F Only), for specific instructions.

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 is present.

    Note:

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

CCC "K" – Form 8697
  1. Edit CCC "K" when Form 8697 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.

    • *(Form 1120, Schedule J, Line 9 for 2006 - 2010.)

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 3.11.16.9.1, Audit Codes.

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 12 through 19* (*2010 and prior Form 1120, Page 1, Lines 32a through 32g) or equivalent lines on 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, and Form 1120-SF, Page 1, Lines 16a through 16e.

  2. Unusual credits are defined as follows:

    • Form 1120-PC, Line 14h 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 by minority shareholder corporations under IRC 337(d).

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

    • Randomly entered credits in Line 32 area notated as "Claim of Right" , "Reg 1.1341" , or "Reg 1.337" .

  3. Usual credits are defined as follows:

    • A refundable credit normally found on Form 1120, Page 3, Schedule J, Lines 12 through 19* (*2010 and prior Form 1120, Page 1, Lines 32a through 32g).

    • Form 7004 payment.

    • Estimated tax payments.

    • Credit from Regulated Investment Company.

    • Fuel Tax Credit present on Schedule J, Line 19b (Line 32f(2) for 2005 through 2010 and Line 32g for 2004 and prior).

    • A refundable credit claimed with or without Forms 8288, 8288-A, Form 8805 or Form 1042-S 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, or Form 1120-RIC to issue Manual Refund.

      2. All other returns edit CCC "U" and attach Form 4227. Check the "Accounting" box on Form 4227.

  2. Edit CCC "O" if there is an entry on:

    1. Form 1120, Schedule J, Part II, Line 14 (Page 1, Line 32c for 2010 and prior revisions).

    2. Form 1120-C, Line 29c.

    3. Form 1120-F, Line 5c.

    4. Form 1120-FSC, Line 2c.

    5. Form 1120-L, Line 29e.

    6. Form 1120-ND, Line 14c.

    7. Form 1120-PC, Line 14e (Line 16e for 1999–1998).

    8. Form 1120-REIT, Line 24c.

    9. Form 1120-RIC, Line 28c.

    10. Form 1120-SF, Line 16c.

CCC "P"
  1. No editing required.

♦ CCC "Q" ♦
  1. No editing required.

♦ CCC "R" – Reasonable Cause for Failing to File a Timely Return ♦
  1. CCC "R" is no longer edited when a reason is given for the delay in filing a return. Issue Letter 1382C and continue editing the return. See IRM 3.11.16.2.4.2(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 section 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 3.11.16.9.1, 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 3.11.16.9.1, 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. CCC "V" is valid for Form 1120 and Form 1120-F for tax year 2010 (including 2010 fiscal year filers ending in 2011).

  2. Edit CCC "V" if Form 3800, Line 1a has a significant entry and Form 3468, Line 8 contains an entry.

    • (Only applicable for 2010 tax years (including 2010 fiscal year filers ending in 2011.)

♦ CCC "W" – Return Cleared by Statutes ♦
  1. CCC "W" is used when the return has been cleared by Statute control. See IRM 3.11.16.2.7, 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 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 3.11.16.6.4, Short Period – Editing Proof of Entitlement through IRM 3.11.16.6.9, Short Period Returns – With Prepaid Credits.

  2. Edit the Tax Period Beginning in MMDDYY format per IRM 3.11.16.6.2.

  3. If a prepaid credit* is claimed on a short period return, enter Action Code "342" or CCC "U" on the return. See IRM 3.11.16.6.9, Short Period Returns – With Prepaid Credit.

    • *(Form 1120, Page 3, Schedule J, Line 12, 13 or 16 (2010 and prior revision Form 1120, Page 1, Line 32a, 32b, or 32e) or applicable line on other Form 1120 series.)

CCC "Z" – Form 1120, (Schedule UTP), 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.

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 3.11.16.10.26.10 .

♦ CCC "3" – "No Reply" to Correspondence ♦
  1. Edit CCC "3" when the tax return is unprocessable and there is an indication that correspondence has been 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 3.11.16-9.

    Figure 3.11.16-9

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CCC "6" – Section 847 Deductions
  1. Edit CCC "6" when any of the following is present:

    • Form 1120, 1120-L, or 1120-PC indicates a "Section 847 Deduction" . Form 8816, also, indicates a "Section 847 Deduction" . See IRM 3.11.16.2.10,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 II, Line 13.

    • Form 1120-L includes an entry on Line 29b and/or 29d.

    • Form 1120-PC includes an entry on Line 14b and/or 14d.

    Figure 3.11.16-10

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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 3.11.16-11.

    • Form 2220 is attached and any column on Form 2220, Schedule A, page 4, Line 38 has entries.

    • When the taxpayer's 1999 Form 2220 for Form 1120-REIT states across the top margin "Penalty Relief Under Notice 2000-5" .

    Figure 3.11.16-11

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CCC "9" – Low-Income Housing Form
  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 (years 200412 and prior),

    • Form 8609-A* is attached.

    • Form 8586 with entries on Line 1 or 3 .

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 (Box A -1 for 2006 and prior)

    • 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 3.11.16.20.3, 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 3.11.16-12 a.

    2. Subsidiaries are listed on Form 851 or Form 1122 is attached.

    3. Subsidiaries are listed on Form 7004 (2003 and prior revisions).

  8. Code "001" when any of the following apply:

    1. Box A - 2, Page 1, Form 1120 is checked. See Figure 3.11.16-12 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, 1120-REIT, or 1120-RIC.

    5. Form 1120, Page 3, Schedule J, Line 8 contains an entry.

    6. Form 1120-REIT, Page 3, Schedule J, Line 5 contains an entry.

    7. Form 1120-RIC, Page 2, Schedule J, Line 5 contains an entry.

    Note:

    If Form 1120, Schedule J, Line 8* has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , correspond. for Schedule PH if not attached. See IRM 3.11.16.10.16, 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.

    3. Box A, Page 1, Form 1120-A is checked.

    4. The box on Form 1120-A, Page 2, Part I is checked.

    Note:

    Also edit Personal Service Corporation Code "2" if the box on Form 1120, Page 3, Schedule J, Line 2 is checked.

Schedule M-3 Checkbox
  1. Edit Computer Condition Code "B" when the Box for Schedule M-3 is marked. See Figure 3.11.16-12 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 "2" , "7" and "8" may also be required for Form 1120. Audit Code "2" may be required for Form 1120-PC. See IRM 3.11.16.9.1, Audit Codes.

    Figure 3.11.16-12

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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 3.11.16-13a.

    3. There is a taxpayer notation of initial filing, such as, "First Return" , "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 3.11.16-13 b.

      Reminder:

      Edit the Tax Period Beginning on an "Initial" Short Period return in MMDDYY format. See IRM 3.11.16.6.2.

      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
    1803 04/01/2016
    1802 03/01/2016
    1801 02/01/2016
    1712 01/01/2016
    1711 12/01/2015
    1710 11/01/2015
    1709 10/01/2015
    1708 09/01/2015
    1707 08/01/2015
    1706 07/01/2015
    1705 06/01/2015
    1704 05/01/2015
    1703 04/01/2015
    1702 03/01/2015
    1701 02/01/2015
    1612 01/01/2015
    1611 12/01/2014
    1610 11/01/2014
    1609 10/01/2014
    1608 09/01/2014
    1607 08/01/2014
    1606 07/01/2014
    1605 06/01/2014
    1604 05/01/2014
    1603 04/01/2014
    1602 03/01/2014
    1601 02/01/2014
    1512 01/01/2013
    1511 12/01/2013
    1510 11/01/2013
    1509 10/01/2013
    1508 09/01/2013

    Figure 3.11.16-13

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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 3.11.16.10.14.13, Form 8844 – Empowerment Zone and Renewal Community Employment Credit.
    2 - Audit Code "2 -" followed by the appropriate Audit Code (e.g., "2 – 1" ).
    See IRM 3.11.16.9.1, Audit Codes.
    3 - Missing Schedule Code Normal correspondence procedures will replace Missing Schedule Codes. Do not edit Missing Schedule Codes. See IRM 3.11.16.2.4.2, Issuing Correspondence.
    4 - Penalty and Interest Code "4 - 1" .
    See IRM 3.11.16.9.3, Penalty and Interest Code.
    5 - Reserve Code "5 - 4" .
    See IRM 3.11.16.9.4, Reserve Code.
    6 - Installment Sales Indicator "6 -" followed by the appropriate Installment Sale Indicator (e.g., "6 - 3" ).
    See IRM 3.11.16.9.5, Installment Sale Indicator.
    7 - Form 1120-F Indicator "7 - 1" if Form 1120-F contains 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 3.11.16.25.14.7, 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 appropriate 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 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 3.11.16.8.1.18, 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 and/or 16. (Form 1120-PC, Page 4, Schedule C, Lines 3, 6, 7, 8, 10, 11, and 12).

    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, 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 is marked "Yes" .

    10. Form 5472, Information Return of a Foreign Owned Corporation 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 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 Page 2, Part I, Question 4, Art (Contribution of $20,000 or more), is checked.

    2. Form 8283, Noncash Charitable Contributions, is attached and Page 2, Part I, Question 5, Column (c) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    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 1120S without a valid election is reprocessed as Form 1120 and Form 13596 is attached.

    Caution:

    If you receive a Form 1120 converted from Form 1120S and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.16.2.8.2, Form 13596 – Reprocessing Returns for additional information.

  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, or 16.

    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.

Reserved

  1. Reserved

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 ♦

  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 appropriate Installment Sale Indicator code in the left margin near Line 12* when Form 6252, Computation of Installment Sale Income, is present (e.g., "6 – 1" ).

    • *(Line 2 for Forms 1120-F and 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.

Form 1120-F Indicator

  1. Edit "7 – 1" in the left margin near Line 2 if Form 1120-F contains 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 3.11.16.25.14.7, Form 1120-F Indicator.

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
    201 West Rivercenter Blvd.
    PIN Unit, Stop 97
    Covington, KY. 41011

  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. Attach Form 6800 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

    • Schedule N (Form 1120)

    • Schedule D (Form 1120)

    • Schedule O (Form 1120)

    • Form 4626

    • Form 8050

    • Form 1125-A

    • Form 4136

    • Form 8913

    • Form 8941

    • Form 5884-B

    • Form 3800

    Note:

    It is not necessary to sequence Form 8050 if blank or Schedule D, Schedule N, Schedule O, Form 4626, Form 1125-A, Form 4136, Form 8913, Form 8941, Form 5884-B, or Form 3800 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 3.11.16.10.4.7, 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 5*, "Schedule L, Balance Sheet" . See IRM 3.11.16.10.25, Schedule L, Balance Sheet.

    • *(Page 4 for 2007 and prior.)

  6. Form 4626, "Alternative Minimum Tax" . See IRM 3.11.16.12, Form 4626 - Alternative Minimum Tax.

  7. Form 4136, "Credit for Federal Tax Paid on Fuels" – "X" any negative entries. See IRM 3.11.16.15, 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 3.11.16-14.

    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 3.11.16-14

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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 appropriate transcription line(s).

    • For Schedule F transfer lines, see Exhibit 3.11.16-19, 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 3.11.16.10.4.2, 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 (2010 prior revisions - Schedule A, Line 8), Line 8. Bracket if negative.

    If... Then...
    Form 1125-A (2010 and prior revisions - Schedule A, Line 8), Line 8 is blank and Line 6 contains an entry, Edit the amount from Line 6, minus any amount on Line 7.
    Form 1125-A (2010 and prior revisions - Schedule A, Line 6), 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
  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, (Line 14 for 2000 through 2011, Line 13 for 1999 and prior):

    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:

    If... Then...
    Line 9, Page 1 contains 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 or Form 1120-H, Line 6 with Form 4797, Line 17, If different, edit Form 4797 amount to Form 1120, Line 9 for Form 1120-H, Line 6. 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. See Figure 3.11.16-15.
    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, Lines 32* plus 38a*. If different, edit Form 4684 amount to Line 9, Form 1120.
    • *(Lines 35 plus 41a for 2010, Lines 35 plus 42a for 2009, Lines 37 plus 44a for 2008, Lines 31 plus 38a for 2007.)

    Figure 3.11.16-15

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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 appropriate transcription lines.

    • Bracket if negative.

    • See Exhibit 3.11.16-19, 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 appropriate transcription lines.

    • Bracket if negative.

    • See Exhibit 3.11.16-19, 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 appropriate transcription lines (Lines 12 through 26).

    • See Schedule F - Transfer Lines, Figure 3.11.16-16.

    Figure 3.11.16-16

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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.

  2. Edit prior year returns as follows:

    • 2005:

    If... And... Then...
    An amount is present on Line 20c,   Change Line 20c to 20.
    Lines 20b and 20c are blank There is an amount on Line 20a,
    1. Edit Line 20a to 20c. Bracket if negative.

    2. Change Line 20c to 20.

    Line 20c is blank Both Lines 20a and 20b have entries,
    1. Subtract Line 20b from 20a and edit to Line 20c. Bracket if negative.

    2. Change Line 20c to 20.

    • 2004 and prior:

      If... And... Then...
      An amount is present on Line 21b,   Change Line 21b to 20.
      Lines 21a and 21b are blank There is an amount on Line 20,
      1. Edit Line 20 to 21b. Bracket if negative.

      2. Change Line 21b to 20.

      Line 21b is blank Both Lines 20 and 21a have entries,
      1. Subtract Line 21a from 20 and edit to Line 21b. Bracket if negative.

      2. Change Line 21b to 20.

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 – Domestic Production Activities
  1. The Domestic production activities deduction is valid for tax periods beginning 01/01/2005 and later. If the tax period beginning date is prior to 01/01/2005, 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 appropriate transcription lines.

    • Bracket if negative.

    • See Exhibit 3.11.16-19, 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 appropriate transcription lines.

    • Bracket if negative.

    • See Exhibit 3.11.16-19, 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 3.11.16-17.

  3. If Line 29c has an entry and Lines 29a and 29b are blank, look for an entry on Schedule C, Line 20. 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 3.11.16-17

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Tax Computation and Settlement - Lines 31 through 36

  1. Following are instructions for Lines 31 through 36. 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 contains 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 - Total payments and Refundable credits
  1. If blank, enter amount from Page 3, Schedule J, Line 21 if present.

Line 32g - Credit for Federal Telephone Excise Tax Paid, Form 8913
  1. Form 8913, Credit for Federal Telephone Excise Tax Paid, is reported on a 2006 Form 1120, Line 32g. Delete Line 32g if an amount is present.

  2. Place Form 8913 in sequence order if Line 15, Column (d) or (e) contain a significant amount.

  3. Edit Action Code "420" .

Backup Withholding
  1. "X" any entry identified by the taxpayer as "Backup Withholding" and edit it to Part II, Schedule J, Line 17.

  2. If the taxpayer has claimed backup withholding ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 1099 is not attached, correspond using Letter 118C.

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 Dispositions by Foreign Persons of U.S. Real Property Interests credit is claimed, route to OSPC.

  2. If Form 8288-A withholding is claimed, OSPC will:

    If ... Then ...
    Form 8288-A is attached,
    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 3.11.16-18.

    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 is not attached, Correspond.
  3. If Form 1042-S 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 19a (Line 32f(1) for 2010 and prior). See Figure 3.11.16-19.
    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.
  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 19a.
    Form 8805 is not attached, Correspond.

    Figure 3.11.16-18

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    Figure 3.11.16-19

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Line 33 – 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 33, do the following:

    1. Leave blank for Form 1120-H.

    2. 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 33 or equivalent lines on other forms. The taxpayer may also have increased Form 1120, Line 34 or decreased Line 35 accordingly. Do not adjust this amount.
      *(Line 34 for 2007–2005.)

    3. If Form 1120, Line 33 is blank, edit the amount from Form 2220, Page 2, Line 38* to Form 1120, Line 33.
      *(Line 34 for 2007–2005 Line 34.)

    4. If Form 2220, Page 2, Line 38* is blank and Form 1120, Line 33 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 33.
      **(Line 33, Columns a-d, for 2007–2005.) See Figure 3.11.16-20.

      Note:

      If Form 2220 is attached some conditions may require CCC "8" and/or Reserve Code "4" .


    *(Line 34 for 2007–2005.)

    Figure 3.11.16-20

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Lines 34 and 35 – Amount Owed/Overpayment
  1. Lines 34 and 35 are edited as positive only. If the taxpayer enters a negative amount, do not bracket.

  2. For Form 1120, edit the proper entry to Line 34 or 35 if both are blank. Do both of the following:

    1. Add Lines 31 and 33. Subtract Line 32*.
      *(Line 32h for 2010 – 2008, Line 32g for 2007.)

    2. 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 34 or reduced Line 35.

    If... Then...
    The amount on Line 34 contains pre-computed interest or penalty or additional charge,
    1. "X" Line 34 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 35 is reduced by pre-computed interest or penalty or additional charge,
    1. "X" Line 35 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 36 – Credit to Estimated Tax
  1. Line 36 – (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 3.11.16.2.6.1, IRC 6020(b) Prepared by Collections.

      Note:

      Starting July 1st, 2013, the Revenue Officers (RO) electronic or typed signature will be accepted as a valid signature on the return.

    • Returns prepared by Examination, for example "SFR" (Substitute for Return) or "SUBSTITUTE RETURN" . See IRM 3.11.16.2.6.3, Examination Prepared Returns - SFR or Substitute for Return.

    • Dummy returns prepared by IRS.

    • Returns filed under IRC 501(d) (Religious or Apostolic Organization).

    • Correspondence containing a signature and jurat is attached showing that the taxpayer is responding to an IRS letter. (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 that have Form 13596 attached. For processing instructions, see IRM 3.11.16.2.4.3, Correspondence Imaging System (CIS) Returns.

  3. If a signature is missing, correspond:

    Note:

    See IRM 3.11.16.2.4.2, 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 containing 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 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 3.11.16.1.14, 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 3.11.16.1.14, Frivolous Arguments.

    2. If the taxpayer responds with a self-prepared "signature declaration" , it must contain 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 and Form 8879-I are not acceptable signature substitutes for a paper return.

  6. Since tax examiners are not expected to be handwriting experts, Internal Revenue Code section 6064 and regulation section 301.6064-1 allows the 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:

    A check mark or "X" used to designate where the taxpayer should sign the return is not considered a valid signature.

  7. The following types of signatures are not valid for corporate returns:

    • Faxed signatures

    • Electronic signatures

    • Docusign digital signatures

    • Typed font Signature

  8. Only one correspondence attempt is required for a 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 Social Security Number (SSN) or Preparer's 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 (Preparer's SSN or PTIN box for 2009 and prior) 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 (Preparer's SSN or PTIN box for 2009 and prior) 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 and Special Deductions

  1. If an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on any of Lines 3, 6, 7, 8, 12, 13, 14, 15, and/or 16, edit Audit Code "2" .

  2. If an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on any of Lines 3, 6, 7, 8, 12, 13, 14,15, and/or 16, edit Audit Code "7" .

Schedule J, Page 3 - Controlled Group Code / Personal Service Corporation Code / Tax Computation

  1. Edit Personal Service Corporation Code "2" above the check box 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 3.11.16.8.2, ABLM Code and Schedule M-3 Checkbox.

  2. Personal Service Corporation Code "2" takes priority over Controlled Group Codes "4" and "1" (described below).

  3. 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.

  4. Edit Controlled Group Code "4" above the check box 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 an IRC 1561 Group or IRC 1563 Group.

    3. Schedule O (Form 1120), Box* 3a, 3b, 3d, or 5b is checked.
      *(Box 3a, 3b, 4b, 4c, or 4d for 2006 revision.)

    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 # 3.11.16-21 #.

      Note:

      If there is any doubt whether an attachment is a "Surtax Apportionment Plan," refer the document to the lead tax examiner.

  5. Edit Controlled Group Code "1" above the check box on Line 1, Page 3, Schedule J when ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ any of Code "4" conditions in paragraph (4)a through (4)d are present. See Figure # 3.11.16-22 #.

  6. If Controlled Group Code "4" or "1" is edited, process Schedule O (Form 1120). See IRM 3.11.16.10.27, Schedule O (Form 1120) - Consent Plan and Apportionment Schedule for a Controlled Group.

  7. If neither Controlled Group Code "4" or "1" is edited, delete Schedule O (Form 1120) if significant entries are present.

    Figure 3.11.16-21

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    Figure 3.11.16-22

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Schedule J, Line 3 - Alternative Minimum Tax

  1. If 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.

  2. If Schedule J, Line 3 has a significant entry and Form 4626 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.
    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 and a write-in credit from Form 5735. 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.
  2. For prior years 2007 and 2006 Form 1120 revisions, Form 5735 credit was also included on Line 5b.

    If... And... Then...
    The entry on Line 5b is ≡ ≡ ≡ ≡ ≡ ≡ There is no indication which form the credit is from and both Form 5735 and Form 8834 are missing, Correspond.
    The entry on Line 5b is ≡ ≡ ≡ ≡ ≡ ≡ There is an indication the credit is from Form 5735 and Form 5735 is missing, Correspond.
    The entry on Line 5b is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ There is an indication the credit is from Form 8834 and Form 8834 is missing, Correspond.
  3. When Form 8834 is attached, check for invalid vehicle years and invalid in-service dates:

    If... Then...
    Form 8834, *Part I, Line 1, Column (a), or (b) include a vehicle year of 2008 or earlier,
    • (Part I, Line 1, Column (a), (b), or (c) for 2010 revision and Part II, Line 8, Column (a), (b), or (c) for July 2009 revision.)

    Edit CCC "C" and circle the invalid vehicle year(s) and/or invalid in-service date(s).
    Form 8834, *Part I, Line 3, Column (a), or (b) include an in-service date of 02/16/2009 or earlier,
    • (Part I, Line 2, Column (a), (b) or (c) for 2010 revision and Part II, Line 9, Column (a), (b), or (c) for July 2009 revision.)

    Edit CCC C and circle the invalid vehicle year(s) and/or invalid in-service date(s).
  4. If Nonconventional Source Fuel, Form 8907 credit, is included on a "prior year return" , Schedule J (Line 6c for 2005–2000, Line 4c for 1999–1996), see IRM 3.11.16.10.14.27, Form 8907 – Nonconventional Source Fuel Credit.

    Note:

    For tax periods 200612 and later, Form 8907 credit, is reported as a General Business Credit.

Schedule J, Line 5c - General Business Credits

  1. If Form 3800is required but missing, correspond. Form 3800is required when a 2008 or subsequent tax return has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Schedule J, Line 5c. Form 3800 is required on a prior year tax return when the following conditions apply:

    Tax Return Year Is A... If... And Either of the Following Conditions Is Present...
    2007 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 5c,
    1. The Form 3800 box is checked, or

    2. A credit is indicated (other than Form 5884, 6478, 8835-Section B, 8844, or 8846).

    2006 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 5c,
    1. The Form 3800 box is checked, or

    2. A credit is indicated (other than Form 6478, 8835-Section B, or 8844).

    2005 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 6d,
    1. The Form 3800 box is checked, or

    2. More than one credit is indicated (other than Form 6478, 8835-Section B, or 8844).

    2004 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 6d,
    1. The Form 3800 box is checked, or

    2. More than one credit is indicated (other than Form 8844, 8835-Section B, or 8884).

    2003 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 6d,
    1. The Form 3800 box is checked, or

    2. More than one credit is indicated (other than Form 8844 or 8884).

    2002 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 6d,
    1. The Form 3800 box is checked, or

    2. More than one credit is indicated (other than Form 8844 or 8884).

    2001 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 6d,
    1. The Form 3800 box is checked, or

    2. More than one credit is indicated (other than Form 8844 8844).

    2000 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 6d,
    1. The Form 3800 box is checked, or

    2. More than one credit is indicated (other than Form 8844).

    1999 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 4d,
    1. The Form 3800 box is checked, or

    2. More than one credit is indicated (other than Form 8844).

    1998 An entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Schedule J, Line 4d,
    1. The Form 3800 box is checked, or

    2. More than one credit is indicated (other than Form 8844).

  2. 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.

  3. Review the Schedule J, Line 5c for the following conditions:

    If... And... Then...
    Schedule J, Line 5c is blank, Form 3800 contains an entry on Line 38** Edit the Line 38 **amount to Schedule J, Line 5c
    Schedule J, Line 5c contains 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.

    **(Line 32 for 2008 - 2010 (Line 19 for 2007 and prior)

Form 3468, Investment Credit
  1. Form 3468, Investment Credit, is required to be filed with Corporate tax returns when claiming the Investment credit.

  2. When an amount is present on Form 3800, Part III, Line 1a* or 4a*, or Form 1120, Schedule J, Line 5c for Form 3468, take the following actions:

    • *(Part I, Line 1a, Line 29a for 2010 – 2008.)

    If... Then...
    Investment credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 3468 is not attached, Correspond.

    Exception:

    If Form 3800, Part III Box C, D, or G are checked, do not correspond.

    Form 3468 has an entry on Line 8* andForm 3800 has an entry on Line 1a or 4a,
    • *(Only applicable for 2010 tax years (including fiscal year filers ending in 2011).)

    Edit CCC "V" .
Form 5884, Work Opportunity Credit
  1. Form 5884, Work Opportunity Credit, is required to be filed with Corporate tax returns when claiming the Work Opportunity Credit.

  2. When an amount is present on Form 3800, Part III, Line 4b* or Form 1120, Schedule J, Line 5c for Form 5884, take the following actions:

    • *(Line 29b for 2010 – 2009, Line 1b for 2006 and prior.)

    If... Then...
    Work Opportunity Credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 5884 is not attached, Correspond.

    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.

Form 5884-A, Credits for Affected Midwestern Disaster Area Employers
  1. Form 5884-A, Credits for Affected Midwestern Disaster Area Employers*, is required to be filed with corporate tax returns when claiming the Affected Midwestern Disaster Area Employers credit.

    • *(Employers Affected by Hurricane Katrina, Rita, or Wilma, for 2006 Revision.)

  2. When an amount is present on Form 3800, Line 1t* (2009-2008) for Form 5884-A, take the following actions:

    • *(Not applicable for 2007 revision.)

    If... Then...
    Affected Midwestern Disaster Area Employers credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 5884-A 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 5884-B, New Hire Retention Credit
  1. Form 5884-B, New Hire Retention Credit, is required to be filed with Corporate tax returns when claiming the New Hire Retention credit.

  2. For tax years 2010 and 2011, when an amount is present on Form 3800, Part III, Line 1aa* for Form 5884-B,

    • *(Part I, Line 1aa for 2010 and prior)

    If... Then...
    New Hire Retention credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 5884-B 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 5884-B is attached, Place in sequence order if a significant entry is present on Line 10 or 11.
  3. For tax years 201212 and subsequent, follow the chart below to edit a Form 5884-B with a significant entry 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 contain an amount, "X" the Form 5884-B.
Form 6478, Biofuel Producer Credit
  1. Form 6478, Biofuel Producer Credit (Alcohol and Cellulosic Biofuel Fuels Credit for 2007 - 2012), is required to be filed with Corporate tax returns if any of the following are present:

    1. The 2011 revision or later of Form 3800, Part III, Line 4c has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    2. The 2008-2010 revision of Form 3800, Line 29c has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    3. Schedule J, Line 5c has an entry indicating Form 6478 is attached and a Form 6478 credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is claimed.

    4. An amount is shown on Line 1d, of a 2004 or prior yearForm 3800. The 2005 through 2007 revision of Form 3800 did not include the Alcohol and Cellulosic Biofuel Fuels Credit.

    5. An amount is shown on the Alcohol and Cellulosic Biofuel Fuels Credit line on a prior year return.

  2. When an amount is present on Form 3800, Part III, Line 4c (Line 29c for 2010 and prior) or Form 1120, Schedule J, Line 5c for Form 6478, take the following actions:

    If... Then...
    Biofuel Producer credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 6478 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.

    These instructions apply to 2009 tax year only, including fiscal year (200901 through 201011).
    • Form 6478 has a significant amount on Line 5*, Column (c) or Line 8*,

    • (Line 5(c) or Line 7 for 2009, Line 7(c) or Line 9 for 2008, not applicable for other prior year revisions.)

    Edit Action Code "343" for Form 1120, Form 1120-C, Form 1120-F, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

    Reminder:

    Do not edit Action Code "343" for tax period 201012.

Form 6765, Credit for Increasing Research Activities
  1. Form 6765, Credit for Increasing Research Activities, is required to be filed with Corporate tax returns when claiming the Increasing Research Activities credit.

  2. When an amount is present on Form 3800, Part III, Line 1c* or Line 4i* or Form 1120, Schedule J, Line 5c for Form 6765, take the following action:

    • *(Part I, Line 1c for 2007 - 2010.)

    If... Then...
    Increasing Research Activities credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 6765 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, Low-Income Housing Credit
  1. Form 8586, Low-Income Housing Credit, is required to 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:

    • *(Part I, Line 1d for 2007 - 2010.) **(Line 29d for 2010 – 2008)

    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 any of Lines 1 or 3 (prior year Lines 1 through 4), or

    • Form 8609 is attached or

    • Form 8609-A (prior year Form 8609, Schedule A) is attached,

    Enter CCC "9" .
Form 8820, Orphan Drug Credit
  1. The Orphan Drug Credit, is valid for tax periods 8301 through 9511, and 9607 and subsequent.

    Note:

    If this credit is claimed for an invalid tax period, "X" and disallow the credit.

  2. Form 8820, Orphan Drug Credit is required to be filed with Corporate tax returns when claiming the Orphan Drug credit.

  3. When an amount is present on Form 3800, Part III, Line 1h* or Form 1120, Schedule J, Line 5c** for Form 8820, take the following actions:

    • *(Part I, Line 1h for 2007 - 2010.)

    If... Then...
    Orphan Drug credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8820 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 8826, Disabled Access Credit
  1. Form 8826, Disabled Access Credit, is required to be filed with Corporate tax returns when claiming the Disabled Access credit.

  2. When an amount is present on Form 3800, Part III, Line 1e* or Form 1120, Schedule J, Line 5c for Form 8826, take the following actions:

    • *(Part I, Line 1e for 2007 - 2010.)

    If... Then...
    Disabled Access credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8826 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 8830, Enhanced Oil Recovery Credit
  1. Form 8830, Enhanced Oil Recovery Credit, is required to be filed with Corporate tax returns when claiming the Enhanced Oil Recovery credit.

  2. When an amount is present on Form 3800, Part III, Line 1t (Part III, Line 1zz for 2016) or Form 1120, Schedule J, Line 5c for Form 8830, take the following actions:

    If ... Then ...
    Enhanced Oil Recovery credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8830 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 8834, Qualified Plug-in Electric Vehicle Credit
  1. Form 8834, Qualified Plug-in Electric Vehicle Credit, is required to be filed with Corporate tax returns when claiming the Qualified Plug-in Electric Vehicle credit.

  2. When an amount is present on Form 3800, Part III, Line 1z* for Form 8834:

    • *(Part I, Line 1z for 2010 and prior.)

    If... Then...
    Qualified Plug-in Electric Vehicle credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8834 is not attached, 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 8834, *Part I, Line 1, Column (a), or (b) include a vehicle year of 2008 or earlier,
    • *(Part I, Line 1, Column (a), (b) or (c) for 2010 revision and Part II, Line 8, Column (a), (b), or (c) for July 2009 revision.)

    Edit CCC "C" and circle the invalid vehicle year(s) and/or invalid in-service date(s).
    Form 8834, *Part I, Line 3, Column (a), or (b) include an in-service date of 02/16/2009 or earlier,
    • *(Part I, Line 2, Column (a), (b) or (c) for 2010 revision and Part II, Line 9, Column (a), (b), or (c) for July 2009 revision.)

    Edit CCC "C" and circle the invalid vehicle year(s) and/or invalid in-service date(s).
Form 8835, Renewable Electricity, Refined Coal, and Indian Coal Production Credit
  1. Form 8835, Renewable Electricity, Refined Coal, and Indian Coal Production Credit, is required to be filed with Corporate tax returns if any of the following are present:

    1. Schedule J, Line 6d (2005 to 2000) has an entry indicating Form 8835 is attached.

    2. Schedule J, Line 5c (2007-2006) has an entry indicating Form 8835 is attached.

    3. Form 3800, Part III, Line 1f* or 4e** has an entry for Form 8835.
      *(Part I, Line 1f for 2007 - 2010.) **(Line 29e for 2010-2008.)

  2. When an amount is present on Form 3800, Part III, Line 1f* or Line 4e** or Form 1120, Schedule J, Line 5c for Form 8835, take the following actions:

    • *(Part I, Line 1f for 2007 - 2010.)

    • **(Line 29e for 2010-2008)

    If... Then...
    Renewable Electricity, Refined Coal, and Indian Coal Production credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8835 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 8844, Empowerment Zone and Renewal Community 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 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .
      *(Part II, Line 24 for 2010–2008 revision.)

    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:

    • *(Line 2 for Form 1120-F.)

    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 6, 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 (Part II, Line 24 for 2010–2008 revisions).

  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:

    • *(Part II, Line 24 for 2010 – 2008.)

    If... Then...
    Empowerment Zone and Renewal Community 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 8845, Indian Employment Credit
  1. Form 8845, Indian Employment Credit, is required to be filed with Corporate tax returns when claiming the Indian Employment credit.

  2. When an amount is present on Form 3800, Part III, Line 1g* or Form 1120, Schedule J, Line 5c** for Form 8845, take the following actions:

    • *(Part I, Line 1g for 2007 - 2010.)

    If... Then...
    Indian Employment credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8845 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 8846, Credit for Employer Social Security Taxes Paid on Certain Employee Cash Tips
  1. Form 8846, Credit for Employer Social Security Taxes Paid on Certain Employee Cash Tips, is required to be filed with Corporate tax returns if any of the following are present:

    1. Schedule J, Line 6d (2005 and prior) has an entry indicating Form 8846 is attached.

    2. Schedule J, Line 5c (2007 revision) has an entry indicating Form 8846 is attached.

      Note:

      The 2007 revision of Form 3800 does not include the computation of the allowable Form 8846 credit.

    3. Form 3800, Part III, Line 4f* has an entry for Form 8846.
      *(Part II, Line 29f for 2010–2008.)

  2. When an amount is present on Form 3800, Part III, Line 4f* or Form 1120, Schedule J, Line 5c for Form 8846, take the following actions:

    • *(Part II, Line 29f for 2010–2008.)

    If... Then...
    Employer Social Security Taxes Paid on Certain Employee Cash Tips credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8846 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 8847, Credit for Contributions to Selected Community Development Corporations
  1. Form 8847, Credit for Contributions to Selected Community Development Corporations, is required to be filed with Corporate tax returns when claiming Contributions to Selected Community Development Corporations credit.

  2. When an amount is present on Form 3800, Line 1y* (2008 revision) or Form 1120, Schedule J, Line 5c for Form 8847, take the following actions:

    • *(Line 1w for 2007.)

    If... Then...
    Contributions to Selected Community Development Corporations credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8847 is not attached, Correspond.

    Exception:

    If Form 3800, Part III Box C, D, or G are checked, do not correspond.

Form 8861, Welfare-to-Work Credit
  1. Form 8861, Welfare-to-Work Credit, is required to be filed with Corporate tax returns when claiming the Welfare-to-Work credit.

  2. When an amount is present on Form 3800, Line 1b (2009–2007) or Form 1120, Schedule J, Line 5c for Form 8861, take the following actions:

    If... Then...
    Welfare-to-Work credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8861 is not attached, Correspond.

    Exception:

    If Form 3800, Part III Box C, D, or G are checked, do not correspond.

Form 8864, Biodiesel and Renewable Diesel Fuels Credit
  1. Form 8864, Biodiesel and Renewable Diesel Fuels Credit, is required to be filed with Corporate tax returns when claiming the Biodiesel and Renewable Diesel Fuels credit.

  2. When an amount is present on Form 3800, Part III, Line 1l* or Form 1120, Schedule J, Line 5c for Form 8864, take the following actions:

    • *(Part I, Line 1l for 2008 - 2010, Line 1m for 2007.)

    If... Then...
    Biodiesel and Renewable Diesel Fuels credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8864 is not attached, Correspond.

    Exception:

    If Form 3800, Part III Box C, D, or G are checked, do not correspond.

Form 8874, New Markets Credit
  1. Form 8874, New Markets Credit, is required to be filed with Corporate tax returns when claiming the New Markets credit.

  2. When an amount is present on Form 3800, Part III, Line 1i* or Form 1120, Schedule J, Line 5c for Form 8874, take the following actions:

    • *(Part I, Line 1i for 2007-2010.)

    If... Then...
    New Markets credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8874 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 8881, Credit for Small Employer Pension Plan Startup Costs
  1. Form 8881, Credit for Small Employer Pension Plan Startup Costs, is required to be filed with Corporate tax returns when claiming the Small Employer Pension Plan Startup Costs credit.

  2. When an amount is present on Form 3800, Part III, Line 1j* or Form 1120, Schedule J, Line 5c for Form 8881, take the following actions:

    • *(Part I, Line 1j for 2007-2010.)

    If... Then...
    Small Employer Pension Plan Startup Costs credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8881 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 8882, Credit for Employer-Provided Childcare Facilities and Services
  1. Form 8882, Credit for Employer Provided Child Care Facilities and Services, is required to be filed with Corporate tax returns when claiming the Employer-Provided Childcare Facilities and Services credit.

  2. When an amount is present on Form 3800, Part III, Line 1k* or Form 1120, Schedule J, Line 5c for Form 8882, take the following actions:

    • *( Part I, Line 1k for 2007-2010.)

    If... Then...
    Employer-Provided Childcare Facilities and Services credit≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8882 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 8884, New York Liberty Zone Business Employee Credit
  1. No editing required.

Form 8896, Low Sulfur Diesel Fuel Production Credit
  1. Form 8896, Low Sulfur Diesel Fuel Production Credit, is required to be filed with Corporate tax returns when claiming the Low Sulfur Diesel Fuel Production Credit credit.

  2. When an amount is present on Form 3800, Part III, Line 1m* or Form 1120, Schedule J, Line 5c for Form 8896, take the following actions:

    • *(Part I, Line 1m for 2008-2010.)

    If... Then...
    Low Sulfur Diesel Fuel Production Credit credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8896 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 8900, Qualified Railroad Track Maintenance Credit
  1. Form 8900, Qualified Railroad Track Maintenance Credit, is required to be filed with Corporate tax returns when claiming the Qualified Railroad Track Maintenance credit.

  2. When an amount is present on Form 3800, Part III, Line 4g* or Form 1120, Line 5c for Form 8900, take the following action:

    • *(Line 29g for 2010–2008, Line 1l for 2007.)

    If... Then...
    Qualified Railroad Track Maintenance credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8900 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 8904, Oil and Gas Production from Marginal Wells
  1. Form 8904, Oil and Gas Production from Marginal Wells, is required to be filed with Corporate tax returns when claiming the Oil and Gas Production credit. (2017 and subsequent)

  2. When an amount is present on Form 3800, Part III, Line 1zz* or Form 1120, Schedule J, Line 5c for Form 8904, take the following actions:

    If... Then...
    Oil and Gas Production from Marginal Wells credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8904 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 8906, Distilled Spirits Credit
  1. Form 8906, Distilled Spirits Credit, is required to be filed with Corporate tax returns when claiming the Distilled Spirits credit.

  2. When an amount is present on Form 3800, Part III, Line 1n* or Form 1120, Schedule J, Line 5c for Form 8906, take the following actions:

    • *(Part I, Line 1n for 2008-2010.)

    If... Then...
    Distilled Spirits credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8906 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 8907, Nonconventional Source Fuel Credit
  1. Form 8907, Nonconventional Source Fuel Credit, is required to be filed with Corporate tax returns when claiming the Nonconventional Source Fuel credit.

    Note:

    Form 8907 is only required for Tax Years 2013 and prior.

  2. When an amount is present on Form 3800, Part III, Line 1o* or Form 1120, Schedule J, Line 5c for Form 8907, take the following actions:

    • *(Part I, Line 1o for 2008-2010.)

    If... Then...
    Nonconventional Source Fuel credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8907 is not attached,

    Note:

    Form 8907 is only required for Tax Years 2013 and prior.

    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 8908, Energy Efficient Home Credit
  1. Form 8908, Energy Efficient Home Credit, is required to be filed with Corporate tax returns when claiming the Energy Efficient Home credit.

  2. When an amount is present on Form 3800, Pat III, Line 1p* or Form 1120, Schedule J, Line 5c for Form 8908, take the following actions:

    • *(Part I, Line 1p for 2008-2010.)

    If... Then...
    Energy Efficient Home credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8908 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 8909, Energy Efficient Appliance Credit
  1. Form 8909, Energy Efficient Appliance Credit, is required to be filed with Corporate tax returns when claiming the Energy Efficient Appliance credit.

    Note:

    Form 8909 is only required for Tax Years 2013 and prior.

  2. When an amount is present on Form 3800, Part III, Line 1q* or Form 1120, Schedule J, Line 5c for Form 8909, take the following actions:

    • *(Part I, Line 1q for 2008-2010.)

    If... Then...
    Energy Efficient Appliance credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8909 is not attached,

    Note:

    Form 8909 is only required for Tax Years 2013 and prior.

    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 8910, Alternative Motor Vehicle Credit
  1. Form 8910, Alternative Motor Vehicle Credit, is required to be filed with Corporate tax returns when claiming the Alternative Motor Vehicle credit.

  2. When an amount is present on Form 3800, Part III, Line 1r* or Form 1120, Schedule J, Line 5c for Form 8910, take the following actions:

    • *(Part I, Line 1r for 2008-2010.)

    If... Then...
    Alternative Motor Vehicle credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8910 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.

  3. When Form 8910 is attached, check for invalid in-service dates:

    If... Then...
    Form 8910, Part I, Line 3, Column (a), or (b) include an in-service date of 02/16/2009 or earlier,
    • *(Part I, Line 2, Column (a), (b) or (c) for 2010 and prior versions.)

    Edit CCC "C" and circle the invalid in-service date(s).
Form 8911, Alternative Fuel Vehicle Refueling Property Credit
  1. Form 8911, Alternative Fuel Vehicle Refueling Property Credit, is required to be filed with Corporate tax returns when claiming the Alternative Fuel Vehicle Refueling Property credit.

  2. When an amount is present on Form 3800, Part III, Line 1s* or Form 1120, Schedule J, Line 5c for Form 8911, take the following actions:

    • *(Part I, Line 1s for 2008-2010, Line 1t for 2007.)

    If... Then...
    Alternative Fuel Vehicle Refueling Property credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8911 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 8923, Mine Rescue Team Training Credit
  1. Form 8923, Mine Rescue Team Training Credit, is required to be filed with Corporate tax returns when claiming the Mine Rescue Team Training credit.

  2. When an amount is present on Form 3800, Part III, Line 1u* or Form 1120, Schedule J, Line 5c for Form 8923:

    • *(Part I, Line 1u for 2010 and prior.)

    If... Then...
    Mine Rescue Team Training credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8923 is not attached, Correspond for missing Form 8923.

    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 8931, Agricultural Chemicals Security Credit
  1. Form 8931, Agricultural Chemicals Security Credit, is required to be filed with Corporate tax returns when claiming the Agricultural Chemicals Security credit.

    Note:

    Form 8931 is only required for Tax Years 2012 and prior.

  2. When an amount is present on Form 3800, Part III, Line 1v* or Form 1120, Schedule J, Line 5c for Form 8931:

    • *(Part I, Line 1v for 2010 and prior.)

    If... Then...
    Agricultural Chemicals Security credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8931 is not attached,

    Note:

    Form 8931 is only required for Tax Years 2012 and prior.

    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 8932, Credit for Employer Differential Wage Payments
  1. Form 8932, Credit for Employer Differential Wage Payments, is required to be filed with Corporate tax returns when claiming the Employer Differential Wage Payments credit.

  2. When an amount is present on Form 3800, Part III, Line 1w* or Form 1120, Schedule J, Line 5c for Form 8932:
    *(Part I, Line 1w for 2010–2008, Line 1v for 2007.)

    If... Then...
    Employer Differential Wage Payments credit is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8932 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 8933, Carbon Dioxide Sequestration Credit
  1. Form 8933, Carbon Dioxide Sequestration Credit, is required to be filed with Corporate tax returns when claiming the Carbon Dioxide Sequestration credit.

  2. When an amount is present on Form 3800, Part III, Line 1x* or Form 1120, Schedule J, Line 5c for Form 8933:
    *(Part I, Line 1x for 2010 and prior)

    If... Then...
    Carbon Dioxide Sequestration credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8933 is not attached, Correspond for missing Form 8933.

    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 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit
  1. Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, is required to be filed with Corporate tax returns when claiming the Qualified Plug-in Electric Drive Motor Vehicle credit.

  2. When an amount is present on Form 3800, Part III, Line 1y* or Form 1120, Schedule J, Line 5c contains and entry for Form 8936:
    *(Part I, Line 1y for 2010 and prior.)

    If... Then...
    Qualified Plug-in Electric Drive Motor Vehicle credit≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 8936 is not attached, Correspond for missing Form 8936.

    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.

  3. When Form 8936 is attached, check for invalid vehicle years and invalid in-service dates:

    If... Then...
    Form 8936, *Part I, Line 1, Column (a), or (b) include a vehicle year of 2008 or earlier,
    *(Part I, Line 1, Column (a), (b) or (c) for 2010 and prior year revisions.)
    Edit CCC "C" and circle the invalid vehicle year(s) and/or the invalid in-service date(s).
    Form 8936, *Part I, Line 3, Column (a), or (b) include an in-service date of 12/31/2008 or earlier,
    *(Part I, Line 2, Column (a), (b) or (c) for 2010 and prior year revisions.)
    Edit CCC "C" and circle the invalid vehicle year(s) and/or the invalid in-service date(s).
Form 8941, Credit for Small Employer Health Insurance Premiums
  1. Form 8941, Credit for Small Employer Health Insurance Premiums, is required to 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:
    *(Part II, Line 29h for 2010.)

    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 3.11.16.17, Form 8941 - Credit for Small Employer Health Insurance Premiums, for Form 8941 editing instructions.
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 8860, Qualified Zone Academy Bond Credit and Form 8912, Credit to Holders of Tax Credit Bonds
  1. When editing Schedule J, Line 5e and the Form 8860 box is marked (2007 and prior tax return), take the following actions:

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8860is not attached, Correspond.
  2. When Schedule J, Line 5e has an entry for Form 8912 or the Form 8912 box is marked (2007 and prior tax return), 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 3.11.16.8.2, ABLM Code and Schedule M-3 Checkbox.

Schedule J, Line 9a through 9f - Other Taxes

  1. This section contains 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:
    *(Line 9 for 2010-2006 revisions.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 4255 is not attached,
    *(Schedule J, Line 9 for 2010-2006 revisions.)
    Correspond.
    Form 4255 is attached and Line 9a* is blank,
    *(Schedule J, Line 9 for 2010-2006 revisions.)
    Edit the amount from Line 20*, Form 4255 to Schedule J, Line 9a**, Form 1120.
    • (Line 15 for 2015-2011 revisions.)

    • *(Line 13 for 2010 and prior revisions.)

    • **(Schedule J, Line 6, Form 1120-REIT.)

    • (For 2010 and prior revisions: dummy current year revision of Schedule J and edit the amount from Form 4255, Line 15 to Schedule J, Line 9a. X through the prior year revision Schedule J)

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:
    *(Line 9 for 2010-2006 revisions.)

    If... Then...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8611 is not attached, Correspond.
    Form 8611 is attached and Line 9b is blank,
    *(Schedule J, Line 9 for 2010-2006 revisions.)
    • Edit the amount from Line 14*, Form 8611 to Schedule J, Line 9b. (Dotted portion of Schedule J, Line 6 of Form 1120-REIT.)

      • *(Line 12 for 1999 and prior revisions.)

    • (For 2010 and prior revisions - dummy current year revision of Schedule J and edit the amount from Form 8611, Line 14 to Schedule J, Line 9b. X through the prior year revision Schedule J)

    More than one Form 8611 is attached,
    1. Combine Form 8611, Line 14*.

      • *(Line 12 for 1999 and prior.)

    2. Edit the total to Schedule J, Line 9b. (Dotted portion of Schedule J, Line 6 of Form 1120-REIT.)

      • (For 2010 and prior revisions - dummy current year revision of Schedule J and edit the combined amount from all Form 8611, Line 14 to Schedule J, Line 9b. X through the prior year revision Schedule J)

  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 (Line 9 for 2010-2007 with Form 8611 indication) contains 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:
    *(Line 9 for 2010-2006 revisions.)

    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,
    *(Schedule J, Line 9 for 2010-2006 revisions.)
    • Edit the amount from Form 8697, Part I, Line 10 or Part II, Line 11 to Schedule J, Line 9c.

    • Edit CCC K.

    • (2010 and prior revisions – dummy current year revision of Schedule J and edit the amount from Form 8697, Part I, Line 10 or Part II, Line 11 to Schedule J, Line 9c. X through the prior year revision Schedule J)

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:
    *(Line 9 for 2010-2006 revisions.)

    If... Then...
    Form 8902 is attached, Edit Audit Code "2" .
    Form 8902 is attached and Schedule J, Line 9e is blank,
    *(Schedule J, Line 9 for 2010-2006 revisions.)
    • Edit the amount from Line 30, Form 8902 to Schedule J, Line 9e.

    • (For 2010 - prior revisions – dummy current year revision of Schedule J and edit the amount from Form 8902, Line 30 to Schedule J, Line 9e. X through the prior year revision Schedule J)

Schedule J, Line 11 – Total Tax

  1. Form 1120, Schedule J, Part I, Line 11* may contain "add on" taxes that will be identified by an explanation in the dotted portion to the left of Line 11*.
    *(Line 10 for 2010–2006.)

    1. If the only entry on Form 1120, Schedule J, Part I, is Line 11*, edit the amount to Schedule J, Line 2.
      *(Line 10 for 2010–2006.)

    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.

Schedule J, Part II Lines 13 – 21

  1. This section contains instructions for Schedule J, Part II, Lines 13* through 21.
    *(Form 2010 and prior revisions – Lines 12-21 were previously Page 1, Lines 32a-32g)

Schedule J, Part II, Line 13 – Estimated Tax Payments
  1. IRC 847 Deduction. If a significant entry is present on Schedule J, Part II, Line 13 (Page 1, Line 32b for 2010 and prior revisions) and "847" and/or "Form 8816" are notated, see IRM 3.11.16.2.10, IRC 847 Deduction.

Schedule J, Part II, Line 15 – Payments
  1. If Schedule J, Part II, Line 15 is blank, add Lines 12 (Page 1, Line 32a for 2010 and prior revisions) and 13 (Page 1, Line 32b for 2010 and prior revisions). Subtract Line 14 (Page 1, Line 32c for 2010 and prior revisions) and enter the total amount on Line 15 (Page 1, Line 32d for 2010 and prior revisions). If there is an entry on Line 14 (Page 1, Line 32c for 2010 and prior revisions), see IRM 3.11.16.8.1.13, CCC "O" – Module Freeze.

  2. For 2010 and prior revisions if significant amounts are present:

    1. Dummy a Schedule J and place in sequence order

    2. "X" through the prior year revision Schedule J

Schedule J, Part II, Line 16 – 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 16*, disallow and delete amount of credit from Line 16*.
    *(Page 1, Line 32e for 2010 and prior revisions).

  3. For 2010 and prior revisions if significant amounts are present:

    1. Dummy a Schedule J and place in sequence order.

    2. "X" through the prior year revision Schedule J.

Schedule J, Part II, Line 17 - Withholding
  1. If the taxpayer has claimed backup withholding ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Schedule J, Part II, Line 17 and Form 1099 is not attached, correspond using Letter 118C.
    *(Page 1, Line 32h for 2010 and prior revisions).

  2. For 2010 and prior revisions if significant amounts are present:

    1. Dummy a Schedule J and place in sequence order.

    2. "X" through the prior year revision Schedule J.

Schedule J, Part II, Line 18 – Total Payments
  1. If Line 18* is the only entry for Lines 12 through 18, arrow the amount to Line 15.
    *(Page 1, Line 32h for 2010 - 2005, Line 32g for 2007.)

  2. For 2010 and prior revisions if significant amounts are present:

    1. Dummy a Schedule J and place in sequence order.

    2. "X" through the prior year revision Schedule J.

Schedule J, Part II, Line 19a – Regulated Investment Co. Credit, Form 2439
  1. Compare Form 1120, Schedule J, Line 19a* to Form 2439, Line 2:
    *(Page 1, Line 32f(1) for 2010 - 2005.)

    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 II, Line 19a (Page 1, Line 32f(1) for 2010 - 2005, Line 32f 2004 and prior, Form 1120). Edit the lesser amount to the left of the "X" .
    Form 2439 shows a larger amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Correspond.
  2. Follow the instructions below for 2010 and prior revisions:

  3. If significant amounts are present:

    1. Dummy a Schedule J.

    2. Edit write-in credits such as Section 960(b)(5) to Schedule J, Part II, Line 19d.

      Note:

      If unusual refundable credits are included in Page 1, Line 32f(1), edit the total of the unusual refundable credits to Line 19d. For a description of the most typical unusual refundable credits, see IRM 3.11.16.8.1.12, CCC "N" – Joint Committee Case.

    3. Place in sequence order

    4. Line through or "X" the prior year revision Schedule J

  4. If Page 1, Lines 32f(1) and 32f(2) are blank and there is a significant amount on Page 1, Line 32f follow the instructions below:

    If... Then...
    Both Form 2439 and Form 4136 are missing, Correspond for missing forms to support the entry on Page 1, Line 32f.
    Both Form 2439 and Form 4136 are attached,
    1. Dummy a Schedule J.

    2. Edit the Form 2439 amount to Schedule J, Part II, Line 19a.

    3. Line through or "X" prior year revision Schedule J.

    Form 2439 is the only form attached,
    1. Dummy a Schedule J.

    2. Edit the smaller of Form 2439 or Page 1, Line 32f amount to Schedule J, Part II, Line 19a.

    3. Line through or "X" prior year revision Schedule J.

    4. Correspond for missing Form 4136 if the entry on Page 1, Line 32f is more than the Form 2439 amount.

    Form 4136 is the only form attached,
    1. Subtract the Form 4136 amount from Page 1, Line 32f and edit the difference to Schedule J, Part II, Line 19a.

    2. Correspond for missing Form 2439≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    Exception:

    Do not correspond for Form 2439 or Page 1, Line 32f if the amount is identified as a write-in credit (e.g., unusual refundable credits, Backup Withholding, FIRPTA Credit, Form 1042-S Credit, etc.).

Schedule J, Part II, Line 19b – Fuel Tax Credit, Form 4136
  1. If Line 19b* contains a significant entry and Form 4136 is not present, correspond for the missing Form 4136.
    *(Page 1, Line 32f(2) for 2010 - 2005.)

  2. For processing instructions, see IRM 3.11.16.15, Form 4136 - Credit for Federal Tax Paid on Fuels.

Schedule J, Part II, Line 19c - Form 8827
  1. For 2012 and subsequent, if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 8827 must be attached to substantiate the credit. Correspond for missing forms to substantiate the credit.

  2. 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.

  3. For 2010 and prior revisions if a significant amount is present on Line 32g:

    1. Dummy a Schedule J.

    2. Place in sequence order.

    3. Line through or "X" the prior year revision Schedule J.

Schedule J, Part II, Line 19d - Other
  1. Accept taxpayer entry.

  2. For 2010 and prior revisions if a significant amount is present:

    1. Dummy a Schedule J.

    2. Place in sequence order.

    3. Line through or "X" the prior year revision Schedule J.

Schedule J, Part II, Line 21 – Total Payments and Credits
  1. If Line 21 is the only entry for Lines 12 through 21, arrow the amount to Line 15.

  2. For 2010 and prior revisions only - If Page 1, Line 32h* is the only entry for Page 1, Lines 32a through 32h:
    *(Line 32g for 2007.)

    1. Dummy a Schedule J and edit the amount from Line 32h* to Schedule J, Part II, Line 15.

    2. Place in sequence order.

    3. Line through or "X" the prior year revision Schedule J.

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.
    *(Question 4 for 2007 and prior.)

    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
    201 West Rivercenter Blvd.
    PIN Unit, Stop 97
    Covington, KY. 41011

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 L, Balance Sheet

  1. This section provides instructions for processing the Balance Sheet. The Balance Sheet is found on Form 1120, Page 5 (Page 4 for 2007 and prior).

    Note:

    The Balance Sheet programming requires a significant entry to be present on Schedule L, Line 15, Column (d) when Total Assets are $250,000 or more or Total Receipts are $250,000 or more.

    Exception:

    CCC "G" or "F" is edited or there are no significant entries in the income and deduction sections.

  2. To determine if editing a Balance Sheet that contains significant entries is necessary follow the chart below:

    Note:

    The following chart is listed in "Priority" order.

    If... And... Then...
    The return is "Amended" or "Final" ,   No action is required. The Balance Sheet will not be transcribed.
    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, Page 4*, Schedule K, Question 13
    *(Page 3 for 2007 and prior.)
    1. The entry on Page 1, Box D is less than $250,000 and,

    2. All entries on Page 1, Line 1a and Lines 4 through 10 are less than $250,000,

    Note:

    C&E is not required to add the amounts on Lines 4 through 10.

    Delete the Balance Sheet.
    None of these conditions exist,   Edit the Balance Sheet, see IRM 3.11.16.10.25.1, Editing Schedule L, Balance Sheet for editing procedures.
  3. To determine if correspondence is necessary for a Balance Sheet that contains no significant entries, is not present, or there is no statement for the balance sheet, follow the chart below:

    Note:

    The following chart is listed in "Priority" order.

    If... And... Then...
    The return is "Amended" ,   Do not correspond. No action is required.
    The return is "Final" ,   Do not correspond. No action is required.
    The "Yes" box is checked on Form 1120, Page 4*, Schedule K, Question 13, *(Page 3 for 2007 and prior.)   Do not correspond. No action is required.
    There are no significant entries on Form 1120, Page 1, Lines 1 through 27,   Do not correspond. No action is required.
    Form 1120, Page 1, Box D is blank, dash, "none" , "N/A" , or zero Schedule L, Line 15, Column (d) entry is dash, "none" , "N/A" , or zero, Do not correspond instead, edit a "1" to Line 15, Column (d) and edit "1" in Box D.*
    Form 1120, Page 1, Box D has a significant entry Schedule L, Line 15, Column (d) entry is dash, "none" , "N/A" , or zero, Do not correspond instead, edit a "1" to Line 15, Column (d).*
    Form 1120, Page 1, Box D is less than $250,000 Total Receipts, Line 1a plus Lines 4 through 10 are less than $250,000, Do not correspond. No action is required.
    The "cash" box on Schedule K is checked or the taxpayer has notated "Single Entry" , "See Books" , "Balance Sheet not available" , or similar entry,  
    1. Edit a "1" to Schedule L, Line 15, Column (d) if blank, dash, "none" , "N/A" , or zero.*

      Note:

      Dummy a Schedule L if not present.

    2. Edit a "1" on Page 1, Box D if blank, dash, "none" , "N/A" , or zero.*

      • See Figure 3.11.16-23.

    None of these conditions exist,   Correspond for the Balance Sheet.

    Note:

    *The editing of a "1" on Form 1120 Page 1, Box D and Schedule L, Line 15, Column (d) allows the return to bypass ERS in the situations where significant entries are required.

    Figure 3.11.16-23

    This is an Image: 33500029.gif
     

    Please click here for the text description of the image.

Editing Schedule L, Balance Sheet
  1. After following all Balance Sheet instructions, if Line 15(d) is blank, zero, dash, "none" , or "N/A" , and the Balance Sheet is not being deleted or corresponded for, edit a "1" on Line 15(d). Also edit a "1" to Page 1, Box D if blank, dash, "none" , "N/A" , or zero.

  2. Place Page 5, Schedule L in sequence order when the Balance Sheet is required.

  3. Edit Balance Sheet amounts in dollars only.

  4. 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.

  5. 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)

  6. 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) contains 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 appropriate 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 appropriate 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.

      There is no entry on Line 15, Column (d) After editing the Balance Sheet, Line 15, Column (d) is blank, zero, dash, "none" , or "N/A" ,
      1. Edit a "1" on Line 15(d).

      2. Edit a "1" to Page 1, Box D if blank, dash, "none" , "N/A" , or zero.

      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 prior to 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 contains 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 contains 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, 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.

  3. Convert prior year (2003–2000) Schedule N, Line 1 to Line 1a.

Schedule N, Line 2 – Number of Forms 8865
  1. No entry is required for Schedule N, Line 2 unless Form 8865 is present.

  2. 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.
  3. For Form 1120, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit Audit Code "2" if Form 8865 is attached. See IRM 3.11.16.9.1, 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 3.11.16.9.1, Audit Codes.

Schedule N, Line 4 – Form 5471, Controlled Foreign Corporation
  1. Edit Audit Code "2" if Schedule N, Question 4a is answered "Yes" or Form 5471 is attached. See IRM 3.11.16.9.1, Audit Codes.

  2. No entry is required for Schedule N, Line 4b unless Form 5471 is present.

  3. 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 3.11.16.9.1, 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.

    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 3.11.16.9.1, 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 appropriate IDRS Action Code (depending on which election has been made) may be needed when Form 8873 is present. See IRM 3.11.16.11, 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 3.11.16.11, 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 3.11.16.11, 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 3.11.16.11Form 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 3.11.16.11, 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 3.11.16.11, 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 3.11.16.11, Form 8873 -Extraterritorial Income Exclusion.

    Reminder:

    Form 8873, Extraterritorial Income Exclusion, requires TC "971" input. See IRM 3.11.16.11, Form 8873 - Extraterritorial Income Exclusion.

Schedule N, Line 8 - Statement of Specified Foreign Financial Assets
  1. For Tax Year 201601 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. Tax Period on Form 1120 is 201601 or later and,

    2. Form 8938 is a current year revision and,

      Note:

      The GPP database can only process current year revisions of Form 8938.

    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 4; or highest asset value in Part VI, Line 4 and delete the others.

      Note:

      The Form 8938 can have multiple "Continuation Statements" . Do not confuse the multiple 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. This section includes instructions for processing Schedule O (Form 1120).

  2. 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.

  3. 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. 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 3.11.16-24

    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 3.11.16-24.
    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 3.11.16.10.11(4), Schedule J, Page 3 - Controlled Group Code / Personal Service Corporation Code / Tax Computation.   Delete Schedule O.

    Figure 3.11.16-24

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    Figure 3.11.16-25

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  2. 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.

  3. 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. 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. 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 appropriate transcription lines.

  2. 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 contain 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 of 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.

      • Transcription lines for 2013 and subsequent are: Part 1, Line 1a, Columns d and e, Lines 1b -3, Columns d, e, and g, and Part II, Lines 8a, Columns d and e, Lines 8b - 10, Columns d, e, and g, and Line 14

      • Transcription lines for 2012 are: Lines 1-3 columns d and e, Lines 8-10 columns d and e, and 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 1125-A - Cost of Goods Sold (Formerly Form 1120, Schedule A)

  1. Place Form 1125-A in sequence order if entries are present on Lines 1, 6, or 7.

  2. Edit Form 1125-A in dollars only. "X" any negative transcription entries.

  3. Line 1 is "Inventory at Beginning of Year" . If Line 1 is blank, edit from the taxpayer's attachment. See Figure 3.11.16-26.

  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 3.11.16-26, 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 blank, enter from taxpayer's attachment. See Figure 3.11.16-26.

  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.

  7. For 2010 and prior revisions follow instructions below if entries are present on Schedule A, Lines 1, 6, and/or 7:

    1. Dummy a Form 1125-A and place in sequence order

    Figure 3.11.16-26

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Form 4136 - Credit for Federal Tax Paid on Fuels

  1. If Form 4136 is missing and a significant entry is present on Schedule J, Part II, Line 19b* of the return, correspond for the missing Form 4136.
    *(Page 1, Line 32f(2) for 2010-2005 .)

  2. If a fuel credit claim is found on other than the appropriate line on the return, and Form 4136 is attached, adjust incorrect entry prior to editing fuel tax credits.

  3. Form 4136 should be placed in sequence order.

  4. If fuel tax credit is claimed on Form 1120, Schedule J, Part II, Line 19b (Form 1120, Page 1 line 32f(2) for 2010 and prior) and Form 4136 is attached, compute Column (d) only if blank and 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. If perfection is not possible, correspond. See Figure 3.11.16-27.
    *(Line 18 for 2007.)

    Figure 3.11.16-27

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  5. 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). CRNs for prior years 2000–1997 must be renumbered when a significant amount is present. See Exhibit 3.11.16-14, Form 4136 - Prior Year Conversion Chart.

Form 8913 - Credit for Federal Telephone Excise Tax Paid

  1. Place Form 8913 in sequence order if a significant amount is present on Line 15, Column (d) or Column (e).

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) check box (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 the 118C letter
    Line A, Both the "Yes" box and the "No" box is checked, Correspond using the 118C letter
  3. Line C: To determine if correspondence is needed for the check boxes 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 the 118C letter
    Line C, Neither the "Yes" box or the "No" box is checked, Correspond using the 118C letter
    Line C, Both the "Yes" box and the "No" box is checked, Correspond using the 118C letter
  4. For prior year conversion instructions, See Exhibit 3.11.16-15, 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 subsequent 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 contain and amount, "X" the Form 5884-B.

Form 3800 - General Business Credit

  1. Form 3800, General Business Credit, is required to 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. For 2010 and prior revisions See Exhibit 3.11.16-13, Form 3800, Prior Year Conversion Chart.

  4. 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.
  5. 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.

Consolidated Returns

  1. A consolidated return is defined as a single income tax return containing combined financial data for a parent corporation and one or more subsidiary or affiliated corporations.

  2. The parent corporation files the return, and its name, which appears on the return, may include the words, "and subsidiaries" , "and affiliated companies" or similar notation.

  3. The parent corporation is required to submit Form 851, with Form 1120, on an annual basis.

    If... And... Then...
    Form 851 is missing or Form 851, Part I is not completed After inspecting the return for possible attachments that may be a "substitute" Form 851,
    1. If a "substitute" Form 851 is found, do not correspond.

    2. If a "substitute" Form 851 is not found, correspond for missing Form 851 or completion of Form 851, Part I.

      Caution:

      Prior to corresponding for missing Form 851, research the parent corporation using Command Code INOLE. Do not correspond if subsidiaries are not shown.

  4. Form 1122 may also be attached to a consolidated return. See IRM 3.11.16.20.4, Form 1122 – Authorization and Consent of Subsidiary Corporation to be Included in a Consolidated Income Tax Return.

  5. If there is an indication a subsidiary return has been detached from the parent corporation return (e.g., "Included in a Consolidated Return" or similar notation is on the tax return), research INOLES to determine if the tax return has an 1120–14 filing requirement.

    1. Route the tax return to AM if INOLES shows an 1120–14 filing requirement.

    2. Continue processing the tax return if INOLES does not show an 1120–14 filing requirement.

Consolidated Return – Mixed Components

  1. A Mixed Component is a Consolidated return with a combination of Form 1120 and/or Form 1120-L (Life Insurance) and/or 1120-PC (Property and Casualty (Non-Life Insurance)) processed as either the parent or subsidiary return. There may also be an indication the return is for a "Life" and/or "Non-Life" insurance company.

  2. Do not search attachments for missing money amounts for pages 1, 2, and 4.

  3. Do not correspond for missing schedules for pages 1, 2, and 4.

  4. Do not correspond for income or deduction amounts if "see attached" is notated in the Income Section or Deduction Section of the return.

  5. Do not correspond for a missing Balance Sheet on a mixed component return that includes a Form 1120-L.

  6. Do not correspond for a missing Form 1120-L or 1120-PC Annual Statement if a re-entry mixed component return, Form 1120 was originally filed electronically.

  7. All other processing instructions will be followed.

Consolidated Returns – Required Information

  1. Supporting schedules showing in detail for each corporation included in the consolidation: income, deductions, and computations of taxable income; reconciliation of earned surplus; and assets and liabilities at the beginning and ending of the taxable year should be attached.

  2. If the supporting information for each corporation is in the form of separate returns for the parent Corporation and the subsidiaries, do not detach or separate these documents from the consolidated return.

  3. If the Balance Sheets are included only for the parent Corporation and subsidiaries, and the Consolidated Balance Sheet is not included, correspond.

  4. If a Consolidated Balance Sheet is not received, all Balance Sheet items should be input from the Balance Sheet of the parent Corporation; if the parent Corporation cannot be identified, Balance Sheet items should be input from the subsidiary with greatest Ending Assets.

Form 851 – Affiliations Schedule

  1. Consolidated returns may be filed on Form 1120, Form 1120-C, Form 1120-L, and Form 1120-PC only.

    Note:

    For Form 1120, see IRM 3.11.16.8.2, ABLM Code and Schedule M-3 Checkbox.

  2. If a Form 851 is attached to any other return, do not input Transaction Code (TC) "590" for the subsidiaries.

  3. A TC "590" with Closing Code "014" MUST be input for all subsidiaries shown on the Form(s) 851. This applies to both numbered and unnumbered returns.

  4. Subsidiaries NAICS Code information:

    1. Six digit codes are located on Page(s) 1, Part II, Lines 2 through 10 on the Form 851.

    2. If more than one Form 851 is present, enter the code in each subsidiaries individual transaction record.

    3. If any NAICS Codes are missing, use code "999000" .